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Berkshire Hathaway, Salesforce, and Snowflakes Partnership — A Financial Boon or Bust?

Berkshire Hathaway, Salesforce, and Snowflakes Partnership — A Financial Boon or Bust?

San Mateo, CA — Warren Buffett’s Berkshire Hathaway and Marc Benioff’s Salesforce participated in the biggest software Initial Public Offering (IPO) deal to date by investing millions of dollars into Snowflake, a cloud-based data warehousing company. Their investment in a private startup valued at over $1 billion is a rare sight. The potential valuation of Snowflake is anticipated to be $24 billion with these investments.

Snowflake, a cloud data unicorn  — saw a huge investor interest. Berkshire Hathaway invested roughly $570 million in Snowflake causing its stake to surge by more than $800 million during Snowflake’s first day of public trading. This deal was the largest U.S. offering of 2020.

On the first day of trading following a $3.4 billion IPO, Snowflake closed at 111% higher than its offering price of $120 per share. It was a rare sight for traders who saw Berkshire bet big on an IPO. The company has not invested money in a deal involving so much money in a new public firm since the company’s investment in Ford’s debut in 1956.

Marc Benioff’s Salesforce invested $500 million in Snowflake. The original investment was $250 million, however, Salesforce eventually doubled its investment. Sara Kennedy, Salesforce’s Communications Manager, directed Current Affairs Times to a press statement. 

Matt Garratt, Managing Partner of Salesforce Ventures said “We believe Snowflake is a foundational component of digital transformation 2.0. Last year the company brought on Frank Slootman, former CEO of ServiceNow and Data Domain, to be its CEO. Snowflake’s revenue for the six months ended July 31, 2020 and jumped 133% from the year prior.”  Garratt said that Salesforce will continue to invest in data-centric companies that are fueling the next generation of digital transformation. Snowflake’s shares are now valued at $253.93 per share.

As venture capitalist Bill Gurley rightly asked “is this not the epitome of the rich getting richer as a direct result of being rich?” 

Image Credit: Sean Pollock/Unsplash

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Afia is a lawyer, journalist, an avid traveler, an avid reader, a foodie, and an amateur singer. She enjoys instrumental music with her glass of wine 🙂

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