Power Players

Marc Benioff couldn't get any VCs to give him money when launching Salesforce—now it's worth $124 billion

Marc Benioff, CEO of SalesForce speaking the 2018 WEF in Davos, Switzerland.
Adam Galica | CNBC

Today, Marc Benioff is the billionaire chairman and co-founder of cloud computing giant Salesforce, which posted annual revenue of $13.3 billion in 2019 and is currently worth about $124 billion

But when Benioff and his co-founders were trying to get Salesforce off the ground in 1999, Benioff struggled to sell the idea behind Salesforce to investors. In fact, according to Benioff, he and his three co-founders (Parker Harris, Dave Moellenhoff and Frank Dominguez) pitched Salesforce to every venture capitalist in Silicon Valley looking for funding.

"When we were raising money, no one would give us money," Benioff said in an interview with TechCrunch in October. "No one on Sand Hill Road would give me any money," he added, referring to the area of Silicon Valley known as a fundraising mecca for start-ups due to a high concentration of venture capital firms.

Benioff said the VCs just couldn't envision what Salesforce would become and how important cloud computing was to the future of the tech industry. 

"I think that they did not understand this incredible opportunity for cloud computing. They certainly did not see that this would be a company with [35,000] employees and more than $100 billion market cap and a top five software company. They just could not see it," Benioff said at the TechCrunch Disrupt conference.

Benioff and his co-founders certainly could have used the cash infusion at the time. The company famously launched out of a cramped, one-bedroom San Francisco apartment that Benioff himself had rented after leaving his role as a vice president at software giant Oracle. Benioff and his co-founders invested over $500,000 of their own money in the start-up in April 1999.

Benioff has explained he had a hard time convincing others in Silicon Valley that cloud computing was an important piece of tech's future in the late-1990s. Despite his experience at Oracle, Benioff said in 2018 that he "had to go hat in hand, like I was a high tech beggar, down to Silicon Valley to raise some money" when launching Salesforce.

In the end, Benioff and his co-founders were able to raise more than $17 million in 1999, but none of it came from venture capital firms.

"We raised it all privately through individuals," Benioff told TechCrunch. "I was lucky that I had some rich friends. If I didn't, I would not be able to get the company going."

Among those friends were early Salesforce investors like Oracle co-founder Larry Ellison, as well as Halsey Minor, an entrepreneur who founded CNET, and entrepreneur Magdalena Yesil, an angel investor who became a founding board member at Salesforce.

Within five years of launching, in 2004, Salesforce launched an IPO that raised $110 million, putting the company on its path to becoming a multi-billion dollar tech giant.

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