The battle for dominance in the platform wars is far from over, with Salesforce.com joining the fray by launching its $100 million Salesforce1 Fund. This dedicated fund, part of the cloud computing giant’s Salesforce Ventures group, aims to woo innovative companies developing mobile applications and connected devices to develop on its platform.
A Five-Year-Old Process Formalized
The launch marks a formalization of a process that has been in place for at least five years, according to John Somorjai, executive vice president of corporate development and strategy at Salesforce.com. As of July 31, 2014, the company had invested $109.6 million in private companies, up from $77 million at the beginning of the year, as per a filing.
A Significant Investment Portfolio
In total, Salesforce.com’s investments in privately held companies stood at $215 million as of July 2014. Somorjai revealed that the $100 million commitment to the Salesforce1 Fund should last for several years and declined to disclose the minimum or maximum commitment the company would make to startups.
Early Commitments and a Robust Pipeline
Already, Somorjai and his team have committed an undisclosed amount to four startups: DocuSign, an electronic signature service; i.am+, a consumer products company developed by musician Will.i.am; InsideSales.com, a sales and marketing analytics, automation, and support company; and Skuid, an HTML5 and Salesforce1 application development toolkit.
"We have a really deep pipeline of other Salesforce1 investments that we’ll be announcing in the next few weeks," Somorjai stated. "We see a huge opportunity as mobile adoption in the enterprise gets bigger and bigger."
A Stage-Agnostic Fund
The fund is stage agnostic and typically only makes one commitment to companies, according to Somorjai. Over the last five years, the company has made commitments to more than 100 companies. However, with advancements in tools like Amazon Web Services or Salesforce.com’s own hosting platform, the size of those commitments can be smaller, and companies need to raise fewer follow-on rounds.
Veeva: A Perfect Example
Somorjai cited Veeva as a perfect example. The company raised $5 million in capital and went on to an initial public offering in the waning days of 2013. Its market capitalization now stands north of $3 billion. Salesforce.com investments in Box, Dropbox, and Evernote may also pay off handsomely for the first enterprise company to float off into cloud computing.
Efficiency and Impact
What’s impressive is that the company has managed to make its bets on the back of a small team whose roles are typically split with other corporate development functions, according to Somorjai. "We do a lot with a little," he said. "We’re very efficient."
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About the Author
Jonathan Shieber is a writer for TechCrunch, covering topics such as venture capital, entrepreneurship, and technology trends.
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