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Atlassian Boosts Team Collaboration With Loom Acquisition

In a debut move set to supercharge team collaboration, Atlassian Corporation, a trailblazer in team productivity software, has announced plans to acquire video messaging platform, Loom.

The purchase aligns with the global shift towards remote working and stands to vastly improve asynchronous (async) video collaboration for distributed teams.

Fuelled by the necessity of adapting to the demands of remote work, the use of asynchronous video has become a vital tool. With over 25 million users, Loom registers nearly 5 million video recordings per month. Atlassian envisages this acquisition as the next evolutionary leap in team collaboration, with Loom providing a more human touch in the virtual workspace.

As a stalwart in the realm of facilitating team productivity, Atlassian services over 260,000 customers. The integration with Loom is set to elevate the collaboration experience, making it possible for engineers to visually log issues in Jira, leaders to engage workforce using videos, sales teams to provide tailored video updates to clients, and HR to considerably humanize the onboarding process.

Another groundbreaking advancement is the union of Atlassian's and Loom’s artificial intelligence (AI) efforts. This fusion is expected to enable a fluid transition between video, video transcripts, summaries, and documents, thus improving team collaboration and connectivity.

For the existing Loom user base, the merger stands to deliver enhanced benefits, including a seamless integration of asynchronous video communication into key workflows in Jira and Confluence.

Estimated at around $975 million, the acquisition is set to be funded by Atlassian's existing cash balances, with the transaction anticipated to close in the third quarter of their 2024 fiscal year. According to Atlassian, this acquisition should be fine with the company's share repurchase strategy.

Founded in 2016, Loom has proven its mettle as a user-friendly video messaging platform that captures users' desktop screens, cameras, and microphones. Loom has also excelled at creating institutional knowledge documentation through their AI features, writing titles, summaries, chapters, and tasks.

The marriage of Atlassian and Loom’s business ethos should succeed in realizing the very mission as spelled out by Loom’s CEO, Joe Thomas, " to empower everyone at work to communicate more effectively wherever they are."

This strategic union thus heralds an exciting chapter not just for Atlassian and Loom, but for team collaboration and productivity at large.

Lower valuation than in 2021

The price tag of $975 million can be viewed in contrast to the last known funding round for the video startup. Loom raised $130 million in a -series C led by Andreessen Horowitz in 2021. The valuation in that round was $1.53 billion.

The lower valuation clearly indicates the current market environment with higher interest rates and weak investor sentiment. A 36% valuation decline in the past 3 years speaks more about the frothy valuations in 2020-2022 than Loom’s performance. Similar valuation cuts are what startups should expect to see.

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