Monday.com celebrates its IPO at the Nasdaq, June 10, 2021.
Source: Nasdaq
In Zoom’s IPO two years ago, Salesforce made a bundle by investing $100 million at the offer price and watching the stock soar out of the gate. Zoom learned a little something from that experience.
Zoom and Salesforce each purchased $75 million worth of stock in Israeli software company Monday.com, which debuted on the Nasdaq on Thursday. Monday.com, which provides cloud-based collaboration tools, didn’t have a Zoom-level pop, but the stock did jump 15% — rising from $155 to $178.87 — giving both investors a quick paper profit.
By the close of trading, Zoom and Salesforce’s stake had blossomed to $86.55 million, giving each a one-day gain of $11.55 million. Like Monday.com’s insiders, Zoom and Salesforce are subject to lock-up restrictions and can’t sell for 180 days.
For Salesforce, purchasing IPO shares has become another way for its venture arm to generate returns beyond traditional investments in start-ups and later-stage tech companies. In addition to investing in the offerings from Zoom and Monday.com, Salesforce put $250 million last year into Snowflake’s IPO, a stake that more than doubled in valued to $529 million on the database company’s first day of trading.
In 2020, Salesforce reported a $2.17 billion annual gain from its investments, primarily from Snowflake and software vendor nCino, a company that Salesforce backed long before its IPO last year. In prior years, Salesforce Ventures invested in the IPOs of Dropbox and SurveyMonkey.
At Zoom, investments are a new business. In April, the video-chat company launched a $100 million fund to back start-ups that would be building features and functions on top of Zoom. However, those deals will be much smaller, given that Zoom’s investment in Monday.com is equal to 75% of that whole fund. According to PitchBook, this is Zoom’s first known investment of any size.
While a 15% one-day jump is certainly attractive, it’s significantly below the kinds of pops the market has seen in recent years and that Salesforce has enjoyed. IPO pricing overall has tightened this year after massive first-day gains in 2020 in Snowflake, DoorDash and Airbnb led to increased criticism that companies are leaving too much money on the table to hand over cheap stock to new investors.
