Unit of the Year: Salesforce Ventures

Often seen as the most prominent corporate venturing player in the enterprise space, Salesforce Ventures was largely shaped by John Somorjai, executive vice-president of corporate development and Salesforce Ventures, and Matt Garratt, managing partner.

Somorjai has been at Salesforce, a US-listed customer relationship management service provider, since 2005. He has been leading the evaluation, deal execution and integration of Salesforce’s corporate strategic transactions, including M&A and investments. Salesforce Ventures was founded in 2009 and Somorjai hired Garratt from venture capital firm Battery Ventures in 2013 to run it.

Salesforce has deployed a series of funds over the years. One of the first was the $50m Lightning Fund, now fully invested and focused on entrepreneurs and companies building transformative apps and components on the Salesforce Lightning Platform. Built on the Lightning fund’s success, the $100m Salesforce Platform Fund was launched in 2017, with goals to speed up the development of platform components driven by artificial intelligence (AI). Salesforce simultaneously revamped its independent software vendor program, creating the AppExchange Partner Program to bring more developers into the company’s app economy.

A variety of vehicles were subsequently launched, resulting in the unit having no fewer than seven active funds of between $50m and $100m. In 2017 alone, the unit launched four specialist funds with a total investment capacity of $250m. Apart from Platform Fund, these included the $50m Impact Fund, $50m AI Innovation Fund, and $50m System Integrator Trailblazer Fund, investing in cloud consulting companies looking to expand their Salesforce services.

Introduced at the end of last year, the Japan Trailblazer initiative was not the first of its kind. A few months earlier, following a commitment made by Salesforce to invest $2bn in Canada over the next five years, the unit launched the $100m Canada Trailblazer Fund, targeting local cloud services startups. At the time Somorjai said: “There is incredible innovation happening in Canada today and we want to encourage and empower the next generation of enterprise cloud startups in the region.” Creating region-specific funds seems to have become a habit for the unit – in 2015, it had already formed a $100m Europe, Middle East and Africa vehicle to support European and Israeli startups.

The Trailblazer funds are not the only elements that made 2018 a special year for Salesforce Ventures. A fair number of portfolio companies went public, yielding a number of record exits. In April, US-based digital signature specialist DocuSign, backed by a variety of investors, including Salesforce Ventures, floated in a $629m IPO giving a market cap of $4.4bn. The same month, file storage platform Dropbox closed its IPO at $869m.

In July, business intelligence and data visualisation provider Domo went public with an IPO of $193m at a $2.3bn valuation. A few months later, it was online survey management platform SurveyMonkey’s turn to float at $207m as underwriters took up the overallotment option and bought an extra $27m in shares. Within a fortnight, business planning software provider Anaplan provided the unit with yet another lucrative exit, floating at $264m at a $2.1bn market cap. It is also worth noting that 2017 was just as glorious a year for Salesforce Ventures on the IPO exit front, as three of its unicorn portfolio companies went public.

Another noteworthy event last year was the acquisition of publicly-listed app development software producer Mulesoft in a deal that valued it at $6.5bn. Salesforce Ventures was an investor in the group’s $37m series E round in 2013 and $50m round in 2014, before returning to lead its $128m series G the following year. Mulesoft has doubled in value since it went public in 2017 in a $221m IPO at a market cap of $2.9bn.

Salesforce Ventures was also an investor in a number of deals last year, including a $47m round for documentation software producer Conga, a $35m series C round for sales assistance software developer Highspot, and a $51.5m round for cloud banking specialist NCino. The $350m deal in which business communications technology supplier Vonage acquired customer service technology provider NewVoiceMedia from Salesforce Ventures in September was another element that helped the unit finish 2018 on a high note.

Salesforce Ventures has completed more than 280 investments across 18 countries with at least $1bn of equity committed, while its venture unit had established offices in the US, the UK and Japan.

Given its capacity to return money from more than a dozen IPOs, and with more than 50 acquisitions under its belt, there would seem to be no shortage of money for Salesforce Ventures to continue its good work.

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