SurePath Capital State of SMB Software - Q2 2019

THE STATE OF SMB SOFTWARE
A look at Q2 2019’s fundraising and exit trends among
North American SMB software companies
Q2
2019

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STATE OF SMB SOFTWARE - Q2 2019
surepathcapital.com
T a b l e o f C o n t e n t s
01 Introduction
02 Lessons and Takeaways
03 Methodology and Scope
04 Venture Capital (VC) Deals
05 Private Equity (PE) Deals
06 Mergers & Acquisitions (M&A)
07 IPOs
08 Public Market Activity
2

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S u r e P a t h : O u r P u r p o s e
H e lp in g f u n d , g r o w , a n d e x it S M B s o f t w a r e c o m p a n ie s
The process of raising growth capital is very different from raising early stage capital
It is cheaper than ever to start companies, but more expensive than ever to build market leaders. If that’s
your aspiration, you need growth capital
We help you prepare for growth stage and help you raise the capital needed to become a market leader
Growth
Funding
We have sat on both sides of the table. We have funded, grown and exited many companies
We remain in touch with our clients between transactions to provide ongoing advice and intros.
A low touch, high impact way to help you grow
Strategic
Guidance
There are few credible choices for advisors to facilitate sub $100M exits. We fill that gap
We work with you to facilitate the BD and Corp Dev intros that pave the way to an eventual exit
No other investment banking firm has the depth of our relationships in the SMB world
Exits
3
SurePath maximizes your optionality:
We make sure you know what it takes to build a market leader and capitalize you towards that goal.
We ensure you are always in the minds of strategic buyers so that if they decide to make a move in your space, you are in
the conversation. You can then decide; Keep going or exit?

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S u r e P a t h a n d S M B
Business Management E-Commerce
CRMMarketing Tech
Payments
We have been part of some the most successful SMB SaaS companies
We have deep relationships with SMB investors and buyers
SurePath is committed to becoming the leading strategic financial advisor to the global SMB software market
4

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T h e S u r e P a t h T e a m
The SurePath team has over 30 years of experience in operating, growing, investing, buying, and selling SMB software companies.
MARK MACLEOD
FOUNDER
JOSH SCHERMAN
VICE PRESIDENT
DANIAL SHAIKH
ASSOCIATE
SARAH NASSER
RESEARCH ANALYST
SARA DEFINA
ANALYST
ERIK MOSNEY
ANALYST
KJ LEE
ANALYST
5

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R e c e n t S u r e P a t h D e a l s
served as the exclusive strategic
and financial advisor to
on its growth
financing led by
USD $60,000,000
on its growth
financing led by
CAD $115,000,000
on its sale to
on its sale to
on its growth
financing led by
USD $11,800,000
a wholly-owned subsidiary of
on its sale to
on its sale to
on its growth
financing led by
USD $32,000,000
on its sale to
6

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T h e S t a t e o f S M B S o f t w a r e i n Q 2 2 0 1 9
7
Welcome to our third annual State of SMB Software Report, looking at fundraising and exit activity in the
Small and Mid-Sized Business (SMB) software space in North America. To isolate the SMB deal activity,
we analyzed over 980 deals narrowing them down to 247 venture deals, 6 PE Growth and Buyout/LBO
deals, 17 M&A deals, and 4 IPOs representing ~$17B in deal proceeds to SMB software companies.
We track SMB software companies across three broad categories: Grow my Business (front office), Run
my Business (middle office) and Track my Business (back office).
We have expanded on our usual coverage by unpacking the biggest trends that we saw this past
quarter.
We hope you find this report useful and invite you to get in touch to discuss it with us.
The SurePath team
July 2019

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Total deal value down over 50% from Q1 but up ~2.5x over Q2 2018. Deal volume was consistent across both
quarters in the first half of 2019 recording more than 240 transactions in each.
A historic quarter for SMB Accounting/Invoicing software: The Accounting/Invoicing vertical attracted ~7x
more VC funding than the average total deal value over the past 5 quarters and had ~$2.1B of M&A activity
across 4 deals. This included H&R Block’s $405M acquisition of Wave. Although frequently overshadowed by
front office solutions, the back-office problems of SMBs present an opportunity that investors can’t pass up.
Restaurant tech continues to gain momentum: The most prominent vertical theme across the State of SMB
Software reports since inception has been the funding magnet that is the Restaurant Tech vertical. The
amount of investment fueled innovation within this age-old industry is head and shoulders above any other
vertical in the SMB space yet again in Q2 2019.
4 IPOs completed – 1 more filed: 18-year-old customer intelligence powerhouse Medallia is set to IPO in early
Q3 2019, riding the coat tails of a star-studded first half of the year including public offerings from Slack, Zoom,
PagerDuty, Lightspeed and Pinterest.
BI/Analytics deal activity is alive and well: There are several enterprise/mid-market business intelligence exits
happening in 2019, primarily through strategic M&A, including powerhouses like Looker, Tableau and
Periscope Data. With this amount of consolidation in 1H 2019, companies on the SMB side of the BI spectrum
should be thinking about where they fit into the altered landscape and what an exit looks like for them.
Bulge bracket banks make bets on SMB software: Both Morgan Stanley and JPMorgan made significant
investments in SMB software companies in Q2 2019 spending over $1.4B USD together.
9
K e y T a k e a w a y s

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The Accounting/Invoicing vertical attracted ~7x more capital than the average total deal value for the same vertical
over the past 5 quarters with Carta, Divvy and Restaurant365 deals surpassing past performance individually. With
high volumes of capital being pushed into front office solutions, the back-office opportunity has long been ignored.
1. Source: Pitchbook
2. Deal count excludes deals involving accelerators, incubators, crowdfunding and deals with undisclosed values.
10
$300M
$200M
$88M
$40M
$20M
$8M
$7M
$2M
$2M
Q2 2019 Capital Raise by Accounting and Invoicing
Carta Divvy Restaurant365
Pilot Procurify Technologies xtraCHEF
Roger Back Office Keeper Tax
$118M
$129M
$63M
$42M
$109M
$666M
11
9
6
6
6
9
0
2
4
6
8
10
12
-
$100M
$200M
$300M
$400M
$500M
$600M
$700M
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019
DealCount
CapitalRaised(inmillions,$USD)
Capital Raised by Quarter for Accounting and Invoicing
Capital Raised Deal Count
V C p i c k s - u p f o r A c c o u n t i n g / I n v o i c i n g

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Many SMBs hesitate to purchase accounting software due to its complexity and the amount of accounting
knowledge required. New solutions are successfully managing complexity and functionality while building easy-to-use
/ do-it-for-me platforms targeting the 22.8M SMBs using an outdated, inappropriate, or non-existent solution. Simple
solutions are here to stay in the SMB market: why not build a lasting product for 22.8M underserved businesses?
C l o u d a c c o u n t i n g f o r S M B s p r e s e n t s a
s u b s t a n t i a l o p p o r t u n i t y f o r s m a l l e r p l a y e r s
11
28.8M
0.7M 0.3M 0.1M 0.1M
0.0M
5.0M
10.0M
15.0M
20.0M
25.0M
30.0M
<10 11 to 25 25 to 50 51 to 100 101+
Number of SMB by Employee Size
Employee Size <10 10 to 100 101+
Incumbent
Challenger
7.0M
0.2M
22.8M
Number of SMBs in North America
Intuit Xero Opportunity

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- Founded in 1955, Kansas City, Missouri
- $3.1B Revenue in 2019
- 25.% EBITDA Margin in 2019
- $95M Capital Expenditure in 2019
- 11,000 company owned retail offices with
over 23 million tax returned prepared in 2019
H & R B l o c k a c q u i r e s W a v e f o r $ 4 0 5 M t o
b e t t e r s e r v e S M B s o u t s i d e o f t a x - s e a s o n
12
Transaction Summary
• On June 11, 2019 H&R Block announced that they have
entered into a definitive agreement to acquire Wave. H&R
Block will use its available cash to acquire all outstanding
shares of Wave for $405 million USD.
• The acquisition will accelerate H&R’s SMB strategy and expand
product offering for its SMB users
• Upon completion of the acquisition, Wave will continue to
operate independently from its Toronto office.
• The acquisition is still subject to regulatory approval and
customer closing conditions
Transaction Rationale
1. Enables H&R Block to better compete with Intuit - their primary
competitor
2. Leverage H&R Block’s existing retail network to grow Wave
Plus
3. Leverage Wave's organic growth engine to monetize users
through Payments and other Wave Products, and use cross-
selling capability to sell tax
4. Offer year-round value to SMB customers since tax is seasonal
- Founded in 2009, Toronto, Canada
- 400,000 active customers – 60% in North
America, majority in US
- >80% signups through unpaid channels
- 25 consecutive quarters of growth
- $50M CAD estimated Revenue
- Global company, headquartered in NA
- Revenue Growth of 1.5% to 3.5%
- Wave contributes $40 to $45M Revenue
- EBITDA Margin of 24% to 26%
- Cross sell H&R services to Wave’s NA users
- Expand product offering beyond accounting,
tax, and bookkeeping
Combined
Company
1. Source: Deal press release, BetaKit

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R e s t a u r a n t T e c h ’ s a c c e l e r a t i n g V C f u n d i n g
m o m e n t u m c o n t i n u e s i n t o 2 0 1 9
13
$2,674M
$2,882M
$813M
$1,037M
-
$500M
$1,000M
$1,500M
$2,000M
$2,500M
$3,000M
$3,500M
$4,000M
$4,500M
FY 2018 1H 2019
VC Raised for Restaurant Tech vs. Other Verticals
Other Restaruant Tech
$2,674M
$2,882M
$2,550M
$2,600M
$2,650M
$2,700M
$2,750M
$2,800M
$2,850M
$2,900M
Largest Restaurant Tech Raises since Q1 2018
$400M Q1 2019 Series F
$250M Q3 2018 Series E
$250M Q1 2019 Series E
$150M Q2 2019 Series D1
$115M Q3 2018 Series D
$100M Q2 2018 Series D
$88M Q2 2019 Series C
$70M Ritual Q2 2018 Series C
$55M Ritual Q2 2018 Series D
$50M Good Eggs Q2 2018 Series BB
$30M Presto Q1 2019 Later Stage
12.3%
26.5%
In the first half of 2019, SMB software companies focused on the restaurant vertical have already raised more money
than they did for all of 2018. The restaurant vertical accounts for ¼ of all vertical-specific VC $ . Early industry leaders
such as DoorDash, Toast and ezCater have raised over $1.2B since Q1 2018 while 57 other VC deals in the restaurant
vertical have raised a combined $585M.

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U p - m a r k e t B I l a n d s c a p e i s c h a n g i n g w i t h
r e c e n t M & A a c t i v i t y ; S M B i s u p f o r g r a b s
14
Looker, Tableau and Periscope Data have all been acquired by strategic buyers in 2019 . This dramatically changes
the BI landscape moving forward. On the SMB side of the spectrum, established leaders such as Klipfolio and Chartio
battle with the “SMB” offerings from more enterprise focused operators. We expect to see consolidation in the SMB
end of this market.
1. Based on G2Crowd Best Business Intelligence Platforms Grid
Enterprise Focus Mid-Market Focus Small Business Focus
Leaders
Contenders

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• Solium Capital, now operating as Shareworks by Morgan Stanley, is a Calgary, Alberta-based provider
of technology and services supporting the administration of equity-based incentive plans. The company
was acquired by Morgan Stanley (NYS: MS) for $844M USD on May 1, 2019.
• The company provides web-based and cloud-enabled services for administration, financial reporting
and regulatory compliance related to equity plans. Solium generates revenue through recurring license
and subscription fees, and from transaction-based fees.
• The acquisition provides Morgan Stanley with broader access to corporate clients and a direct channel
to their employees, as well as a greater opportunity to establish and develop relationships with a
younger demographic and service this population early in their wealth accumulation years.
B u l g e b r a c k e t b a n k s b u y i n g i n t o S M B t e c h
15
• InstaMed is a Philadelphia-based payments network provider designed to connect providers, payers
and consumers on one cloud-based platform. The company reached a definitive agreement to be
acquired by JPMorgan Chase for $600M USD on May 17, 2019.
• The company's payments network reduces the risks, costs and complexities of working with multiple
payment vendors by delivering one platform for all forms of payment in healthcare. The company
serves health care providers from large hospital groups to small doctor practices as well as most U.S.
health plan insurers.
• The acquisition is an effort to expand the JPMorgan’s suite of payment services designed specifically for
healthcare and support the existing InstaMed network with their payments expertise.
In the same quarter where Carta raises $300M as an equity management platform, Morgan Stanley acquires equity
management platform Solium Capital and internalizes their SaaS offering. JPMorgan plans to leverage payments
expertise within the InstaMed network to simplify and facilitate payments for US healthcare providers of all shapes and
sizes. With over $1.4B invested between these two banks Q2, these are not small bets on the growth potential of the
acquired offerings in the SMB software space.

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In Q2 2019, there were over 980 deals in the B2B
software space, globally.
785 deals were in North America
275 deals (247 venture deals, 17
M&A deals, 6 PE/Buyout/LBO
deals, and 4 IPOs) involved
companies with a clear SMB
software offering
17
M e t h o d o l o g y

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Beginning in 2019, we updated our approach for tracking SMB software companies. While we continue
to track SMB software companies across three broad categories of Grow my Business (front office), Run
my Business (middle office) and Track my Business (back office), we have re-assessed and expanded
our sub-categories within each them as follows:
2 0 1 9 C h a n g e s t o S M B C a t e g o r i z a t i o n
Grow My Business
Sales Tech
Marketing Tech
Advertising Tech
E-Commerce
Social Media Management
Marketplace
Run My Business
HR Tech
Security / IT
Business Management / ERP
Practice Management
Productivity
Reputation Management
Booking
Customer Support
Websites
Member Management
Keep Track of My
Business
Accounting & Invoicing
Payments
18

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Q 2 2 0 1 9 S M B S o f t w a r e D e a l L a n d s c a p e
$5,598M
$4,181M
$76M
$6,954M
$179M $269M
Total Capital Invested by Deal Type
Merger/Acquisition Early/Late Stage VC Buyout/LBO
IPO Angel/Seed PE Growth/Expansion
$2M $27M $67M
$1,738M
$329M
$38M
92
155
4
4
17
2
0
50
100
150
200
250
300
350
400
$0M
$200M
$400M
$600M
$800M
$1,000M
$1,200M
$1,400M
$1,600M
$1,800M
$2,000M
A
ngel/See
d
Ea
rly/La
te
Sta
ge
V
C
PE
G
row
th/Exp
ansion
IPO
M
erger/A
cq
uisition
Buyout/LBO
DealCount
AverageDealSize(inmillions,USD)
Average Deal Size by Deal Type
Average Deal Size Deal Count
19
~$17B of capital was deployed across 274 deals in Q2 2019 – less than half of the deal value seen in Q1 2019 but
~2.5x the deal value realized in Q2 2018. Of the capital deployed in Q2 2019, nearly ~73% of the capital invested
came from M&A/PE/IPO exit activity (~$13B across 27 deals). From a deal volume perspective, early and late stage
venture capital raises accounted for the largest deal category.

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© GeoNames, HERE, MSFT
Powered by Bing
AR
0.4%
AZ
2.3%
CO
5.1%
FL
2.7%
GA
2.7%
IL
3.5%
IN
0.8%
MN
0.8%
MO
0.4%
NC
1.2%
OH
0.4%
OR
0.8%
PA
1.6%
SC
1.2%
TN
2.0%
TX
3.9%
UT
2.0%
VA
1.6%
WA
4.7%
KY
0.4%
OK
0.4%
WI
0.4%
CA
39.8%
NY
12.1%
0.0%
39.8%
% of Total Deals
Q 2 2 0 1 9 S M B S o f t w a r e D e a l s b y S t a t e
Naturally, California saw the most deal activity representing ~40% of all deals, followed by New York which
represented ~12% of all deal. Colorado, Washington and Texas have been consistently contributing ~4-5% of deal
volume respectively over the past few quarters.

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Q 2 2 0 1 9 ’ s T o p S M B S o f t w a r e R a i s e s
$150M The Raine Group
$149M Greenoaks Capital Partners / GV / Index
Ventures / Scale Partners / IVP
$120M Hercules Capital
$120M Insight Partners / Samsung / NextEquity
Partners / Data Collective / others
$114M Lone Pine Capital / M12 / Four Rivers / DFJ
Growth / Spark Capital / Sapphire / others
$300M Andreessen Horowitz / Goldman Sachs / SGH
Capital / Thrive Capital / Lava Walk / others
$260M Coatue / CommerzVentures / Visa / IA
Capital / Spark Capital / ICONIQ / others
$200M New Enterprise Associates / Insight Partners /
Pelion Partners
$150M Summit Partners / Acadian Software
$150M Lightspeed Partners / GIC Private / Insight
Partners / Quadrille Capital / others
21

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S M B V e n t u r e F u n d i n g i n Q 2 2 0 1 9
$52M
$127M
$1,051M
$3,130M
41
51
93
62
0
10
20
30
40
50
60
70
80
90
100
-
$500M
$1,000M
$1,500M
$2,000M
$2,500M
$3,000M
$3,500M
Angel Seed Round Early Stage VC Later Stage VC
DealCount
Capital Raised by Venture Deal Type
Capital Raised Deal Count
247 SMB software companies raised venture capital in Q2 2019 – almost the exact same amount of deal volume seen
in Q1. ~63% of the deal volume and ~96% of deal value was in early and later stage VC investments. The average
round was ~$11M for early stage and ~$50M for later stage.
22

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84
18
145
$1,410M
$995M
$1,955M
Grow My Business
Keep Track of My Business
Run My Business
V e n t u r e D e a l s b y C a t e g o r y
Outer ring represents total
capital invested by
category and inner ring
represents total deal count
by category
We track SMB software
companies across three
broad categories:
• Grow my Business:
Marketing / front office
• Run my Business:
Typically vertical apps
to help operate
(business management,
ERP, etc.)
• Track my Business:
Billing, accounting, etc.
23
SMB software companies raised ~$4.4B across 247 deals in Q2 2019. Of those, companies that helped SMBs grow and
run their business attracted ~77% of deal value ~93% of deal volume in the SMB software space.

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9
56
27
17
24
9
26
27
14
12
8
7 2 4 212
$666M
$635M
$633M
$588M
$416M
$329M
$297M
$249M
$226M
$141M
$60M
$57M
$24M
$19M $11M $8M
$2M
Accounting/Invoicing
Business Management/ERP
Mar Tech
Security/IT
Sales Tech
Payments
Productivity
HR Tech
Marketplace
Customer Support
E-Commerce
Ad Tech
Member Management
Social Media Management
Reputation Management
Booking
Practice Management
V e n t u r e D e a l s b y C a t e g o r y ( c o n t . )
24
Amongst our 16 SMB software categories, Accounting/Invoicing companies attracted the highest amount of VC in
Q2 2019 – slightly edging the usual Business Management/ERP thanks to large raises from Carta and Divvy. Business
Management/ERP had higher deal volume in Q2 vs. Q1 2019 when they led the field.

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161
48
38
$6,948M
$677M
$1,327MBoth
Medium
Small
V e n t u r e D e a l s b y T a r g e t C u s t o m e r
25
~65% of venture funding in Q2 2019 went to companies with a broad offering for both the small and medium segments
of the SMB software space – a similar proportion to that realized throughout 2017, 2018 and Q1 2019. Having offerings
for both small and larger businesses gives vendors the ability to satisfy the needs of a broader market and grow with
their customers.

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V e r t i c a l - S p e c i f i c V e n t u r e D e a l s
12
3
2
7
5
2
2
12
8
5
41
$330M
$151M
$120M
$90M
$73M
$60M
$58M
$55M
$53M
$41M
$182M
Restaurant Tech
Logistics
Home Services
Construction
Software Development
Legal
Salons & Spas
Real Estate
Retail
Health and Wellness
Other
26
Across 26-disctinct verticals, we saw 99 deals with a total of ~$1.2B raised in Q2 2019. Top 10 verticals represented
~85% of vertical-specific deal value and ~58% of volume, largely consistent with what we saw in Q1 2019. Restaurant-
Tech is the clear winner for vertical specific investment as VCs back their horses in the race to be market leader.

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Q 2 2 0 1 9 P E S M B D e a l s
27
$20M Nadavon Partners / Bellwether Financial
Recapitalization
$14M Wavecrest / MassMutual / Migration Capital
Growth/Expansion
$2.5M Undisclosed
Growth/Expansion
$165M Standard Chartered / MUFG / others
Growth/Expansion
$88M FleetCor / MasterCard / Fidelity / others
Growth/Expansion
$56M Sumeru Equity Partners
Buyout/LBO

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P E G r o w t h / B u y o u t D e a l s b y C a t e g o r y
3
2
1
$241M
$102M
$2MRun My Business
Grow My Business
28
In Q2 2019, private equity investors deployed ~345M of capital into companies serving the SMB space which was very
light relative to past quarters including $3.1B deployed in Q1 2019. Q1 deal value from PEs were somewhat inflated
due to the large LBO’s of Chrome River and MindBody.

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1
2
1
1
1
$165M
$102M
$56M
$20M
$2MProductivity
HR Tech
Practice Management
Mar Tech
P E G r o w t h / B u y o u t D e a l s b y C a t e g o r y ( c o n t . )
SMB software companies funded or acquired by private equity investors fell across a broad range of categories in
Q2 2019 with Productivity and Accounting/Invoicing leading the way on deal value via Symphony Communication
Services and Bill.com transactions
29

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P E G r o w t h / B u y o u t D e a l s b y T a r g e t C u s t o m e r
4
1
1
$237M
$88M
$20MBoth
Medium
Small
30
2/3 of private equity deal volume in Q2 2019 went to companies with a broad offering for both the small and medium
segments of the SMB software space. This trend is logical as PEs generally target mature companies with a offerings
across the SMB spectrum rather than a growth stage company who has traction in a single market segment.

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Q 2 2 0 1 9 S M B S o f t w a r e M & A D e a l s
$2.6B 100% Acquired by Google
Announced
$844M 100% Acquired by Morgan Stanley
Completed
$600M 100% Acquired by JPMorgan Chase
Announced
$405M 100% Acquired by H&R Block
Completed
$350M 100% Acquired by Solarwinds
Announced
$320M 100% Acquired by Lear
Completed
$70M 100% Acquired by PayU
Completed
$64M Merged with NXGEN Payment Services
Completed
$57M
Heath/benefit business Acquired by Morneau
Shepell
Announced
$50M 100% Acquired by Upland Software
Announced
31

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5
6
6
$2,795M
$2,303M
$501M
Grow My Business
Run My Business
M & A D e a l s b y C a t e g o r y
2. Deal count excludes deals with undisclosed values.
32
The cumulative value of all mergers and acquisitions (with disclosed proceeds) in the SMB software space in Q2
was ~$5. 6B across 17 deals. Q2 saw a drop off from the ~$24.6B of deal value realized in Q1 2019 but actually had
more than 2x the deal value vs. Q1 after adjusting for Fiserv’s acquisition of First Data in January.

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4
4
1
2
1
2
2
1
$2,695M
$2,169M
$350M
$134M
$100M $59M $5M
Mar Tech
Productivity
Payments
Sales Tech
HR Tech
Security/IT
Customer Support
M & A D e a l s b y C a t e g o r y ( c o n t . )
33
Companies with Mar Tech and Accounting/Invoicing offerings were involved in the highest volume of M&A of deals
in Q2 2019 accounting for ~$4.9B of deal value over 8 transactions – inflated by Looker’s ~$2.6B acquisition. Again,
we find the Accounting/Invoicing vertical being highlighted in the M&A data just as we saw in the VC data.

SUREPATH INSIGHTS
surepathcapital.com
15
2
$5,543M
$55M
Both
Medium
M & A D e a l s b y T a r g e t C u s t o m e r
34
~90% of M&A activity in Q2 2019 involved companies with a broad offering for both the small and medium segments
of the SMB software space - consistent with what we’ve seen historically. In general, a more mature company with a
robust offering to a broad range of SMB markets is a more attractive target for M&A.

SUREPATH INSIGHTS
surepathcapital.com
1. Slack, Pinterest, PagerDuty and Zoom filed for IPO in Q1 2019 but completed the their respective listings in Q2 2019; Amount Raised/Expected represents amount raised for these companies
IPO/Filing Date June 21 June 20 April 11 April 18 April 18
Status Filed Complete Complete Complete Complete
Amount Raised/Expected $247M $4.6B $218M $1.4B $751M
Age at IPO 18 Years 10 Years 10 Years 9 Years 8 Years
Annual Revenue at IPO $314M $221M $79.6M $756M $331M
Headcount at IPO 1,258 1,000 524 1,600 1,700
Pre-IPO Investors
Saints Capital,
Sequoia, TriplePoint
Venture Growth
Accel, Andreessen
Horowitz, M13 , SV
Angel, Social +
Capital, GV, Kleiner
Perkins
Andreessen Horowitz,
Bessemer, Y Ventures,
Ignition, Y
Combinator, Accel, T.
Rowe
Andreessen Horowitz,
Bessemer, NY Angels,
Acequia, SV Angel,
EventBrite, Rakuten
TSVC Capital,
Qualcomm,
Facebook, Horizons,
Emergence, Sequoia
Q 2 2 0 1 9 ’ s S M B S o f t w a r e I P O s
(NYSE:WORK) (NYSE:PD) (NYSE:PINS) (NAS:ZM)
35
(NYSE:MDLA)

SUREPATH INSIGHTS
surepathcapital.com
SMB is
our
focus
Our
clients
serve
SMBs
Many
other
indices
The first
to see
trends
Introduced in 2016, the SurePath SMB Index originally tracked 35 publicly traded companies that serve the SMB
market and their performance against other benchmark indices. Over time, as companies in the index have been
acquired, and other relevant companies have publicly listed, the current number of constituents is 37.
Examined 280+ Annual Reports of Publicly
Traded Companies
Selection of Companies for SMB
Focus
SurePath SMB Index
T h e S u r e P a t h S M B I n d e x
Final Selection of 37
Companies
37

SUREPATH INSIGHTS
surepathcapital.com
2 0 1 9 C h a n g e s t o S M B I n d e x
During the first quarter of 2019 we added 6 relevant companies that IPOed. These are companies that are making it
easier for SMBs to move faster (Dropbox and DocuSign), gather feedback from customers and employees
(SurveyMonkey), improve the current and prospective employee experience (Ceridian), sell to customers easier and
more efficiently (Lightspeed), and more.
8 of the original constituents of our SMB Software Index were removed during this period following the completion of
their acquisition. ShoreTel (acquired by Mitel), Web.com (acquired by Sirus Capital), FirstData (acquired by Fiserv),
and Mindbody (acquired by Vista Equity Partners).
38

SUREPATH INSIGHTS
surepathcapital.com
I n d e x C o n s t i t u e n t s
39

SUREPATH INSIGHTS
surepathcapital.com
80%
100%
120%
140%
160%
180%
200%
220%
240%
260%
01-04-16
03-04-16
05-04-16
07-04-16
09-04-16
11-04-16
01-04-17
03-04-17
05-04-17
07-04-17
09-04-17
11-04-17
01-04-18
03-04-18
05-04-18
07-04-18
09-04-18
11-04-18
01-04-19
03-04-19
05-04-19
07-04-19
SurePath SMB Index S&P 500 Nasdaq Dow Jones
S u r e P a t h S M B S o f t w a r e I n d e x S u m m a r y
40
Company Ticker
Market Cap
(billions)
Automatic Data Processing, Inc. ADP $71.74
Intuit Inc. INTU $70.14
Shopify Inc. SHOP $35.31
Atlassian Corporation Plc TEAM $32.57
Square, Inc. SQ $31.43
Paychex, Inc. PAYX $30.66
Paycom Software, Inc. PAYC $14.00
GoDaddy Inc. GDDY $12.71
Sage Group plc LON:SGE $11.08
Dropbox DBX $10.35
Zendesk, Inc. ZEN $10.07
RingCentral, Inc. RNG $9.68
DocuSign DOCU $9.07
HubSpot, Inc. HUBS $7.43
Ceridian CDAY $7.30
Wix.com Ltd. WIX $7.17
GrubHub Inc. GRUB $7.10
ANGI Homeservices Inc. ANGI $6.55
Xero Limited. ASX:XRO $6.24
H&R Block, Inc. HRB $5.82
LendingTree, Inc. TREE $5.35
New Relic, Inc. NEWR $5.32
AppFolio, Inc. APPF $3.51
Qualys, Inc. QLYS $3.46
Cimpress N.V. CMPR $2.87
Yelp Inc. YELP $2.70
LightSpeed POS LSPD $2.63
SurveyMonkey SVMK $2.17
Groupon, Inc. GRPN $2.03
Deluxe Corp. DLX $1.79
Shutterstock, Inc. SSTK $1.35
Eventbrite EB $1.33
LendingClub Corporation LC $1.33
Carbonite, Inc. CARB $0.88
Stamps.com Inc. STMP $0.80
Endurance International Group Holdings, Inc. EIGI $0.71
Marchex, Inc. MCHX $0.20
Market Cap by Index Constituents (in US$ b)
$1bn Market Cap Club (in Grey)
Despite overall volatility in Q2 the SurePath SMB index
outperformed the general market - appreciating by 21% vs.
an average of 6% for the benchmark indices

SUREPATH INSIGHTS
surepathcapital.com
Q 2 2 0 1 9 P e r f o r m a n c e b y C o n s t i t u e n t
41
Lightspeed POS leads the pack after it’s March 2019 IPO, appreciating 73.5% through Q2 with Shopify and AppFolio
trailing close behind as larger cap companies. Amongst the bottom performers, Endurance International depreciated
35.4%, driven down primarily by its quarterly revenues, missing analyst expectations. There is an increase in short
interest in the company.

SUREPATH INSIGHTS
surepathcapital.com
The Leading Financial Advisor in SMB Software
EXPERIENCE
Funding, growing & exiting tech companies
PEDIGREE
Alumni of Constant Contact, FreshBooks, Shopify…
ACCESS
To Tier 1 investors & strategic partners
FOCUS
The only advisor with a dedicated focus on SMB Software
COMMITMENT
Helping our clients and their investors succeed
T h e S u r e P a t h D i f f e r e n c e

Toronto • San Francisco
Mark MacLeod
Founder & President
mark@surepathcapital.com
416.843.6004
Josh Scherman
Vice-President
josh@surepathcapital.com
646.420.0074
Danial Shaikh
Associate
danial@surepathcapital.com
647.876.5453
Sara Defina
Analyst
sara@surepathcapital.com
416.689.2474
KJ Lee
Analyst
KJ@surepathcapital.com
647.500.3457
Erik Mosney
Analyst
erik@surepathcapital.com
519.239.5759
Sarah Nasser
Research Analyst
sarah@surepathcapital.com
437.225.3484
43

SurePath Capital State of SMB Software - Q2 2019

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SurePath Capital State of SMB Software - Q2 2019