Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
Upcoming SlideShare
What to Upload to SlideShare
What to Upload to SlideShare
Loading in …3
×
1 of 71

Bessemer's State of the Cloud 2021

7

Share

Download to read offline

In State of the Cloud 2021, we explore the major milestones and changes within the cloud economy and original analysis on what’s driving today’s private cloud valuations. In addition, we share new frameworks and emerging strategies to help founders measure growth endurance and drive go-to-market momentum. Plus, we dive into our seven predictions for 2021.

Top takeaways
Cloud companies have not just reset in the New Normal, but have thrived with a record-breaking market capitalization of more than $2 trillion.
There’s been a changing of the guard afoot: MT SAAS has overtaken FAANG.
Cloud multiples are rising to new heights, with both public and private cloud trading over 20x.
Cloud growth rates and access to capital are at all-time highs, with the average Cloud 100 company growing 80% YoY and $186 billion going into private cloud companies in 2020 alone.
Good-better-best of growth endurance is 70%-75%-80%.
GTM strategies have adapted in the New Normal; best practices include product-led growth, usage-based pricing, and the adoption of cloud marketplaces.

Related Books

Free with a 30 day trial from Scribd

See all

Related Audiobooks

Free with a 30 day trial from Scribd

See all

Bessemer's State of the Cloud 2021

  1. 1. State of the Cloud 2021 The New Normal Byron Deeter PARTNER @bdeeter Elliott Robinson PARTNER @TheValuesVC Mary D’Onofrio PARTNER @mcadonofrio Hansae Catlett INVESTOR @hansaecatlett Janelle Teng INVESTOR @NextBigTeng
  2. 2. Agenda 2020 New Normal Public Cloud Private Cloud Market Analysis 2021 Predictions Recap
  3. 3. 2020
  4. 4. SCENARIO EXIT VALUE Wipe out – failure to launch GTM and compete against incumbents. $0 Downside case – company fails to grow meaningfully beyond a small set of customers. $100M Base case – company succeeds in capturing meaningful market share. $500M Upside case – company becomes market leader. $1B Just goes nuts – company becomes go-to solution owning majority of market. $5B+ Cloud Investment A - Scenario Planning Global pandemic?
  5. 5. -40% -30% -20% -10% 0% 10% 2-Jan 29-Jan 25-Feb 23-Mar % Change S&P 500 (^SPX) NASDAQ Composite Index (^IXIC) Dow Jones Industrial Average (^DJI) 2020 Major indices dropped more than 30% over the course of three weeks
  6. 6. Welcome to the New Normal
  7. 7. Usage of digitally-enabled care skyrockets Increase in telehealth utilization 300x
  8. 8. Distance learning becomes the norm of households with school age children engaged in distance learning 93%
  9. 9. Small and medium businesses evolve and adapt The restaurant industry is going through massive digital transformation
  10. 10. Industries transition from offline to online $10T global construction industry accelerates shift to the cloud
  11. 11. We’ve seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security—we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything. “ – Satya Nadella, CEO of Microsoft
  12. 12. $0B $50B $100B $150B $200B $250B $300B $350B Top 5 public cloud companies by market cap 2020 Market Cap
  13. 13. $0B $50B $100B $150B $200B $250B $300B $350B Top 5 public cloud companies by market cap 2021 Up 70% 2020-2021 Market Cap
  14. 14. $0B $50B $100B $150B $200B $250B $300B $350B Top 5 public cloud companies comprise $1T+ of market cap 2021 $1T+ Market Cap
  15. 15. $0B $50B $100B $150B $200B $250B $300B $350B Top 3 public cloud companies each over $200B market cap 2021 $200B Market Cap
  16. 16. 0% 10% 20% 30% 40% 50% Q1–17 Q2–17 Q3–17 Q4–17 Q1–18 Q2–18 Q3–18 Q4–18 Q1–19 Q2–19 Q3–19 Q4–19 Q1–20 Q2–20 Q3–20 Q4–20 IaaS crosses $150B run rate in 2020 Amazon dominates the public cloud infrastructure market Share of worldwide revenue OTHERS
  17. 17. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Public cloud reaches $2 trillion Total cloud market cap Feb 2019 35% CAGR Feb 2020 Feb 2021 $2.2T $690B $1T 45% CAGR 120% CAGR 65% CAGR $0T $1T $2T
  18. 18. Bessemer Cloud Index since launch 0% 200% 400% 600% 800% 1,000% 1,200% 1,400% Net Change BVP Nasdaq Emerging Cloud Index INSTITUTIONALIZED WITH NASDAQ AS EMCLOUD September, 2018 EMCLOUD 2013 2014 2015 2016 2017 2018 2019 2020 2021
  19. 19. WCLD performance since launch $0 $10 $20 $30 $40 $50 $60 $70 Sep-2019 Dec-2019 Mar-2020 Jun-2020 Sep-2020 Dec-2020 Share Pricing WCLD Feb-2021
  20. 20. WisdomTree Licensed the Index for the WCLD ETF #1 ETF on the NASDAQ for 2020 #2 technology ETF within US technology ETFs for 2020
  21. 21. Introducing our new BVP Cloud Index
  22. 22. 2020 was marked by record-breaking IPO & M&A activity IPOs M&A ACTIVITY
  23. 23. Snowflake massively surpassed VMware’s record as largest software IPO in history Company IPO Date Market Cap at Pricing Snowflake Sep ‘20 VMware Aug ‘07 Zoom Apr ‘19 Dropbox Mar ‘17 ZoomInfo Jun ‘20 Datadog Sep ‘19 CrowdStrike Jun ‘19 $6.7B $7.9B $8.2B $8.3B $9.3B $10.9B $34.0B $0B $5B $10B $15B $20B $25B $30B $35B $40B
  24. 24. 13.5x 13.6x 14.4x 15.1x 17.9x 21.5x 21.8x 22.2x 25.5x 34.8x 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x 40.0x 45.0x Record breaking cloud M&A activity in 2020 with Slack receiving the largest revenue multiple paid in history Multiple (EV/LTM Revenue)
  25. 25. Changing of the guard: MT SAAS overtakes FAANG! MT SAAS, EMCLOUD, FAANG, and Major Indexes Performance since 2020 -50% 0% 50% 100% 150% 200% Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Percent Change EMCLOUD SPX DJI RUT MT SAAS FAANG EMCLOUD Performance: Approx. +130% MT SAAS Performance: Approx. +180% Russell 2000 Performance: Approx. +35% FAANG Performance: Approx. +60% S&P Performance: Approx. +20% Dow Jones Performance: Approx. +10%
  26. 26. COVID-19 more than doubled the rate of digital transformation across different vertical industries
  27. 27. Hello Unicorns Total cumulative value 527 private unicorns $1,964B 100 C100 companies $267B
  28. 28. What is driving theincrease in unicorns? 1. Cloud multiples are going up 2. Cloud companies are growing faster than ever 3. There is more demand than supply for cloud assets
  29. 29. 1. What is driving the increase in unicorns? Cloud multiples are going up 1. 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20 Jun-20 Nov-20 Average PRIVATE PUBLIC EMCLOUD Multiples 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
  30. 30. 1. 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x 35.0x Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Jul-12 Dec-12 May-13 Oct-13 Mar-14 Aug-14 Jan-15 Jun-15 Nov-15 Apr-16 Sep-16 Feb-17 Jul-17 Dec-17 May-18 Oct-18 Mar-19 Aug-19 Jan-20 Jun-20 Nov-20 Average Bottom Quartile Top Quartile PUBLIC PRIVATE EMCLOUD Multiples 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 What is driving the increase in unicorns? Cloud multiples are going up 1.
  31. 31. PUBLIC PRIVATE 9x 8x 11x 13x 23x 2016 2017 2018 2019 2020 Average 150% 2016 to 2020 Cloud 100 Multiples What is driving the increase in unicorns? Cloud multiples are going up 1.
  32. 32. PUBLIC PRIVATE 60% 65% 90% 80% 65% 95% 100% 100% Cloud 100 Growth Rates Average Top quartile What is driving the increase in unicorns? Cloud growth rates have gone up 2. 2017 2018 2019 2020
  33. 33. $14B $186B 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Capital Invested 1200%+ 2010 to 2020 Capital Invested in Private Cloud Companies What is driving the increase in unicorns? There is more demand than supply for cloud assets 3.
  34. 34. What rationalizes these increased valuations?
  35. 35. y = ~0.8x 0% 50% 100% 150% 200% 0% 50% 100% 150% 200% EMCLOUD Growth Endurance (2010-2020) What rationalizes these increased valuations? PRIVATE PUBLIC GROWTH ENDURANCE Current Year’s Growth Rate Last Year’s Growth Rate = Expect public cloud company growth rates this year to be 80% of what they were last year
  36. 36. 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % + PRIVATE PUBLIC DISTRIBUTION What rationalizes these increased valuations? 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % + 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % + 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % +
  37. 37. Leading cloud companies demonstrate unprecedented growth endurance 0 10 20 30 40 50 60 70 80 90 100 110 -1 0 1 2 3 4 Growth Rate (%) Years from IPO 0 10 20 30 40 50 60 70 80 90 100 110 -1 0 1 2 Growth Rate (%) Years from IPO Actual Analyst Actual Analyst
  38. 38. 0 20 40 60 80 100 -1 0 1 2 3 4 0 20 40 60 80 100 -1 0 1 2 Actual Analyst Actual Analyst 0 20 40 60 80 100 -1 0 1 2 3 4 5 Actual Analyst 0 20 40 60 80 100 -1 0 1 2 3 4 Actual Analyst 0 20 40 60 80 100 -1 0 1 2 3 4 5 6 7 8 9 Actual Analyst 0 20 40 60 80 100 -1 0 1 2 3 4 Actual Analyst 0 20 40 60 80 100 -1 0 1 2 Actual Analyst 0 20 40 60 80 100 Actual Analyst -1 0 1 2 3 4 5 6 7 0 20 40 60 80 100 -1 0 1 2 3 4 Actual Analyst
  39. 39. What rationalizes these increased valuations? y = ~0.7x 0% 50% 100% 150% 200% 0% 50% 100% 150% 200% Cloud 100 Growth Endurance 2016-2020 PUBLIC PRIVATE GROWTH ENDURANCE Current Year’s Growth Rate Last Year’s Growth Rate = Expect private cloud company growth rates this year to be 70% of what they were last year
  40. 40. 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % DISTRIBUTION PUBLIC PRIVATE 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % 0% 5% 10% 15% 20% < 3 0 % 3 0 - 4 0 % 4 0 - 5 0 % 5 0 - 6 0 % 6 0 - 7 0 % 7 0 - 8 0 % 8 0 - 9 0 % 9 0 - 1 0 0 % 1 0 0 - 1 1 0 % 1 1 0 - 1 2 0 % 1 2 0 - 1 3 0 % 1 3 0 - 1 4 0 % 1 4 0 - 1 5 0 % 1 5 0 % What rationalizes these increased valuations?
  41. 41. The Good, Better, and Best of Growth Endurance Implications for growth deceleration 0% 50% 100% 150% 200% 250% 300% 350% 1 2 3 4 5 6 7 8 9 10 11 12 Growth Rate Years $1MM ARR BEST: 6 years $100MM ARR BETTER: 7 years $100MM ARR GOOD: 12 years $100MM ARR
  42. 42. Nail it before you scale it! In the New Normal, you really have to nail it before you scale it INITIATION Founder Led Sales TRANSITION Sales Led Sales EXECUTION Scalable S&M
  43. 43. Product-led growth Usage-based pricing Cloud Marketplaces Three GTM strategies top cloud companies employ in The New Normal
  44. 44. 1. Product-led growth Attain market leadership by prioritizing user needs as they grow Karen Peacock, CEO of Intercom “ Connecting the product team with customers was a massive unlock for us and helped to scale us to the upmarket company that we are. And the habit of being product-first persists. It’s in our DNA. “
  45. 45. $1B $2B $6B $17B $21B $41B $97B $211B $687B 2012 2013 2014 2015 2016 2017 2018 2019 2020 Tremendous growth in market cap of public product-led growth companies
  46. 46. 2. Usage-based pricing Pick the usage-based value metric that is predictable and communicates product value “ Startups send notifications to customers on demo day, IPO day and beyond. Providing a reliable product also means offering pricing that reflects the value they receive as they grow. “ Troy Goode, CEO and founder of Courier
  47. 47. 116% 120% 122% 130% 130% 136% 137% 162% 183% 10% Public cloud mean Usage-based mean Companies employing usage-based pricing have best-in-class net dollar retention, leading to a premium in valuations Leverage usage-based pricing to grow with your customers
  48. 48. 3. Cloud marketplaces One of many early adopters to see 10x YoY marketplace growth Eugenio Pace, CEO and co-founder of Auth0 “ Cloud Marketplaces have been a real accelerant for our business as they are helping us close larger deals faster. We have grown the number of deals through marketplace dramatically and are investing more to double down in this exciting channel. “
  49. 49. Digital channels provide promise and cloud marketplaces are the natural option 50% $3B of sales interactions will happen through digital channels by 2025 faster sales cycles through cloud marketplaces predicted revenue through cloud marketplaces in 2021 80%
  50. 50. Aim for a GTM flywheel that creates champions, not a static funnel Champion Captivate Catalyze Cultivate Cycle of creating champions
  51. 51. Fire up the flywheel to drive momentum Champion Captivate Catalyze Cultivate Cycle of creating champions Established a diverse customer advisory board and doubled the number of champions Grew alongside customers by developing proprietary dashboards to help them optimize usage and costs Deployed a remote-first playbook for strategic involvement and virtual enablement trainings focused on scalability and self-sufficiency Provided dedicated support SWAT teams during promotions and upgrades Amplified individual user voices through customer-led marketing initiatives (#ThingsCustomersSay series, Inaugural customer survey) Renewed content marketing with a focus on interactive, educational pieces and thought leadership Shortened time-to-value for customers by 75 days even with a fully-distributed workforce Developed a culture of project partnership with customer-centric product innovation and cross- functional collaboration
  52. 52. Results from Hyperscience’s flywheel 300% YoY ARR growth 10x increase in platform usage 140% overall account growth 170% net ARR retention Peter Brodsky, CEO and Co-Founder of Hyperscience
  53. 53. 1. Unbundling of the Office 2. We’re bringing S-M-B back with SaaS 3. Diversity, equity, and inclusion software take their rightful place 4. Data and machine learning infrastructure accelerates to new heights 5. The rise of the “citizen” developer and creator 6. Fintech and crypto players are changing financial services forever 7. The vertical SaaS wave becomes a tsunami 2021 Predictions
  54. 54. Prediction 1: The unbundling of the Office CALENDARS PROJECT MANAGEMENT VIRTUAL OFFICE/TEAM ROOM EMAILS/MESSAGING EVENTS COLLABORATIONS
  55. 55. Prediction 2: We’re bringing S-M-B back with SaaS SALES & MARKETING VERTICAL IT/OPS CUSTOMER HR FINANCE/LEGAL
  56. 56. Prediction 3: Diversity, equity, and inclusion software take their rightful place DATA TRACKING/TALENT MANAGEMENT DEI CULTURE TRAINING & EDICATION REPORTING RECRUITING
  57. 57. Prediction 4: Data and machine learning infrastructure accelerates to new heights AI/ML OPS DATA MONITORING DATA VISUALIZATION DATA PIPELINE DATA MANAGEMENT/ GOVERNANCE DATA ANALYTICS/SCIENCE
  58. 58. Prediction 5: The rise of the “citizen” developer and creator NO CODE/LOW-CODE APP-BUILDING TOOLS CREATOR EMPOWEREMENT TOOLS
  59. 59. Prediction 6: Fintech and crypto players are changing financial services forever BANKING-AS-A-SERVICE & CARD ISSUANCE B2C & B2B LENDING IDENTITY / FRAUD B2C & B2B PAYMENTS BROKERAGE / WEALTH MGMT CRYPTO
  60. 60. Prediction 7: The vertical SaaS wave becomes a tsunami AUTO REPAIR SALON & SPA FIELD SERVICES EDUCATION CONSTRUCTION LEGAL RESTAURANT NETWORKING BANKING DENTAL USED CAR AUCTION EARLY EDUCATION REAL ESTATE PUBLIC SECTOR HEALTHCARE BARBERSHOP REAL ESTATE AGENTS
  61. 61. State of the Cloud 2021 Top takeaways 1. Cloud companies have not just reset in the New Normal, but have thrived (record-breaking market cap of $2 trillion) 2. Changing of the guard: MT SAAS has overtaken FAANG 4. Cloud growth rates and access to capital are at all-time highs, with the average Cloud 100 company growing 80% YoY and $186 billion going into private cloud companies in 2020 alone 3. Cloud multiples are rising to new heights, with both public and private cloud trading for over 20x 5. Good-better-best of growth endurance is 70%-75%-80% 6. GTM strategies have adapted to the New Normal; best practices include product-led growth, usage-based pricing, and the adoption of cloud marketplaces
  62. 62. Even in the New Normal, we’re living in a cloud first world. Byron Deeter PARTNER @bdeeter Elliott Robinson PARTNER @TheValuesVC Mary D’Onofrio PARTNER @mcadonofrio
  63. 63. Go to bvp.com/cloud State of the Cloud 2021 Get the full report Book Giveaway! 1. Read State of the Cloud 2021 2. Share your favorite insight on social and tag @BessemerVP 3. First 100 to sign up at the bottom of the report will get a free copy of Ask Your Developer! The New Cloud Index bvp.com/cloudindex
  64. 64. Thank You bvp.com/cloud @BessemerVP
  65. 65. 71 / Confidential and Not for Distribution Footnotes/sources Slide 5: CapIQ. Performance measured from January 2020 until March 2020. Slide 10: Statistics from EHRN.org Slide 11: US Census Slide 13: USC Farnham Research Slide 16: Cap IQ, Feb 2020 Slide 17-19: Cap IQ, Feb 2021 Slide 20: Canalys; SEC Form 10-K Filings Slide 21: BVP Nasdaq Emerging Cloud Index Slide 22: BVP Nasdaq Emerging Cloud Index Slide 23: WisdomTree WCLD Slide 24: WisdomTree WCLD Slide 25: BVP Nasdaq Emerging Cloud Index Slide 27 - 28: CapIQ and Morgan Stanley Data pack Slide 29: CapIQ, FAANG and MT SAAS equal-weighted to 1/1/2010. Performance measured since January 2020 until February 2021. Slide 34-35: CapIQ, including all past and present cloud index companies since January 2010 until February 2021. Slide 36: Forbes Cloud 100 data from 2016-2020. Slide 37: Forbes Cloud 100 data from 2016-2020. Slide 38: Pitchbook, includes capital invested in all privately-backed companies tagged with SaaS with deal announced between 1-Jan-2010 and 31-Dec-2020 Slide 40-41: CapIQ, includes all years’ growth endurance data for past and present cloud index companies since January 2010 until February 2021. Slide 42-43: CapIQ, including company filings and reports from Barclays, Credit Suisse, JP Morgan, Canaccord Slide 44-45: Forbes Cloud 100 data from 2016-2020 Slide 50: CapIQ; Bessemer Venture Partners analysis; logos displayed for year companies went public Slide 52: SEC Form 10-K Filings for companies that went public in the last five years; Bessemer Venture Partners analysis Slide 54: Gartner; Crowdstrike quarterly earnings call; Bessemer Venture Partners analysis

×