Bessemer VCs expect massive exits for cloud startups in the coming year, as the average valuation for top companies has soared 58% over four years

Mary D'Onofrio Bessemer Venture Partners

Every fall for the last four years, Bessemer Venture Partners has published a Cloud 100 list of the top private cloud companies based on both quantitative and qualitative data.
It’s planning to publish the 2020 list this fall, but has shared data analysis from past lists with Business Insider, including that it has seen average valuations soar 58%.
The Bessemer team is expecting major IPOs and M&A exits from cloud startups in the coming year because of the increasing demand for cloud, which has only strengthened because of the coronavirus crisis.
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Valuations and demand for cloud startups are soaring despite — and perhaps in part because of — the coronavirus pandemic and the team at Bessemer Venture Partners is expecting some major cloud IPOs in the coming year.

Every fall for the last four years, Bessemer and Forbes Magazine have published The Cloud 100, a list of the top 100 private cloud companies, based on both quantitative and qualitative data. Over the years, Bessemer has seen the valuations and revenue for the cloud startups on the list skyrocket.

“Cloud valuations are getting bigger,” Mary D’Onofrio, vice president at BVP, told Business Insider. “It’s a reflection of the appetite for cloud continuing to grow.”

The average valuation has increased 58% over the past four years: In 2016, the average company on this list was valued at $1.05 billion, and in 2019, the average grew to $1.66 billion.

Meanwhile, the coronavirus pandemic has caused companies to spend more on cloud infrastructure and software as remote work increases, and Bessemer predicts it will only speed up the shift to the cloud overall.

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“It’s actually forcing their hand and accelerating any plans they had,” Byron Deeter, partner at BVP, told Business Insider of companies that had planned digital transformations. “You have this dynamic to build or acquire into cloud fast or they will be irrelevant. People who were slowing it, they can’t anymore. It’s entirely clear that cloud is the future, and now in a work-from-home environment, they need and should embrace cloud.”

Here are some of the trends VCs found from analyzing the top cloud startups since 2016.

IPOs and M&A for cloud startups are becoming bigger

Today, cloud unicorns are becoming more common. In 2016, 36 of the startups on the list were valued at $1 billion or more, but in 2019, that number had nearly doubled to 60.

In 2016, the average exit — whether through IPO or an acquisition — was $1 billion, but the average grew to $3.9 billion in 2019. Of the 178 companies that have appeared on any of the Cloud 100 lists, 65 of them, or 37%, have exited, and about 70% of those exits have valued the company at $1 billion or more.

Some of the biggest acquisitions of companies on the list include Plaid’s $5.3 billion sale to Visa, Vlocity’s $1.3 billion sale to Salesforce, and Qualtrics’ $8 billion sale to SAP. Meanwhile, the average IPO value …read more

Source:: Business Insider


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