In a recent morning announcement, Atlassian disclosed its acquisition of Loom, a video messaging service, for a staggering $975 million. It’s worth noting that just a couple of years earlier in May 2021, Loom had been valued at an impressive $1.53 billion during a $130 million Series C funding round. This was a time when businesses were fervently embracing cloud-based work, and the future appeared exceptionally promising.
However, the evolving landscape has led to a shift in Loom’s valuation. Despite this, Atlassian recognizes the immense potential in Loom and its substantial user base, including 25 million customers and over 5 million monthly video conversations. Atlassian envisions Loom as a valuable addition to its collaboration toolset, particularly benefiting platforms like Jira and Confluence.
Atlassian’s co-founder and co-CEO, Mike Cannon-Brookes, emphasized the significance of asynchronous video in team collaboration, stating, “Async video is the next evolution of team collaboration, and teaming up with Loom helps distributed teams communicate in deeply human ways.”
Additionally, Atlassian sees the acquisition as an opportunity to harness the power of AI, which can enhance the platform with features such as video transcripts, summaries, documents, and associated workflows, enabling various methods for teams to connect and collaborate.
Joe Thomas, the co-founder and CEO of Loom, expressed optimism about the acquisition, highlighting Loom’s mission to enhance workplace communication. He believes that by joining forces with Atlassian, they can expedite the realization of this mission and unlock the potential of every team, a sentiment often echoed by acquired CEOs who anticipate greater accomplishments and rapid growth within a larger entity.
Loom, a company founded in 2015, had secured over $200 million in funding on its journey. Notable investors in its $30 million Series B round in 2019 included prominent figures like Figma CEO Dylan Field, Front CEO Mathilde Collin, and Instagram co-founders Kevin Systrom and Mike Krieger, as well as reputable venture capital firms Sequoia and Kleiner Perkins.
The company boasts an impressive customer roster, featuring renowned corporations across various industries, including Ford, Tesla, Disney, Walmart, Goldman Sachs, and Amazon, to name a few.
However, it appears that the transition to a paid user base may have been challenging, as the company offered a free tier. Signs of difficulties emerged in June, when Loom announced a 14% reduction in its workforce.
Atlassian intends to finance the acquisition using its available cash reserves, with the transaction expected to be finalized in the third quarter of the following year, pending the usual conditions and regulatory approvals.
