Qubit: Battery OpenCloud Report 2022
Battery Ventures published their OpenCloud report last month. A couple of charts caught my eye.
One was on slide 7 on the broken path to IPO. How many of the 1,000+ unicorns will eventually become public companies? Keep in mind that more than 580 unicorns were minted in 2021.
The other was on slide 4 on software revenue multiples. It’s a wonderful example of markets reverting to the mean.
"But market challenges persist, and no company is totally immune. In the past, the easy availability of outside funding in some cases disguised product-market fit — now, companies of all kinds must be more strategic and efficient as they scale. In our 2022 OpenCloud report, we affirm our belief that the road to building a robust cloud company is really no different than it’s ever been: focus on business inputs, like closing customers, revenue growth, and measured operating expenses, and the output (valuation) will follow. Despite the crazy (and, at the time, unexpected) Covid-era boom in corporate tech spending on cloud products, and then the subsequent market swoon, our view is that companies need to plan for 30% growth in annual recurring revenue, 75%+ gross margins and sales-and-marketing spending of just 25% of revenue."
Source:
OpenCloud 2022: How to Navigate Stormy Markets and Other Tips for Cloud Founders
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