What's 🔥 in Enterprise IT/VC #223
We're past the age of decacorns 🦄 - what's the new bar for enterprise outliers?
Ed Sim | Feb 6 |
What's 🔥 in Enterprise IT/VC #223We're past the age of decacorns 🦄 - what's the new bar for enterprise outliers?
The ☁️ and enterprise software market continues to be on 🔥 in 2021. First, who would have thought that when Jeff Bezos stepped down as CEO of Amazon that the head of Amazon Web Services would replace him? That’s exactly what happened and shows the ever growing importance of the ☁️ at Amazon and overall. Second, who would have thought that we’d have a number of pre-IPO fundings in the $30 billion range for enterprise software companies. That’s exactly what happened this week with both Databricks and UIPath at $28 billion and $35 billion respectively. 🤔 about those numbers for a second…🤯 When I started boldstart in 2010, our goal was to partner with technical enterprise founders armed with an idea and a slide deck on day one and 🙏🏼 that we would get one, just one, $1 billion company per fund where we had close to 10% ownership on exit. With those numbers, one could create a significant return of capital on a small fund size. 11 years later, and it’s clear that I dramatically underestimated how big and how fast some of these enterprise software companies would become. I wasn’t thinking big enough! The goalposts seem to keep moving for what a category creating, private enterprise software company is and the growth and valuations they are realizing. Here’s a slide from our boldstart annual meeting in June 2020 - notice the valuations (courtesy of SaaStr). Here, I was suggesting the equivalent of the $1 billion exit en years ago has become a $10 billion one, a decacorn. And 8 months later, look at the valuations 😲 (from Meritech). Forget about 🦄 or decacorns, the new mythical creature is a pentacontacorns (yes a mouthful). Clearly the new investors in UIPath and Snowflake are thinking much larger outcomes. Working backwards from IPO, this has a dramatic effect on valuations all the way back to the seed and Series A rounds. There is so much capital trying to get ownership as early as possible in the next potential pentacontacorn (ok, we need a better name 😬) that valuations are inflated across the board. Fund sizes keep increasing and the question we all need to ask is, will this last and is this sustainable? If you look at numbers on ☁️ spend from Ron Miller at Techcrunch, for example, then the answer is yes. Loved this summary from @ron_miller on the current state of the cloud market. "less than 4% of IT spend currently is on cloud infrastructure, leaving so much room for growth and for those billions to grow ever bigger in the coming years." buff.ly/2MQKpVD So much more to chew on and think about as 2021 evolves. As always, 🙏🏼 for reaching and please share with your friends and colleagues! Scaling Startups
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