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Salesforce (CRM) Unveils $50 Million Impact Investment Fund


Just within a month of announcing a $50-million artificial intelligence (AI) start-up fund, Salesforce.com Inc.’s CRM investment arm venture — Salesforce Ventures — rolled out another $50-million fund which has been named Impact Investment Fund.

Under the recently announced facility, Salesforce intends to invest in companies which are using its cloud platform to develop innovative solutions “to address challenges across workforce development, equality, sustainability and the social sector.”

The company further noted that the fund “builds on previous investments in companies driving positive social change and aligns with Salesforce Ventures' charter to strategically invest in companies built on the Salesforce Platform, delivering unique capabilities to Salesforce customers.” Per the company, Angaza, Ellevest, Hustle and ViridisLearning are the first recipients of this funding.

Salesforce stock has gained 40.7% year to date, substantially outperforming the 26.8% rally of the industry it belongs to.

Investments in start-ups have always been one of Salesforce’s key growth strategies. Over the past several years, the company either acquired or partnered with many such companies. Citing John Somorjai, executive vice president of Salesforce Ventures, Reuters noted that Salesforce Ventures has invested over $700 million in more than 250 enterprise start-ups since 2009.

We believe Salesforce’s consistent focus on expanding its business through strategic acquisitions and investments in start-ups will drive growth over the long run.

However, stiff competition, currency fluctuations and stepped-up investments in international expansions and data centers are expected to thwart its near-term profitability.

Currently, Salesforce carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the broader technology sector are NVIDIA Corporation NVDA, Micron Technology, Inc. MU and Xcerra Corporation XCRA, all sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term expected EPS growth rates for NVIDIA, Micron and Xcerra are 10.3%, 10% and 16%, respectively.

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