The Strategist

Zoom, Salesforce earn $11.5M each after Israeli software maker IPO

06/11/2021 - 04:02

Video conferencing service Zoom invested in the stock market for the first time, while Salesforce is a seasoned investor in IPOs and in the venture capital market.

Zoom and Salesforce each raised $11.5m in a day of trading after the IPO of Israeli cloud collaboration software maker on the Nasdaq exchange. They invested $75 million each in the company's stock, rising to $86.5 million by the end of trading, CNBC reports. 

The Israeli company went public at $155 per share, and trading closed Thursday at $178.87 per paper. Shares in the company, which provides cloud-based collaboration tools, jumped 15%, giving both Zoom and Salesforce investors a quick paper gain. As insiders, both companies can't sell shares for 180 days. While the one-day jump of 15% is certainly appealing, it is well below the performance seen in the market in recent years, which Salesforce has enjoyed. Snowflake, DoorDash and Airbnb's massive rally in share price on the first day of trading in 2020 resulted in criticism that new investors cannot buy cheap shares.

In the Zoom IPO two years ago, Salesforce bought a stake in the video conferencing service, investing $100m at the offer price and watching the shares soar. For Salesforce, buying IPO shares was another way for the venture capital arm to profit beyond traditional investments in start-ups and later-stage technology companies. In addition to investing in offers from Zoom and in 2020, Salesforce invested $250 million in the Snowflake IPO, a stake that more than doubled to $529 million on its first day of trading.

In 2020, Salesforce reported an annual return of $2.17 billion from its investments, primarily from Snowflake and software provider nCino, a company that Salesforce backed long before its IPO last year. In previous years, Salesforce Ventures invested in the Dropbox and SurveyMonkey IPOs. For Zoom, the investment is new business. In April, the video conferencing company launched a $100m fund to support start-ups that will build for the service and beyond.  However, these deals will be much smaller than Zoom's investment in at 75% of the size of the entire fund. According to PitchBook, this is Zoom's first known investment of any size.