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State Of The Cloud 2019
BYRON DEETER
Partner
BVP
@bdeeter
KRISTINA SHEN
Partner
BVP
@kshenster
ANNA KHAN
Vice President
BVP
@annarchyy
Byron Deeter
Partner
BVP
@bdeeter
Kristina Shen
Partner
BVP
@kshenster
State Of The Cloud 2019
www.bvp.com/cloud
Anna Khan
Vice President
BVP
@annarchyy
BESSEMER’S
TOP 10 LAWS
OF CLOUD
COMPUTING
2008
0
HOW MANY $1B+
PRIVATE CLOUD
COMPANIES ARE
THERE, TODAY?
HOW MANY $1B+
PRIVATE CLOUD
COMPANIES ARE
THERE, TODAY?
55
S o u r c e : T e c h C r u n c h , F o r b e s , R e c o d e , M a r k e t W a t c h , M o r g a n S t a n l e y H e a d l i n e s
S A A S T R A N N U A L 2 0 1 9
S o u r c e : A r i L e v y , T w i t t e r
S A A S T R A N N U A L 2 0 1 9
2018 ALONE SAW >$90B
OF LARGE M&A
$1.9B
$2.9B$8B $7.5B
$2.4B $1.6B $1.4B
$33B
S o u r c e : C a p I Q a n d P i t c h b o o k
~$44B ALSO ADDED IN MARKET
CAP THROUGH CLOUD IPOS
S o u r c e : C a p I Q a n d P i t c h b o o k ( M a r k e t C a p a f t e r D a y 1 o f T r a d i n g . )
IN FACT THE BUYING DEMAND FOR
CLOUD SHARES HAS HIT RECORD HIGHS
VCDollarsRaised($B)
$MarketCap($B)
Comb in ed Clou d L iq u id ity 2 0 1 0 – 2 0 1 8 , an d VC I nvestments Rais ed
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
2010 2011 2012 2013 2014 2015 2016 2017 2018
M&A IPO VC Dollars Raised
S A A S T R A N N U A L 2 0 1 9
S o u r c e : C a p I Q a n d P i t c h b o o k
$0
$200
$400
2010 2011 2012 2013 2014 2015 2016
WE PREDICTED THE CLOUD MARKET
CAP WOULD HIT $500B IN 2020
$BMarketCap
Pu b lic Clou d Market Cap
S A A S T R A N N U A L 2 0 1 9
$250
S o u r c e : C a p I Q a n d P i t c h b o o k
WE PREDICTED THE CLOUD MARKET
CAP WOULD HIT $500B IN 2020
$BMarketCap
Pu b lic Clou d Market Cap
S A A S T R A N N U A L 2 0 1 9
$0
$200
$400
$600
$800
$1,000
$1,200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$500B
S o u r c e : C a p I Q a n d P i t c h b o o k
INSTEAD, WE HIT THE MARK 2 YEARS
EARLIER IN MARCH 2018
$BMarketCap
Pu b lic Clou d Market Cap
S A A S T R A N N U A L 2 0 1 9
$0
$200
$400
$600
$800
$1,000
$1,200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
March 2nd 2018
$500B $500B
S o u r c e : C a p I Q a n d P i t c h b o o k
PUBLIC CLOUD HAS A PATH TO $1T+$BMarketCap
Total Clou d Market Cap
S A A S T R A N N U A L 2 0 1 9
$690B
Feb 5th 2019
$1T
$0
$200
$400
$600
$800
$1,000
$1,200
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
S o u r c e : C a p I Q a n d P i t c h b o o k
THE CLOUD 100 IS
VALUED AT $175B+
S o u r c e : P i t c h b o o k
HOW DO WE
PROTECT FOR
VOLATILITY ?
S A A S T R A N N U A L 2 0 1 9
BVP Nasdaq Emerging Cloud Index
HOW TO BUILD A
RESILIENT COMPANY
Q: WHEN WAS THE
LONGEST BULL
MARKET?
Longest Bull Run in
History ~10 years
2nd Longest Bull
Run 9.5 years
S o u r c e : y a h o o f i n a n c e . S & P 5 0 0 f r o m 1 9 5 0 t o 1 / 2 9 / 2 0 1 9 .
HOW TO BUILD A
RESILIENT COMPANY
GROWTH
(ARR)
S A A S T R A N N U A L 2 0 1 9
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1 2 3 4 5 6 7 8 9 10 11 12 13 14
$ARR(inM)
Years
YEARS FROM $1M TO $100M ARR
S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s .
N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R .
N o t e : A s s u m i n g i t t a k e s 2 4 m o n t h s f r o m f o u n d i n g t o $ 1 M A R R i f d o n o t h a v e a c t u a l d a t a .
S A A S T R A N N U A L 2 0 1 9
$100
YEARS FROM $1M TO $100M ARR
S A A S T R A N N U A L 2 0 1 9
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
1 2 3 4 5 6 7 8 9 10 11 12 13 14
$ARR(inM)
Years
Pu b lic Clou d Comp an ies
5.3 yrs
Top 25%
7.3 yrs
Median
10.6 yrs
Bottom
25%
S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s . .
N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R .
N o t e : A s s u m i n g i t t a k e s 2 4 m o n t h s f r o m f o u n d i n g t o $ 1 M A R R i f d o n o t h a v e a c t u a l d a t a .
BVP GROWTH BENCHMARK
S A A S T R A N N U A L 2 0 1 9
F rom $ 1 mm ARR
Yearsto$10MARR
Yearsto$100MARR
3Years
7Years
4Years
10Years
2Years
5Years
BEST
GOOD
BETTER
HOW TO BUILD A
RESILIENT COMPANY
GROWTH
(ARR)
S A A S T R A N N U A L 2 0 1 9
RETENTION
IS YOUR
BEST FRIEND
RETENTION FOR DIFFERENT
CUSTOMER SEGMENTS
S A A S T R A N N U A L 2 0 1 9
Gross Retention 80 – 90%70 – 80% 90%+
Net Retention 90 – 120%80 – 100% 100%+
Average ACV $12 – $50K<$12k $50K+
SMB EnterpriseMidmarket
S A A S T R A N N U A L 2 0 1 9
RETENTION IS A MAJOR DRIVER
OF VALUATION
$40
$60
$85
$115
$150
$180
$200
50%
42%
35%
30% 20%
11%
0%
20%
40%
60%
80%
100%
$0
$50
$100
$150
$200
$250
$300
$350
2013 2014 2015 2016 2017 2018 2019
Net Retention 110%
Assumed 2019
Revenue Mult 10x
Enterprise
Value
$2.0bn
S A A S T R A N N U A L 2 0 1 9
AN ADDITIONAL 1% IN NET
RETENTION = $100M OF VALUE
Net Retention 125%
Enterprise
Value $3.5bn
Increased
Value +$1.5bn
$40
$66
$102
$148
$209
$276
$347
65%
54%
46%
41% 32%
26%
0%
20%
40%
60%
80%
100%
$0
$50
$100
$150
$200
$250
$300
$350
2013 2014 2015 2016 2017 2018 2019
S A A S T R A N N U A L 2 0 1 9
CHURN DRAMATICALLY
DECREASES VALUE
Net Retention 100%
Enterprise
Value $1.4bn
Decreased
Value -$630m
$40
$56
$75
$97
$120
$135 $137
40%
34%
29%
24%
13%
1%
0%
20%
40%
60%
80%
100%
$0
$50
$100
$150
$200
$250
$300
$350
2013 2014 2015 2016 2017 2018 2019
S A A S T R A N N U A L 2 0 1 9
+
HOW TO BUILD A
RESILIENT COMPANY
GROWTH
(ARR)
S A A S T R A N N U A L 2 0 1 9
RETENTION
IS YOUR
BEST FRIEND
IN THE
BANK
S A A S T R A N N U A L 2 0 1 9
S A A S T R A N N U A L 2 0 1 9
QUEEN
MANAGE
YOUR
RUNWAY
Buffer for
contingency plan
18 – 24 months
runway
Hiring is a big
lever
THINK ONE FINANCING AHEAD
ARR Reven u e Mu ltip les of Clou d Comp an ies
S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s . P r i c e d a s o f 1 / 2 3 / 2 0 1 9
N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R .
I n c l u d e s 5 2 p u b l i c c l o u d c o m p a n i e s i n t h e E M C L O U D .
S A A S T R A N N U A L 2 0 1 9
0.0x
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
1/1/11
5/1/11
9/1/11
1/1/12
5/1/12
9/1/12
1/1/13
5/1/13
9/1/13
1/1/14
5/1/14
9/1/14
1/1/15
5/1/15
9/1/15
1/1/16
5/1/16
9/1/16
1/1/17
5/1/17
9/1/17
1/1/18
5/1/18
9/1/18
1/1/19
Peak – Mar 2014
~10x
Trough – May 2014
5.8x
Trough – Feb 2016
4.6x
Current
9.8x
HOW TO BUILD A
RESILIENT COMPANY
GROWTH
(ARR)
S A A S T R A N N U A L 2 0 1 9
RETENTION
IS YOUR
BEST FRIEND
IN THE
BANK
TARGETED SPEND
(“EFFICIENCY”)
S A A S T R A N N U A L 2 0 1 9
DEFINING EFFICIENCY
Net New
ARR
Net Burn
=
BVP Efficiency
Score
(<$30M ARR)
S A A S T R A N N U A L 2 0 1 9
BVP Nasdaq Emerging Cloud Index
EFFICIENT
BUSINESSES
ARE
REWARDED
IN ALL
MARKETS
S A A S T R A N N U A L 2 0 1 9
BVP EFFICIENCY SCORE
(<$30M ARR)
BEST
> 1.5x
GOOD BETTERNet New ARR
Net Burn
= < 0.5x 0.5x – 1.5x
S A A S T R A N N U A L 2 0 1 9
$12
$24
($2)
Ending ARR Net Burn
($ in M)
BEST
> 1.5x
$12M
(= $24 - $12)
$2M
6.0x
BVP Efficiency Score
GOOD BETTERNet New ARR
Net Burn
= < 0.5x 0.5x – 1.5x
=
BVP EFFICIENCY SCORE
(<$30M ARR)
S A A S T R A N N U A L 2 0 1 9
HOW TO CALCULATE YOUR GRIT SCORE
+++Growth
(ARR)
In The Bank
Targeted
Spend
(Efficiency)
Retention
Is Your Best
Friend
%AnnualNet
Retention
%YoYGrowth YearsofRunway NetNewARR/
NetBurn
0.5–1.5x80–150% 1–3Years50–200%
= GRIT
SCORE
3–4
4–6
>6
GOOD
BETTER
BEST
S A A S T R A N N U A L 2 0 1 9
EXAMPLE 1 – TWILIO (<$5M ARR)
+++
%AnnualNet
Retention
%YoYGrowth Years ofRunway NetNewARR/
NetBurn
0.5–1.5x80–150% 1–3Years50–200%
= GRIT
SCORE
BEST
1.5
(1.5xEfficiency)
2
(2Years)
3
(300%+Growth)
1.6
(160%Retention)
8.1
G I TR
+++ =
S A A S T R A N N U A L 2 0 1 9
EXAMPLE 1 – SERVICETITAN (<$5M ARR)
+++
%AnnualNet
Retention
%YoYGrowth Years ofRunway NetNewARR/
NetBurn
0.5–1.5x80–150% 1–3Years50–200%
= GRIT
SCORE
BEST
3.4
(3.4xEfficiency)
2
(2Years)
2
(200%+Growth)
0.9
(90%Retention)
8.3
G I TR
+++ =
2019 PREDICTIONS
#1 ROBOTS TO THE RESCUE
AGRICULTURE
ACCOUNTING
CUSTOMER SUPPORT
MARKETING
AUDIT
FRAUD
SALES
HEALTHCARE
S A A S T R A N N U A L 2 0 1 9
#2 PRODUCT HAS PURSE STRINGS
$PRODUCT
SALES
SERVICES SUPPORT
MARKETING
S A A S T R A N N U A L 2 0 1 9
#3 OPENSOURCE MAKES MONEY
BiggestIPOEver
DeepBenchofStrong
Privates
LargestM&As
S A A S T R A N N U A L 2 0 1 9
#4 DEEPER VERTICALIZATION OF MOBILE
VERTICALSOFTWARE
CONSTRUCTION FIELD SERVICES RETAIL SALES
EDUCATIONWORKFORCE MGMT SAFETY/COMPLIANCE
FLEET TRANSPORTATION REAL ESTATE RECRUITING
S A A S T R A N N U A L 2 0 1 9
#5 LOW CODE/NO CODE
Developer BusinessAppsEasy
Automation
BESSEMER’S 5
PREDICTIONS
FOR 2019
1 Robots to the rescue
Product has purse strings2
Opensource makes money3
Deeper verticalization of mobile4
Low code/no code5
CLOUD REIGNS
$1 TRILLION
Thank You
www.bvp.com/cloud

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Bessemer Venture Partners' 2019 State of the Cloud

  • 1. State Of The Cloud 2019 BYRON DEETER Partner BVP @bdeeter KRISTINA SHEN Partner BVP @kshenster ANNA KHAN Vice President BVP @annarchyy
  • 2. Byron Deeter Partner BVP @bdeeter Kristina Shen Partner BVP @kshenster State Of The Cloud 2019 www.bvp.com/cloud Anna Khan Vice President BVP @annarchyy
  • 3. BESSEMER’S TOP 10 LAWS OF CLOUD COMPUTING 2008
  • 4. 0
  • 5. HOW MANY $1B+ PRIVATE CLOUD COMPANIES ARE THERE, TODAY? HOW MANY $1B+ PRIVATE CLOUD COMPANIES ARE THERE, TODAY?
  • 6.
  • 7. 55
  • 8. S o u r c e : T e c h C r u n c h , F o r b e s , R e c o d e , M a r k e t W a t c h , M o r g a n S t a n l e y H e a d l i n e s
  • 9. S A A S T R A N N U A L 2 0 1 9 S o u r c e : A r i L e v y , T w i t t e r
  • 10. S A A S T R A N N U A L 2 0 1 9
  • 11. 2018 ALONE SAW >$90B OF LARGE M&A $1.9B $2.9B$8B $7.5B $2.4B $1.6B $1.4B $33B S o u r c e : C a p I Q a n d P i t c h b o o k
  • 12. ~$44B ALSO ADDED IN MARKET CAP THROUGH CLOUD IPOS S o u r c e : C a p I Q a n d P i t c h b o o k ( M a r k e t C a p a f t e r D a y 1 o f T r a d i n g . )
  • 13. IN FACT THE BUYING DEMAND FOR CLOUD SHARES HAS HIT RECORD HIGHS VCDollarsRaised($B) $MarketCap($B) Comb in ed Clou d L iq u id ity 2 0 1 0 – 2 0 1 8 , an d VC I nvestments Rais ed $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $- $10.00 $20.00 $30.00 $40.00 $50.00 $60.00 $70.00 $80.00 $90.00 $100.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 M&A IPO VC Dollars Raised S A A S T R A N N U A L 2 0 1 9 S o u r c e : C a p I Q a n d P i t c h b o o k
  • 14.
  • 15. $0 $200 $400 2010 2011 2012 2013 2014 2015 2016 WE PREDICTED THE CLOUD MARKET CAP WOULD HIT $500B IN 2020 $BMarketCap Pu b lic Clou d Market Cap S A A S T R A N N U A L 2 0 1 9 $250 S o u r c e : C a p I Q a n d P i t c h b o o k
  • 16. WE PREDICTED THE CLOUD MARKET CAP WOULD HIT $500B IN 2020 $BMarketCap Pu b lic Clou d Market Cap S A A S T R A N N U A L 2 0 1 9 $0 $200 $400 $600 $800 $1,000 $1,200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 $500B S o u r c e : C a p I Q a n d P i t c h b o o k
  • 17. INSTEAD, WE HIT THE MARK 2 YEARS EARLIER IN MARCH 2018 $BMarketCap Pu b lic Clou d Market Cap S A A S T R A N N U A L 2 0 1 9 $0 $200 $400 $600 $800 $1,000 $1,200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 March 2nd 2018 $500B $500B S o u r c e : C a p I Q a n d P i t c h b o o k
  • 18. PUBLIC CLOUD HAS A PATH TO $1T+$BMarketCap Total Clou d Market Cap S A A S T R A N N U A L 2 0 1 9 $690B Feb 5th 2019 $1T $0 $200 $400 $600 $800 $1,000 $1,200 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 S o u r c e : C a p I Q a n d P i t c h b o o k
  • 19. THE CLOUD 100 IS VALUED AT $175B+ S o u r c e : P i t c h b o o k
  • 20. HOW DO WE PROTECT FOR VOLATILITY ? S A A S T R A N N U A L 2 0 1 9 BVP Nasdaq Emerging Cloud Index
  • 21. HOW TO BUILD A RESILIENT COMPANY
  • 22. Q: WHEN WAS THE LONGEST BULL MARKET?
  • 23. Longest Bull Run in History ~10 years 2nd Longest Bull Run 9.5 years S o u r c e : y a h o o f i n a n c e . S & P 5 0 0 f r o m 1 9 5 0 t o 1 / 2 9 / 2 0 1 9 .
  • 24. HOW TO BUILD A RESILIENT COMPANY GROWTH (ARR) S A A S T R A N N U A L 2 0 1 9
  • 25. $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 $ARR(inM) Years YEARS FROM $1M TO $100M ARR S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s . N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R . N o t e : A s s u m i n g i t t a k e s 2 4 m o n t h s f r o m f o u n d i n g t o $ 1 M A R R i f d o n o t h a v e a c t u a l d a t a . S A A S T R A N N U A L 2 0 1 9 $100
  • 26. YEARS FROM $1M TO $100M ARR S A A S T R A N N U A L 2 0 1 9 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 $ARR(inM) Years Pu b lic Clou d Comp an ies 5.3 yrs Top 25% 7.3 yrs Median 10.6 yrs Bottom 25% S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s . . N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R . N o t e : A s s u m i n g i t t a k e s 2 4 m o n t h s f r o m f o u n d i n g t o $ 1 M A R R i f d o n o t h a v e a c t u a l d a t a .
  • 27. BVP GROWTH BENCHMARK S A A S T R A N N U A L 2 0 1 9 F rom $ 1 mm ARR Yearsto$10MARR Yearsto$100MARR 3Years 7Years 4Years 10Years 2Years 5Years BEST GOOD BETTER
  • 28. HOW TO BUILD A RESILIENT COMPANY GROWTH (ARR) S A A S T R A N N U A L 2 0 1 9 RETENTION IS YOUR BEST FRIEND
  • 29. RETENTION FOR DIFFERENT CUSTOMER SEGMENTS S A A S T R A N N U A L 2 0 1 9 Gross Retention 80 – 90%70 – 80% 90%+ Net Retention 90 – 120%80 – 100% 100%+ Average ACV $12 – $50K<$12k $50K+ SMB EnterpriseMidmarket
  • 30. S A A S T R A N N U A L 2 0 1 9 RETENTION IS A MAJOR DRIVER OF VALUATION $40 $60 $85 $115 $150 $180 $200 50% 42% 35% 30% 20% 11% 0% 20% 40% 60% 80% 100% $0 $50 $100 $150 $200 $250 $300 $350 2013 2014 2015 2016 2017 2018 2019 Net Retention 110% Assumed 2019 Revenue Mult 10x Enterprise Value $2.0bn
  • 31. S A A S T R A N N U A L 2 0 1 9 AN ADDITIONAL 1% IN NET RETENTION = $100M OF VALUE Net Retention 125% Enterprise Value $3.5bn Increased Value +$1.5bn $40 $66 $102 $148 $209 $276 $347 65% 54% 46% 41% 32% 26% 0% 20% 40% 60% 80% 100% $0 $50 $100 $150 $200 $250 $300 $350 2013 2014 2015 2016 2017 2018 2019
  • 32. S A A S T R A N N U A L 2 0 1 9 CHURN DRAMATICALLY DECREASES VALUE Net Retention 100% Enterprise Value $1.4bn Decreased Value -$630m $40 $56 $75 $97 $120 $135 $137 40% 34% 29% 24% 13% 1% 0% 20% 40% 60% 80% 100% $0 $50 $100 $150 $200 $250 $300 $350 2013 2014 2015 2016 2017 2018 2019
  • 33. S A A S T R A N N U A L 2 0 1 9 +
  • 34. HOW TO BUILD A RESILIENT COMPANY GROWTH (ARR) S A A S T R A N N U A L 2 0 1 9 RETENTION IS YOUR BEST FRIEND IN THE BANK
  • 35. S A A S T R A N N U A L 2 0 1 9
  • 36. S A A S T R A N N U A L 2 0 1 9 QUEEN
  • 37. MANAGE YOUR RUNWAY Buffer for contingency plan 18 – 24 months runway Hiring is a big lever
  • 38. THINK ONE FINANCING AHEAD ARR Reven u e Mu ltip les of Clou d Comp an ies S o u r c e : C a p I Q , i n t e r n a l s o u r c e s a n d c o m p a n y a n n o u n c e m e n t s . P r i c e d a s o f 1 / 2 3 / 2 0 1 9 N o t e : U s e q u a r t e r l y r e v e n u e t i m e s f o u r a s a p r o x y f o r A R R . I n c l u d e s 5 2 p u b l i c c l o u d c o m p a n i e s i n t h e E M C L O U D . S A A S T R A N N U A L 2 0 1 9 0.0x 2.0x 4.0x 6.0x 8.0x 10.0x 12.0x 1/1/11 5/1/11 9/1/11 1/1/12 5/1/12 9/1/12 1/1/13 5/1/13 9/1/13 1/1/14 5/1/14 9/1/14 1/1/15 5/1/15 9/1/15 1/1/16 5/1/16 9/1/16 1/1/17 5/1/17 9/1/17 1/1/18 5/1/18 9/1/18 1/1/19 Peak – Mar 2014 ~10x Trough – May 2014 5.8x Trough – Feb 2016 4.6x Current 9.8x
  • 39. HOW TO BUILD A RESILIENT COMPANY GROWTH (ARR) S A A S T R A N N U A L 2 0 1 9 RETENTION IS YOUR BEST FRIEND IN THE BANK TARGETED SPEND (“EFFICIENCY”)
  • 40. S A A S T R A N N U A L 2 0 1 9 DEFINING EFFICIENCY Net New ARR Net Burn = BVP Efficiency Score (<$30M ARR)
  • 41. S A A S T R A N N U A L 2 0 1 9 BVP Nasdaq Emerging Cloud Index EFFICIENT BUSINESSES ARE REWARDED IN ALL MARKETS
  • 42. S A A S T R A N N U A L 2 0 1 9 BVP EFFICIENCY SCORE (<$30M ARR) BEST > 1.5x GOOD BETTERNet New ARR Net Burn = < 0.5x 0.5x – 1.5x
  • 43. S A A S T R A N N U A L 2 0 1 9 $12 $24 ($2) Ending ARR Net Burn ($ in M) BEST > 1.5x $12M (= $24 - $12) $2M 6.0x BVP Efficiency Score GOOD BETTERNet New ARR Net Burn = < 0.5x 0.5x – 1.5x = BVP EFFICIENCY SCORE (<$30M ARR)
  • 44. S A A S T R A N N U A L 2 0 1 9 HOW TO CALCULATE YOUR GRIT SCORE +++Growth (ARR) In The Bank Targeted Spend (Efficiency) Retention Is Your Best Friend %AnnualNet Retention %YoYGrowth YearsofRunway NetNewARR/ NetBurn 0.5–1.5x80–150% 1–3Years50–200% = GRIT SCORE 3–4 4–6 >6 GOOD BETTER BEST
  • 45. S A A S T R A N N U A L 2 0 1 9 EXAMPLE 1 – TWILIO (<$5M ARR) +++ %AnnualNet Retention %YoYGrowth Years ofRunway NetNewARR/ NetBurn 0.5–1.5x80–150% 1–3Years50–200% = GRIT SCORE BEST 1.5 (1.5xEfficiency) 2 (2Years) 3 (300%+Growth) 1.6 (160%Retention) 8.1 G I TR +++ =
  • 46. S A A S T R A N N U A L 2 0 1 9 EXAMPLE 1 – SERVICETITAN (<$5M ARR) +++ %AnnualNet Retention %YoYGrowth Years ofRunway NetNewARR/ NetBurn 0.5–1.5x80–150% 1–3Years50–200% = GRIT SCORE BEST 3.4 (3.4xEfficiency) 2 (2Years) 2 (200%+Growth) 0.9 (90%Retention) 8.3 G I TR +++ =
  • 47.
  • 49. #1 ROBOTS TO THE RESCUE AGRICULTURE ACCOUNTING CUSTOMER SUPPORT MARKETING AUDIT FRAUD SALES HEALTHCARE S A A S T R A N N U A L 2 0 1 9
  • 50. #2 PRODUCT HAS PURSE STRINGS $PRODUCT SALES SERVICES SUPPORT MARKETING S A A S T R A N N U A L 2 0 1 9
  • 51. #3 OPENSOURCE MAKES MONEY BiggestIPOEver DeepBenchofStrong Privates LargestM&As S A A S T R A N N U A L 2 0 1 9
  • 52. #4 DEEPER VERTICALIZATION OF MOBILE VERTICALSOFTWARE CONSTRUCTION FIELD SERVICES RETAIL SALES EDUCATIONWORKFORCE MGMT SAFETY/COMPLIANCE FLEET TRANSPORTATION REAL ESTATE RECRUITING S A A S T R A N N U A L 2 0 1 9
  • 53. #5 LOW CODE/NO CODE Developer BusinessAppsEasy Automation
  • 54. BESSEMER’S 5 PREDICTIONS FOR 2019 1 Robots to the rescue Product has purse strings2 Opensource makes money3 Deeper verticalization of mobile4 Low code/no code5
  • 56.