Morgan Stanley
  • Investment Banking
  • Nov 10, 2017

Capital Creates New Ways to Connect

With help from Morgan Stanley, Salesforce raised capital to support its mission of enabling a range of organizations and businesses to grow, connect and better serve customers.

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So you want to start your own business. Where do you start? If you’re a florist, say, you’ll need a shop and nurseries from which to source flowers, plants, pots, tools and, of course, garden gnomes. Success comes first with satisfied customers, but growth requires more.

Software isn’t simply about code, systems installations and integrations.

What do customers buy? How often? Do they have clients of their own? How do you best serve them? Pretty soon, you’re hiring help. At night, you dream of branching out to a neighboring town, maybe beyond. The possibilities are dazzling, but the complexities of managing your business—servers, software, spreadsheets—not so much. Instead of arranging flowers, you’re tech support, locked into the vicious upgrade cycle.

In 1999, “the cloud” was barely a wisp on the far horizon of the Internet boom. But Marc Benioff, who founded Salesforce that year, made it the platform for a simple idea: Offer entrepreneurs the software they need to run their business, so that they can focus on customers and service, not the backend technology to support it.

Software wasn’t simply about code, systems installations and integrations. It was a tool that could help manage customer relationships and grow your business, and it could live in the virtual environment of cloud computing. Salesforce would offer “software as a service.” Clients could pick and pay for what they used and access it via a web browser on any device, anywhere, to connect with their customers.

This then original idea to disrupt traditional enterprise software found a receptive audience. By early 2004, Salesforce had approximately 9,800 clients, representing more than 147,000 subscriptions in approximately 65 countries.1 When Salesforce decided to go public, the company turned to Morgan Stanley as the sole book runner of its initial public offering, raising $110 million2 in June of 2004.

Ten years later, Salesforce had become the leading provider3 of cloud-based enterprise software as a service. To its initial toolbox of customer relationship management software, it has added marketing, eCommerce, call-center management and analytics, among other options, delivering maximum scalability. Its client base had grown to more than 150,000 customers and partners4 in 239 countries.5 To help finance its next level of growth, Salesforce tapped Morgan Stanley again in 2013 to help issue $1 billion6 in convertible senior notes, to be used in part to fund possible acquisitions and investments in complementary businesses, services and technologies.

For Morgan Stanley, the Salesforce business model—offering clients software seeded in the cloud to connect with customers and help grow business—wasn’t a stretch to understand. For decades, our bankers have been offering clients in-depth market expertise and strategic financial advice so that they can focus on what they do best: driving innovation, growth, and, ultimately, doing better for their customers.

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