Snowflake has raised 479 million dollars at a valuation of 12.4 billion dollars, in what looks likely to be its final private funding round before going public. The round, led by Dragoneer Investment Group and Salesforce Ventures, more than triples the 3.5 billion dollar valuation from less than two years earlier. It also brings a strategically important new investor onto the cap table, Salesforce, and it comes as the company visibly prepares for a public offering. This is the chapter right before the fireworks.
Tripling in Under Two Years
A jump from 3.5 billion to 12.4 billion dollars in under two years is remarkable even by the standards of fast-growing software companies, and it reflects the continued power of Snowflake’s core dynamics. Its consumption-based model means existing customers keep spending more as they move additional data and teams onto the platform, while new enterprise customers sign on at a rapid clip. The compounding of high net revenue retention, existing customers expanding their spending, plus strong new-customer acquisition, produces exactly the kind of growth curve that drives valuations sharply upward.
Snowflake has also brought in a CEO specifically suited to the next phase. Frank Slootman, who previously led the enterprise software company ServiceNow through a successful public offering and dramatic growth, took the helm in 2019, joined by his longtime finance chief Michael Scarpelli. Slootman has a reputation as a demanding, growth-focused operator who knows how to scale a company and run a public-market debut. His arrival is a clear signal that Snowflake is preparing for an IPO and wants a leader proven at exactly that transition.
Why Salesforce Matters
The participation of Salesforce Ventures, the investment arm of the giant customer-relationship-management software company, is more than a financial vote of confidence. Salesforce sits at the center of how thousands of large enterprises manage their sales and customer data, and a relationship with Salesforce signals potential for deep integration and a powerful partner with enormous reach into exactly the kind of customers Snowflake wants. Strategic investors like this bring credibility and ecosystem connections, not just capital, and Salesforce backing Snowflake just before its IPO reinforces the market’s sense that Snowflake is becoming a central pillar of the enterprise data world.
The Calm Before the IPO
This round has the character of a final pre-game gathering. The investors joining at this stage, large institutional and crossover funds, are typically those who want to own a piece of a company shortly before it goes public, positioning themselves for the debut. Their presence, alongside the proven IPO-leader CEO and the soaring valuation, makes it clear to everyone watching that Snowflake’s public offering is imminent and likely to be enormous. The 12.4 billion dollar private valuation sets the floor for expectations, and the public markets may well push past it.
It is worth pausing on the timing. It is February 2020, and a strange unease is settling over the world as reports of a new coronavirus spread. Whether that becomes a global disruption is not yet clear. What can be said is that the trends Snowflake rides, the rush to the cloud, the surge in demand for data analytics as companies work to understand rapidly changing conditions, show no sign of slowing, and a shock that forces more business online could accelerate them rather than derail them. Snowflake’s timing, raising a massive round now and heading toward a public debut, may prove well judged.
What It Means for the Market
Snowflake’s 12.4 billion dollar valuation cements its status as one of the most valuable private software companies in the world and sets the stage for a public debut that will reverberate across the industry. For competitors, it is further confirmation that the cloud-native data platform category is now among the most valuable in all of enterprise technology. The traditional vendors continue their slide, and the cloud giants keep racing to match Snowflake’s capabilities in their own warehouse products.
For the rivalry at the heart of this industry, Snowflake’s pre-IPO surge has a direct effect on how Databricks is valued and perceived. As Snowflake marches toward a blockbuster public offering, it establishes a benchmark that lifts the entire category, including its great rival. Databricks, still private and pursuing its lakehouse vision, is measured against Snowflake’s valuation, and the two are perpetually compared on growth, customers, and the breadth of their platforms. The benefit to customers remains the relentless competition this funding fuels: two superbly capitalized companies pushing each other to build better, easier, more powerful data platforms. Snowflake’s final private round is the deep breath before its arrival on the public stage, an arrival set to test just how mainstream the cloud data platform has become.