Executive Vice President of Corporate Development & Salesforce Ventures, Salesforce
Salesforce Part 2 | John Somorjai
John continues the discussion about Salesforce and touches on investments.
John Somorjai is the Executive Vice President of Corporate Development & Salesforce Ventures at salesforce.com. Since 2005, he has been leading the evaluation, deal execution and integration of mergers and acquisitions, and investments. John’s team has helped bring the company into significant new growth areas through acquisitions including Exact Target, Radian6, Buddy Media, Heroku, Instranet, MetaMind, Model Metrics, RelateIQ, and Steelbrick, and also brought onboard a number of key leaders. In addition, John leads...
About John Somorjai
John Somorjai, Executive Vice President of Corporate Development & Salesforce Ventures at Salesforce, discussed the company's acquisition strategy and venture activities in several 2024 and 2025 appearances. At Dreamforce 2025, Somorjai said his team reviews "several thousand opportunities every year" but acquires only a small number. He outlined key acquisition criteria: the ability for a company to become accretive to cash flow and profitability within one to two years, a reasonable price, and a non-dilutive structure for shareholders. He cited the pending Informatica deal and the acquisition of Regrello, now part of Salesforce's Agentforce Supply Chain, as recent examples. Somorjai also described a framework for integration that emphasizes speed, transparency about challenges, and alignment of culture and values between the acquired company and Salesforce. In September 2024, Somorjai announced a new $500 million AI investment fund from Salesforce Ventures, bringing the firm's total commitment to AI innovators to $1 billion over the prior 18 months. He stated that the fund aims to invest in entrepreneurs "helping to solve business challenges in unprecedented ways" and noted that Salesforce Ventures has invested in companies such as Runway, Anthropic, Hugging Face, and Mistral. Somorjai said the firm typically invests at the Series A stage, co-investing with venture capitalists, with Series A investments not exceeding $2 million and Series B investments not exceeding $5 million. He added that Salesforce Ventures has invested in 162 companies and is one of the most active corporate tech investors.
Transcript (17 segments)
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John Somorjai0:00
Okay, why would companies take money from us? Well, three things. We give them tremendous access to our ecosystem of partners, to our executives, our product teams. We make VC introductions for them. We give them a lot of advice. We've learned so much over the years and made many mistakes, and we can help advise companies to make sure they don't make the same mistakes. Help them think about their technology scalability, reliability, all the infrastructure lessons that we've learned from the billions of transactions that we have to serve every day. And it's obviously a lot of it gives a lot of credibility if you're selling into the enterprise and selling to our customer base to have an investment from us.
As I mentioned, we invest all over the world. I've got a full-time head that works for me in London who does our European investments, and then one in Tokyo who does our Japanese investments. It turns out Japan is a great market for cloud computing, really, really high adoption for cloud, for mobility, for social technologies. And so we found some amazing companies there, and that's probably one of the most, the best returns from our portfolio overall if you just have to pick a region or option in Japan, which probably surprises a lot of you.
And we do most of our investing, we have 72 companies in there. You know, it's really because our business is not so big in South America. We try to piggyback off of the business of Salesforce as a whole because we, again, we're about building that ecosystem of partners and helping customers buy more, and our business is just developing down here.
Well, they don't pay a lot of money for it. I think that's one of the big lessons that we learned early on. We used to peanut butter our international investments all around the world and we'd have a little of this, a little of that in every country. And we realized that it's pretty important to have scale. Like you want to have a hub of activity where you have salespeople, where you have pre-sales people, you've got your software engineers, where you can have marketing people, salespeople, and our executives will go. And so we decided to focus on nine countries essentially, and we put, you know, 98% of our investment goes into those nine countries.
And those are the nine markets that are the best for enterprise software. So that would be the US, Canada, UK, France, Germany, Netherlands, Japan, Australia, and I guess the Nordics would probably be next. But Latin America's not on that list. But if there was a tenth country, it would be Brazil, but we really only focus on that.
So this was kind of cool. There was some research done on who's the most active VC in enterprise software, and we were number four on the list even with all these top-tier firms. So that was very exciting for us. But even more exciting is that we have a lot of potential IPOs that are getting ready, a lot of investments that we've made in companies over the years that we think will go public soon.
And you know, we think about investments the same way. It's sort of very similar to the chart I showed you on acquisitions, is that we need an executive sponsor who will raise their hand internally and say, 'This company, this technology is really important, and I'm going to help them.' And then they sponsor the investment. And we have that for every one of these companies. And basically, all these companies are tied to a cloud we've done. As you can see, because the bulk of our business is in sales, services, marketing, that's where most of our investments have been made.
And then we have a series of businesses over here that are kind of less related to our company, but there might be built on our platform, or there's some important partner, or they're a very hot company like Stripe that we work with in some cases and we want to have a piece of. So I don't know if any of you did any of you see 60 Minutes last night? It was great, 60 Minutes on FinTech and Stripe was featured. But any questions on this slide?
Yes. Determine like which companies are investing versus you guys have just purchased outright? That is a great question and one we spend a lot of time on. So every, probably two to three times a year, I meet with one of the leaders of these business units that we call clouds, and we talk about their whole roadmap strategy for the next three years and where they want to build, buy, or partner.
And when they think about the 'buy' versus 'partner', they may not know, like it might be an area, it's a young area, we think it's important, the companies in the space though are all really small and we just don't know if there's a lot of revenue there. So why don't we start by partnering with them and investing in them, and if they do well then we can buy it later. We'll pay more, but you know, where we are, one of the challenges that I have right now is that where we are as a company, 8 billion in revenue this year, if you're not buying a business that's going to be a hundred million in revenue very quickly, it just doesn't mean anything to the company.
And so we really need to focus on making sure that we're spending our money wisely and that we're buying companies that will really move the needle for us. And that this is one of the challenges you have as the company grows. When I started in 2005, we were not thinking about hundred million dollar businesses, we were thinking about 10 million dollar businesses. It just, the scale was just completely different.
I'm going to, good segue. This is kind of where we're spending most of our time investing right now. So as I mentioned, you know, predictive intelligence, machine learning, and deep learning is one area that we're really looking hard at, and it applies to every business that there is. Big data and data integration, this is hugely important for cloud services. So you know, you need to have all these apps need to be able to communicate with each other and pass data back and forth between them in a very secure way.
And you know, the old legacy businesses that are all built on premise behind a firewall, you know, that's not where the world is going. The world is going in this direction where a company will buy, you know, hundreds of applications and they all need to integrate and move information back and forth among them in a very secure way. So this data integration, this is a huge business and something that a lot of companies are trying to solve many different ways. Also being able to mine a lot of data and extract valuable insights out of it is very important.
We think every operation in the company is all moving to the clouds, we're spending time there. Mobility is a huge theme for everything that we do, and so we always think about when we're developing our products of trying to be mobile first. And so we're investing in a number of companies that are helping mobility in different ways. On the business-to-developer side, these are companies that, you know, create like a messaging layer or payments layer that every application can tap into, so that if you're developers, you don't have to build it yourself. That's a big area of investment right now. And then verticals, like lots of vertical solutions for companies in the cloud. But that's what we're spending most of our time.
Can you say the area as a threat to your ecosystem? Yeah. Okay. I think the short answer is no, but I would say you'd have to ask someone much more technical than I am that question. But I think we feel pretty good about where our platform is right now.
What stage? Oh, see if I have a slide. No, I don't have that slide. So we typically will invest at the first time at the Series A stage, and we always, our model is to co-invest with a VC. And so we don't do the early stage seed stage investing. We'll come in at the Series A, sometimes it's Series B, but that's 80% of our investments start at that early stage level. There are a few companies that we've come in at the Series C and D level, but those tend to be larger, more established partners, but that's a much smaller percentage of what we do.
And then in terms of investment size, we basically, because we invest off our balance sheet and we worry about making sure we're not, you know, if the company goes under and we've invested off of our balance sheet, we have to take a write-off for that company, that investment. And so we want to make sure that we apply the right level of risk and the right dollar amount that we're investing at the stage of the company. So for Series A investment, we're not going to go above two million dollars. For a Series B investment, we won't go above five. For later stage companies, we'll do larger investments, but then the risk is much less and the company has really proven itself.