When a company like Slack gets all this money, can they decide to not spend the money? Like you said, what else could you really add? Why do companies find the need to expand?
>When a company like Slack gets all this money, can they decide to not spend the money?
Not really.
E.g. The firms investing $250 million basically would like to see ~3x return or more on their money. The want their $250 million to turn into ~$750 million. That's the whole point of investing.
If Slack simply parked $250 million in the bank for 1% interest rates, that's something Softbank could simply do themselves. If Softbank can buy $250 million treasury bills for 1% return, there's no need to give Slack $250 million to do it for them. Besides, VCs like Softbank can't survive on 1% returns; they're hoping for ~20%+ returns.
Instead, Slack is supposed to put that $250m to productive use and make the company more valuable. This makes more money for everyone including investors. (This doesn't mean Slack spends the $250m all at once though. Softbank and CEO Stewart Butterfield probably had long discussions on the strategic uses of the potential capital. Presumably, Softbank agreed with Butterfield's vision which is why they invested.)
Well, a loan would have set terms and schedules of repayment and default.
For investors, the 3x & 20% figures I gave are not formalized terms of payback. Instead, they are desirable financial targets for the investor so they can be considered a prestigious firm that attracts capital from more limited partners. Slack won't be in "default" if they provide 0% return to Softbank. However, future limited partners like university endowments or police/firemen pensions will avoid underperforming VCs that deliver low or negative returns. (If VCs don't perform to expecations, the market will punish them and they will shut down.[1])
To trace the causal chain, VCs want 20%+ because your grandmother and her pension plan investing in the VCs want 20%.
It's less about whether they can technically handle the scale (they clearly can), but more about enterprises that are going to have typical enterprise demands - security policies, encryption at rest, whitelabeling, maybe even on-premise installs. On top of that, enterprises typically aren't self service, you need to have a pretty large sales team to effectively sell to the enterprise.
obviously, but part of that investment is increasing sales velocity to enterprises. It would behoove slack to grow and get more bigCos entrenched onto the platform - switching costs and employee preference can help them get a foothold on the market to beat back competition.
