Byron Deeter of Bessemer Venture Partners has an excellent slide deck titled State of the Cloud Report 2018. Byron and his team do an excellent job reviewing trends in the industry and predicting the next big areas for cloud-enabled B2B software.
Some notes:
- Five largest companies in the world by market cap are tech companies
- IPOs are sill below historical norm
- Public cloud companies outperform the overall market
- Many private companies are getting premiums compared to public companies due to faster growth rates
- VC-backed startups exits have gone down the last three years
- ARR growth rate from $1M to $10M is a major indicator (best is doing it in two years)
- ARR Multiple divided by Year-over-Year (YoY) annual growth has stayed constant
- Example: 10x ARR multiple divided by 150% YoY growth would be an ARRG value of 6.7x
- Best valuations for SaaS startups as follows:
- CARR revenue growth of 200% (e.g. tripled ARR in last 12 months)
- CAC payback < 12 months
- Churn is net negative
- Cash flow efficiency > 1
- Predictions:
- Rise of serverless computing
- API’s drive innovation
- Blockchains finds a home in the enterprise
- Payments-as-a-service
- The move from system of record to system of results
- The screenless software movement
- Values create value
- The cloud is flat; innovation outside the Valley
Interested in SaaS? Head over and read State of the Cloud Report 2018.
David Cummings on Startups 