Cloud software vendor Snowflake is valued at $12.4 billion, with fresh capital from Salesforce

Key Points
  • Snowflake CEO Frank Slootman said the company generated well over $100 million in revenue in 2019.
  • Slootman said he doesn't wish to get involved in the debate on direct listings vs. initial public offerings, despite having raised another large venture round.
Snowflake CEO Frank Slootman, far right, addresses the team at an all-hands meeting.
Courtesy of Snowflake

Snowflake, a developer of cloud-based technology for storing and analyzing data, is now worth $12.4 billion, making it one of the most valuable venture-backed companies in Silicon Valley.

Salesforce's corporate venture arm joined Dragoneer Investment Group in the $479 million financing round, Snowflake said in a statement. The fresh capital should come in handy as Snowflake takes on cloud infrastructure providers Amazon, Microsoft and Google.

The involvement of Salesforce, which has invested in several other enterprise software companies that went public in recent years, will help Snowflake with its "content strategy," said CEO Frank Slootman, who took cloud software vendor ServiceNow public in 2012. Salesforce houses clients' data on customers, and all that information can be combined with data stored inside Snowflake and then sent to a service like Tableau (owned by Salesforce) for visualization.

He said Snowflake has probably taken 2,500 customers from Amazon Web Services' Redshift data warehousing service. They include Adobe, Instacart, Deliveroo and Strava, he said.

"We wouldn't even exist as a company if we didn't do that every day of the week," Slootman said. AWS declined to comment.

As a result of the collaboration with Salesforce, data from that company's cloud services won't require even a single click for a customer starting to use Snowflake.

"It'll just magically show up. It's pretty cool," Slootman said.

The new funding round more than triples Snowflake's valuation from $3.9 billion in its prior financing in 2018. Slootman said the company hasn't touched the $450 million it raised in that round. Still, he said the company isn't profitable on a net basis, in part because of stock-based compensation.

It "takes quite a while" to cross that line of profitability, he said.

Slootman told CNBC in December that he's preparing the company to go public, but doesn't have a definitive timeline and has some concerns about 2020 because of the upcoming presidential election.

"We have the scale and the velocity to go out but we're sort of waiting for the right time," he said. "When we go out, I want to, and we want to, present the company in its best form possible, you know, rather than try to rush it."

The new funding round gives Snowflake a large pool of cash. But Slootman isn't saying if the company will go for a traditional IPO or a direct listing, which would take Snowflake public without bringing in additional capital.

"We need to prepare the company for a trajectory whereby we have investors that can own multibillion-dollar positions and own them for 10 years and longer and sign on to a journey," Slootman said.

Snowflake was founded in 2012 and is based in San Mateo, Calif. Slootman replaced former Microsoft executive Bob Muglia as CEO in May.

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