One of the most noteworthy developments in recent months is Salesforce’s acquisition of SPIFF. This raises questions about the rationale behind this acquisition, its timing, and its implications for Varicent.
As many are aware, SPIFF, like CIQ, commenced operations in 2017, initially targeting the SMB segment. Adopting a speculative market evaluation strategy, SPIFF aggressively pursued growth, aiming to bolster its valuation for subsequent fundraising rounds. However, the landscape shifted with inflation and higher interest rates, impacting SPIFF’s target market and necessitating another funding round, notably its Series C round delayed until May 2023. While details of the $50M funding are not publicly disclosed, it’s reasonable to infer the inclusion of convertible debt given prevailing market conditions.
Of significance, SPIFF’s Series C round was spearheaded by Salesforce Ventures. While this doesn’t conclusively imply early acquisition targeting by Salesforce (similar to WorkDay Ventures and CIQ), it does prompt speculation regarding the eventual acquisition. We suspect that SPIFF’s rapid capital burn rate prompted Salesforce Ventures to weigh between acquisition and divestment, ultimately opting for the former.
What implications does this acquisition hold for Varicent? Given SPIFF’s platform maturity (or lack thereof) in Varicent’s target market, Salesforce would likely need to reconfigure its technology to align with market demands. Consequently, we anticipate minimal immediate impact on Varicent’s operations, with long-term effects contingent upon the successful development of a scalable ICM platform tailored for enterprise clients—a journey akin to CIQ’s ongoing endeavors, which is expected to span several years.
Thank you for your attention, and we welcome any further insights or feedback.