The State of Enterprise Software
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Enterprise software valuations showed a decline in Q1 but are stabilizing at a new normal, with a slowdown in VC deal volume yet sustained interest for strong companies. The startup climate for 2016 encourages long-term planning and a focus on cash positions, while strategic M&A activity is anticipated to rise. Key market areas include infrastructure, security, and evolving applications, with a focus on data, IoT, and machine intelligence driving innovation.
The State of Enterprise Software
- 1. THE STATE OF ENTERPRISE SOFTWARE J E R RY C H E N
- 2. Valuations took a hit in Q1 but are coming back. BessemerCloudIndex Source: Bessemer 2016
- 3. We are seeing a“new normal”in valuations. Source: Morgan Stanley, Capital IQ, Thomson Avg. Aggregate Value / Next 12 Month Revenue 15.5x 2013-2014 7.4x 2/12/2016
- 4. Recent Enterprise IPOs: 1 Year Performance Source: Google Finance
- 5. 2015 VC investments reached dotcom levels Source: Greylock, PwC/NVCA Data: Thomson Reuters
- 6. U.S. Early Stage VC: Q4 2015 - Q1 2016 Decrease in # Deals Increase in Round Sizes Source: Pitchbook
- 7. U.S. Late Stage VC: Q1 2016 Decrease in # Deals y/y Smaller Deal Sizes y/y Source: Pitchbook
- 8. Expect M&A to return to historic levels. Source: Morgan Stanley, Capital IQ, Dealogic
- 9. Market Summary Public Markets Valuations are down. We’re stabilizing at a new normal. VC Deal volume is decreasing, but still an appetite for great companies. M&A Expect strategic M&A to pick up over the next four quarters.
- 10. Startup Climate for 2016 Focus on cash positions Build for the long haul Pick a wave bigger than you You.
- 11. MARKET SPOTLIGHT Areas of Interest
- 12. INFRASTRUCTURE “Caught between OSS and a Cloud Place”
- 13. How do you get out between OSS and a Cloud Place?
- 14. Infrastructure Amazon is the biggest threat to infrastructure companies. Azure and Google will make progress in 2016 with enterprise buyers. Incumbent and private cloud vendors will act irrationally. You need a large footprint and direct connection to developers (DDI).
- 15. SECURITY “Separating signal from the noise”
- 16. Security Thousands of companies all sound the same. (And many are the same.) Customers don’t want to buy snake oil. Your job is to help them be smart buyers. Security is an evergreen market. There will always be bad guys, so build a business model that“works for you.”
- 17. APPS “Not your father’s Oldsmobile”
- 18. Evolution of Apps Cloud/SaaS Cloud/MobileClient/Server What’s Next? ?
- 19. The basic building blocks of apps are changing. Bots and conversational UIs IoT extends reach of apps everywhere Big Data/AI will power apps
- 20. Cloud-enabled car recognizes when you’re in an accident. Sends data to your insurance company and sends quote to your phone. Calls Uber to pick you up. Not your father’s Oldsmobile.
- 21. DATA & IoT “Machine intelligence and other oxymorons”
- 23. Data and IoT Vision, speech, and text are real and ready for apps today. Find the data. Accumulate more data and proprietary data. More data trumps better math.