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Software 2019

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IPOs, M&A, and Forces of Growth — Here’s Software 2019

Publicado en: Tecnología
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Software 2019

  1. 1. Software 2019 Neeraj Agrawal Logan Bartlett
  2. 2. 1 This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with such verbal or written comments, is referred to herein as the “presentation.” This presentation is being provided for informational purposes only. Nothing herein is or should be construed as investment, legal or tax advice, a recommendation of any kind or an offer to sell or a solicitation of an offer to buy any security. This presentation does not purport to be complete on any topic addressed. The information in this presentation is provided to you as of May 2nd 2019 unless otherwise noted and Battery Ventures does not intend to update the information after its distribution, even in the event the presentation becomes materially inaccurate. Certain information in this presentation has been obtained from third party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Certain logos, tradenames, trademarks and copyrights included in the presentation are strictly for identification and informational purposes only. Such logos, trade names, trademarks and copyrights may be owned by companies or persons not affiliated with Battery Ventures and no claim is made that any such company or person has sponsored or endorsed the use of such logos, trade names, trademarks and copyrights in this presentation. This presentation includes various examples of companies in which Battery Ventures has invested. These examples are included as illustrations of various investment strategies. For a complete list of all companies in which Battery Ventures has invested, please visit here. Past performance is not evidence of future results and there can be no assurance that a particular Battery portfolio company investment will achieve comparable results to any other investment. There can be no assurance that the investment objectives or the investment strategies described in this presentation will be successful. The information contained herein is based solely on the opinions of Neeraj Agrawal and Logan Bartlett and nothing should be construed as investment advice. The anecdotal examples throughout are intended for an audience of entrepreneurs in their attempt to build cloud-focused businesses and not recommendations or endorsements of any particular business. Disclaimers This presentation includes proprietary information of Battery Ventures
  3. 3. 2 WHY WE’RE LONG SOFTWARE This presentation includes proprietary information of Battery Ventures
  4. 4. Overall software spend continues to grow 3 8.6% 3.4% 2.4% 2017-2022 CAGR SaaS spend 2017-2022 CAGR Software spend 2017-2022 CAGR Total IT spend 2017-2022 CAGR Total US GDP vs. vs. vs. 18.3% 0% 5% 10% 15% 20% 25% 2017 2018 2019 2020 2021 2022 Overall IT Growth Rate Software Growth Rate SaaS Growth Rate US GDP Software CAGR: 8.6% Overall IT CAGR: 3.4% US GDP CAGR: 2.4% SaaS CAGR: 18.3% Source: Gartner Market Databook, 4Q18 Update; Forrester; Trading Economics This presentation includes proprietary information of Battery Ventures
  5. 5. $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018 2021 MillionsofDollars Homegrown/Internal Software On-Prem + Mainframe SaaS Software has consistently grown through different eras & delivery models 4 Note: Homegrown/Internal Software is estimate based on hours worked Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input ResearchThis presentation includes proprietary information of Battery Ventures
  6. 6. Software continues to grow as a percentage of GDP 5 Source: Credit Suisse, Bureau of Economic Analysis 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 This presentation includes proprietary information of Battery Ventures
  7. 7. Software has had a demonstrable impact on the economy and employment 6 $1.14T of indirect and $564.4B of direct value added to the US GDP 10.5M jobs supported by the software industry $63.1B of R&D investment by software companies Source: “The $1 Trillion Economic Impact of Software”, BSA | The Software Alliance, September 2017 This presentation includes proprietary information of Battery Ventures
  8. 8. The five forces of software’s accelerating growth 7 Every company is becoming a software company Software is displacing services and labor Software is displacing hardware Software is infiltrating what were once niche markets Existing software markets are growing over time 2 1 3 4 5 This presentation includes proprietary information of Battery Ventures
  9. 9. Mainframe Era Client Server Era Desktop SaaS Era Cloud-First Era Golden Years 1970 -1985 1985 - 2000 2000 - 2015 2015 - Potential Users 1M 10M-100M 1B+ 10B+ Buyer IT IT Business Units Business Users Customers Gov’t, Manufacturing, Financial Large Businesses Most Businesses All Businesses Market Size $ $$ $$$ $$$$$ CRM ERP HR/Accounting Expense Mgmt Procurement Systems Mgmt Content Mgmt Contact Center Identity BI 8 ILLUSTRATIVEEXAMPLES * * * * * 1 Existing software markets are growing over time • Source: Battery research. Examples given are illustrative. • * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. • For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/This presentation includes proprietary information of Battery Ventures
  10. 10. 9 * * Denotes a current or former Battery portfolio company Security guard softwareMusic collaboration platform Illustrative Vertical Market Examples Product documentation * Illustrative Hyper-Focused Business Processes Examples Individual mail client Illustrative SMB Market Examples Pharma manufacturingAPI for health systemsReal estate investment management software Solar panel sales enablement Expense mgmt. monitoring Image optimization 401K benefits E-Commerce checkoutSaaS translation service CRM Scheduling Software project mgmt BookkeepingExpense management * 2 Software is infiltrating what were once niche markets • Source: Battery research. Examples given are illustrative. • * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. • For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ * * This presentation includes proprietary information of Battery Ventures
  11. 11. 10 Number of jobs: 1,256,200 Job outlook, 2016-2026: 24% Software Engineers Software engineers are in high demand(2) $47 $52 $58 $65 $72 $81 $62 $61 $60 $58 $57 $56 $40B $50B $60B $70B $80B $90B $100B 2017 2018 2019 2020 2021 2022 Worldwide spending: cloud vs non-cloud IT infrastructure(1) Cloud IT Infrastructure Non-Cloud IT Infrastructure By 2020, spending on cloud IT infrastructure will surpass spending on non-cloud IT infrastructure 2017-2022 CAGR Cloud IT Infrastructure: Non-Cloud IT Infrastructure: 2017-2022 CAGR 11.7% (2.7%) 3 Software is displacing hardware (1) International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker (2) Bureau of Labor Statistics. Number of jobs in 2016. Job outlook calculated as the projected percent change in employment from 2016 to 2026. The average growth rate for all occupations is 7% Number of jobs: 73,600 Job outlook, 2016-2026: 5% Hardware Engineers This presentation includes proprietary information of Battery Ventures
  12. 12. 11 4 Software is displacing service & labor This presentation includes proprietary information of Battery Ventures
  13. 13. Every company is becoming a software company 12 Date Acquirer Target Total Deal Amount 8/8 $1.6B 12/26 $1.1B 10/9 $820M 9/5 $712M 10/16 $510M Date Acquirer Target Total Deal Amount 12/9 $18.4B 7/31 $2.0B 2/15 $1.9B 6/25 $1.6B 4/23 $1.2B 5/21 $1.1B 12/19 $1.0B 1/29 $821M 7/2 $775M 8/1 $730M 3/6 $550M 8/27 $525M Date Acquirer Target Total Deal Amount 6/15 $4.0B 8/3 $2.7B 4/20 $1.3B 5/19 $687M 10/8 $675M 4/27 $600M 8/3 $500M Date Acquirer Target Total Deal Amount 12/6 $2.8B 8/1 $2.4B 7/1 $1.5B 1/25 $970M 11/14 $915M 6/21 $900M 2/22 $800M 10/31 $632M 3/11 $581M 20182015 2016 2017 * Source: 451 Research. Includes all announced software acquisitions by historically non-technology buyers with transaction value over $500M from 1/2015 through 12/2018 * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ 5 * * This presentation includes proprietary information of Battery Ventures
  14. 14. We’re still in the early innings of the software revolution 13 $0 $1T $2T $3T $4T $5T $6T $7T 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 ~5 TODAY Source: Battery Ventures; Forrester; Gartner; the Yankee Group; BEA.gov; Input Research Global software industry revenue Assumed 2017-2050 CAGR Global Software Revenue ~5% $1 Trillion This presentation includes proprietary information of Battery Ventures
  15. 15. 14 SOFTWARE IN 2019 This presentation includes proprietary information of Battery Ventures
  16. 16. 2018 in review 15 2018 set a new record for software M&A volume and acquisition premiums. 2018 set a new record for IPO volume, representing a spectrum of scale and GTM strategy. 2018 saw a new all-time high for public company revenue multiples. “Rule of 40” still reigns, but public markets are increasingly prioritizing growth. Round sizes and valuations rise, but number of deals is down. 2 1 3 4 5 This presentation includes proprietary information of Battery Ventures
  17. 17. 16 The Public Market This presentation includes proprietary information of Battery Ventures
  18. 18. SaaS companies are well outpacing broad-based indices 17 1,195% 291% 193% 195% • While the typical market indices are significantly up since 2008, an index of SaaS companies has outperformed all of them by more than 3x in the same time (up 1,195% since 2008). Indexed stock price since 2008 Source: Capital IQ Data as of 3/31/2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 SaaS Index S&P 500 Nasdaq Dow Jones This presentation includes proprietary information of Battery Ventures
  19. 19. SaaS multiples recently traded up to an all-time high 18 3.3x 3.2x 3.2x 1.8x 1.9x 2.4x 3.1x 3.1x 3.2x 2.8x 3.2x 3.7x 4.3x4.2x 2.9x 3.9x 4.3x4.5x4.6x 4.3x 4.7x 5.1x 6.0x 6.5x 5.9x 5.5x 4.3x 4.7x 4.7x4.8x 4.6x4.6x 3.5x 4.5x 5.1x 4.3x 4.9x 5.8x5.7x 5.9x 6.6x 7.9x 8.2x 6.2x 7.6x 0x 1x 2x 3x 4x 5x 6x 7x 8x 9x 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Source: Capital IQ Data as of 3/31/2019 Median NTM Revenue Multiple • Median NTM multiples reached an all-time quarterly high in September 2018 at 8.2x (5x greater than the same figure 10 years ago), before dipping to 6.2x to end the year. • As of 3/31, the multiple had nearly recovered to its September 2018 high. This presentation includes proprietary information of Battery Ventures
  20. 20. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 <10% 1.6x 2.4x 3.1x 3.8x 2.8x 3.3x 3.0x 2.4x 2.4x 4.0x 10-20% 2.3x 3.7x 5.0x 4.6x 4.5x 5.6x 4.3x 4.3x 4.9x 7.5x 20-30% 2.5x 4.1x 6.0x 5.9x 6.6x 8.4x 7.2x 4.6x 6.4x 8.6x 30%+ 2.2x N/A 9.8x 9.1x 12.1x 11.7x 9.3x 6.3x 9.6x 10.5x Multiples are expanding across the growth spectrum 19 • SaaS multiples have grown fairly consistently year over year across the same bands of growth. NTM multiples for the 10% band in 2018 surpassed the NTM multiple for 30%+ growth companies in 2009. Source: Capital IQ Market data as of 3/31 NTM multiple bands Number of SaaS companies by band 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 <10% 13 8 7 8 9 7 15 18 15 20 10-20% 7 15 15 18 16 24 23 21 21 21 20-30% 3 3 5 5 7 10 13 18 19 15 30%+ 1 0 2 3 6 7 8 4 1 4 This presentation includes proprietary information of Battery Ventures
  21. 21. 27.5x 24.5x 21.5x 19.3x 19.3x 18.3x 17.9x 17.2x 16.5x 15.8x 15.8x 15.5x 14.1x 13.5x 13.5x 13.2x 12.7x 12.2x 12.2x 11.2x 10.9x 10.9x 10.8x 10.4x 10.0x 39% 39% 41% 22% 34% 20% 44% 26% 30% 38% 65% 26% 39% 20% 22% 33% 22% 34% 26% 22% 27% 33% 17% 28% 27% (10.0)% 10.0% 30.0% 50.0% 70.0% 90.0% 110.0% 130.0% 150.0% 170.0% 0.0x 5.0x 10.0x 15.0x 20.0x 25.0x 30.0x Zscaler MongoDB Elastic Atlassian Okta Veeva Smartsheet Coupa Anaplan Alteryx Twilio Paycom Shopify Xero ServiceNow Everbridge Avalara Zendesk Workday Adobe HubSpot AppFolio Five9 Q2 Holdings RingCentral NTM revenue multiple NTM growth rate Record-breaking software multiples for a handful of cloud publics 20 Source: Capital IQ Data as of 3/31/2019 * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • While the NTM revenue multiple of some long-established public cloud companies has come down over time, a handful of (mostly) new publics are trading at record breaking multiples approaching or exceeding 20x. * * * This presentation includes proprietary information of Battery Ventures
  22. 22. Public markets have shifted to reward growth and profitability 21 Source: Data from Capital IQ. Includes SaaS companies with LTM Growth >0%. Both charts are as of 12/31/2018 LTM Revenue Growth LTM Growth + Unlevered FCF Margin R² = 0.5781 0 5 10 15 20 25 0% 20% 40% 60% 80% 100% TEV/LTMRev LTM Revenue Growth + UFCF Margin R² = 0.5078 0 5 10 15 20 25 0% 20% 40% 60% 80% 100% TEV/LTMRev LTM Revenue Growth R^2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 LTM Growth 0.12 0.03 0.36 0.27 0.63 0.48 0.44 0.39 0.42 0.52 0.51 LTM Growth + UFCF 0.10 0.11 0.37 0.29 0.57 0.50 0.47 0.58 0.62 0.60 0.58 Correlation Over Time • In aggregate, public markets continue to reward growth and profitability ahead of just growth alone, though this correlation has declined in recent years. This presentation includes proprietary information of Battery Ventures
  23. 23. This holds true across all groupings of growth + profit 22 Source: Capital IQ Data as of 3/31/2019. Rule of 40 is calculated as 2019 Revenue Growth Rate + 2019 FCF Margin * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Public SaaS companies by Rule of 40 (as of 3/31/2019) <10% 10-20% 20-30% 30-40% 40-50% 50-60% 5.9x 4.6x 6.2x 9.3x 9.8x 15.8x 6.3x 5.0x 7.7x 10.4x 10.4x 16.7x Median Average 2019 Rev Mult * * * * • The traditional “Rule of 40” (revenue growth rate + FCF margin) continues to hold true, as companies that perform well on this metric receive a higher revenue multiple. * This presentation includes proprietary information of Battery Ventures
  24. 24. (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 2019FCF%ofRevenue 2019 Revenue Growth Rate (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 2019FCF%ofRevenue 2019 Revenue Growth Rate “The Four Zones” for the Rule of 40 23 Source: Wall Street Consensus Estimates from Capital IQ. Data as of 3/31/2019. Does not include AppFolio, Brightcove and Xero due to lack of estimates. • Companies that exceed the “Rule of 40” trade at a higher revenue multiple (left chart: 12.8x 2019 revenue vs. 7.9x 2019 revenue), BUT companies that exceed the “Rule of 40” AND are growing LTM revenues 30%+ trade at a premium (right chart: 15.2x NTM revenue). 6.6x EV/2019 Rev Multiple 12.8x EV/2019 Rev Multiple 7.9x EV/2019 Rev Multiple 15.2x EV/2019 Rev Multiple 12.8x EV/2019 Rev Multiple 10.3x EV/2019 Rev Multiple This presentation includes proprietary information of Battery Ventures
  25. 25. Unpacking the Four Zones of the Rule of 40 24 Source: Wall Street Consensus Estimates from Capital IQ. Data as of 3/31/2019. Does not include AppFolio, Brightcove and Xero due to lack of estimates. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Green QuadrantYellow Quadrant Blue QuadrantRed Quadrant Includes some of the largest SaaS companies that are at a mature point in their journey 2019 Revenue Multiple High: 17.0x (Veeva) Low: 4.9x (Dropbox) Median: 9.4x Average: 10.3x Features a full range of business from those that are just south of the rule of 40 to those that are struggling significantly in the public markets 2019 Revenue Multiple High: 16.5x (Coupa*) Low: 1.1x (K12) Median: 6.0x Average: 6.6x Number of recent IPOs in this group that are squarely focused on top-line growth at the moment 2019 Revenue Multiple High: 20.9x (MongoDB) Low: 6.7x (2U) Median: 13.7x Average: 12.8x Many of the cream of the crop companies, which are efficiently growing with strong unit economics 2019 Revenue Multiple High: 25.2x (Zscaler) Low: 10.0x (RingCentral) Median: 14.2x Average: 15.2x * * * * * * This presentation includes proprietary information of Battery Ventures
  26. 26. (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 2019FCF%ofRevenue 2019 Revenue Growth Rate $337K LTM Revenue / Employee (60%) (50%) (40%) (30%) (20%) (10%) 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 60% 70% 2019FCF%ofRevenue 2019 Revenue Growth Rate LTM revenue / employee is a guiding principle 25 Source: Wall Street Consensus Estimates from Capital IQ. Data as of 3/31/2019. Does not include AppFolio, Brightcove and Xero due to lack of estimates, and Bottomline, HealthStream, Instructure, Intuit, K12, Medidata, Shopify, 8x8, Adobe, Paylocity, ServiceNow, SPS Commerce, and Zscaler due to lack of headcount data. • Companies that exceed the “Rule of 40” drive over $100K more in revenue per employee than companies that fall short of that metric. $218K LTM Revenue / Employee $336K LTM Revenue / Employee $338K LTM Revenue / Employee $201K LTM Revenue / Employee $223K LTM Revenue / Employee This presentation includes proprietary information of Battery Ventures
  27. 27. ARR per employee maturity curve 26 Over-Investing Phase Investing Phase Breakeven Phase Sustained Profit Phase <$100K ARR / Employee Over-Investing zone Maturity Curve • While less instructive for companies with less than $10M in ARR, in general per-employee efficiency is a great indicator of operating leverage across the maturity spectrum. $100-200K ARR / Employee $200-300K ARR / Employee $300-500K ARR / Employee This presentation includes proprietary information of Battery Ventures
  28. 28. Median Statistics IPO Size ($MM) a $129 $90 $137 $114 $105 $100 $98 $140 $190 $251 IPO Pipeline NTM Rev ($MM)a $125 $140 $96 $137 $110 $109 $116 $153 $199 $222 NTM Rev Growtha 17% 16% 26% 25% 31% 24% 27% 32% 37% 19% $0.5 $0.8 $1.0 $2.5 $1.8 $1.7 $1.4 $0.9 $1.4 $5.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Software IPOs 2009 – 2019YTD Total Amount Raised ($Bn) Shading denotes acquired companies ? 2018 proved to be the best year ever for software IPOs 27 Source: Qatalyst Partners. Capital IQ mean consensus estimates, company filings. Multiples are undiluted and shown as of the first day close. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • 17 software companies went public in 2018, and IPO volume was up over 2.6x compared to 2017. Median Statistics IPO Size ($MM) a $129 $90 $137 $114 $105 $100 $98 $140 $190 $251 IPO Pipeline NTM Rev ($MM)a $125 $140 $96 $137 $110 $109 $116 $153 $199 $222 NTM Rev Growtha 17% 16% 26% 25% 31% 24% 27% 32% 37% 19% $0.5 $0.8 $1.0 $2.5 $1.8 $1.7 $1.4 $0.9 $1.4 $5.1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Software IPOs 2009 – 2019YTD Total Amount Raised ($Bn) Shading denotes acquired companies ? This presentation includes proprietary information of Battery Ventures * * * * * * * * *
  29. 29. Snapshot of 2018 software IPOs 28Source: Alex Clayton, Spark Capital (link) * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • These new public software companies represent a spectrum of scale, growth, profitability, efficiency and go-to-market strategy, but on average have an implied ARR of ~$200M, have raised ~$300M over a 13.5-year period. Company LTM Rev ($M) Implied ARR ($M) IPO Y/Y Growth Rate Subscription Revenue (%) Implied Net New ARR at IPO ($M) LTM GAAP Gross Margin LTM GAAP Operating Margin Net Retention / Expansion Average ACVs Months to Payback Acquisition Cost Equity Raised ($M) Time to IPO ARR per Employee ($K) Dropbox $1,106.8 $1,222.0 28.4% 100.0% $75.2 66.7% (10.3%) 90.0% $111 16 $607 11 $243.5 DocuSign $518.5 $549.1 37.3% 93.5% $57.5 77.2% (10.0%) 115.0% $1,484 30 $551 15 $119.1 Pivotal $509.4 $299.9 18.2% 50.8% $35.7 55.2% (33.0%) 158.0% $940,176 48 $358 5 $296.6 SurveyMonkey $233.5 $225.7 17.1% 90.0% $15.1 71.1% (9.0%) 95.0% $366 46 $315 19 $154.8 Avalara $225.6 $231.5 25.3% 100.0% $15.0 72.5% (24.0%) 107.0% $29,830 42 $394 19 $199.6 Tenable $206.4 $210.4 46.0% 86.9% $24.3 85.5% (12.3%) 124.0% $7,800 24 $300 16 $180.1 Anaplan $199.9 $198.5 40.8% 87.2% $18.8 71.1% (37.7%) 123.0% $202,729 30 $301 10 $207.6 Elastic $184.9 $206.4 79.0% 92.8% $21.7 73.6% (30.9%) 142.0% $37,534 15 $162 6 $148.0 Zuora $167.9 $138.1 62.2% 71.7% $14.0 52.4% (27.6%) 110.0% $142,179 48 $248 11 $229.8 Pluralsight $166.8 $189.6 38.3% 100.0% $16.5 70.1% (49.6%) 117.0% $10,704 31 $238 14 $178.0 Carbon Black $162.0 $165.9 31.0% 92.1% $13.1 78.0% (34.1%) N/A $44,374 31 $276 16 $185.6 $154.3 $176.3 52.8% 100.0% $20.1 79.3% (24.8%) 122.0% $62,966 21 $183 11 $243.5 Domo $116.2 $106.7 31.8% 81.8% $8.0 59.8% (147.0%) 105.0% $66,908 98 $730 8 $119.1 Smartsheet $111.3 $119.0 67.5% 90.2% $13.3 80.5% (44.0%) 130.0% $1,606 22 $121 13 $296.6 Acquired pre-IPO Qualtrics $372.4 $317.1 39.3% 74.4% $28.9 73.5% 1.1% 122.0% $35,299 25 $400 16 $165.6 Adaptive Insights $106.5 $104.8 37.0% 88.2% $8.4 73.8% (38.1%) 98.0% $28,017 42 $173 15 $210.4 Overall Median $192.4 $202.5 37.8% 90.1% $17.7 73.0% (29.3%) 117.0% $32,565 30.5 $301 13.5 $208.3 >$200M LTM Rev Median $372.4 $299.9 28.4% 90.0% $28.9 72.5% (10.3%) 115.0% $7,800 30 $394 16 $161.4 <$200M LTM Rev Median $162.0 $162.0 40.8% 90.2% $14.0 73.6% (37.7%) 119.5% $44,374 31 $238 11 $178.0 * This presentation includes proprietary information of Battery Ventures
  30. 30. 8.8x 6.0x 6.6x 6.0x 9.2x 6.6x 6.0x 4.4x 6.0x 4.0x 7.6x 7.0x 9.7x 7.9x 7.2x 27.5x 4.9x 6.9x 6.0x 15.9x 9.3x 3.4x 7.3x 11.2x 5.7x 8.0x 8.4x 16.3x 14.9x 8.2x 0x 5x 10x 15x 20x 25x 30x IPO NTM Revenue Multiple Current NTM Revenue Multiple 29 Source: Capital IQ. Prices and Market Cap as of 3/31/2019 IPO CY2019 Revenue Multiple uses consensus Wall Street estimates from 30 days post-IPO * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Snapshot of 2018 software IPOs (continued) IPO Date 3/15 3/22 4/11 4/20 4/26 4/26 5/3 5/16 6/14 6/28 7/26 9/25 10/4 10/11 10/18 IPO Size $192.0 $756.0 $154.0 $555.0 $174.5 $629.3 $152.0 $310.5 $180.0 $193.2 $250.7 $180.0 $252.0 $263.5 $375.0 IPO Pricing $16.0 $21.0 $14.0 $15.0 $15.0 $29.0 $19.0 $15.0 $24.0 $21.0 $23.0 $12.0 $36.0 $17.0 $15.0 Current Share Price $70.93 $21.80 $20.03 $20.85 $40.79 $51.84 $13.95 $31.74 $55.79 $40.33 $31.66 $18.21 $79.87 $39.36 $19.52 IPO Market Cap ($B) $1.9B $8.2B $1.5B $3.8B $1.5B $4.4B $1.3B $0.9B $1.6B $0.5B $2.1B $1.5B $2.5B $2.1B $4.5B Current Market Cap ($B) $8.8B $9.0B $2.2B $5.6B $4.3B $8.8B $1.0B $2.4B $3.9B $1.1B $3.0B $2.3B $5.9B $5.0B $6.1B • Thirteen out of 15 of the 2018 software IPOs above have seen NTM revenue multiple expansion since their IPO, and all but one have increased market capitalization. * This presentation includes proprietary information of Battery Ventures
  31. 31. Software companies continue to perform well in the public markets 30 IPO Date$ Raised Current ∆ from IPO IPO Date$ Raised Current ∆ from IPO IPO Date$ Raised Current ∆ from IPOEV Price EV Price EV Price 6/22 $150M $16.0B $129.18 761% 3/16 $221M $6.5B $44.89 164% 3/15 $192 $8.8 $70.93 343% 7/28 $95M $1.5B $50.57 181% 3/23 $126M $5.2B $83.87 499% 3/22 $756 $9.0 $21.80 4% 9/15 $90M $2.5B $75.01 525% 4/6 $187M $9.3B $82.73 387% 4/11 $154 $2.2 $20.03 43% 9/22 $96M $1.9B $37.97 137% 4/12 $116M $2.4B $21.86 99% 4/20 $555 $5.5 $20.85 39% 9/29 $238M $6.9B $37.74 136% 4/27 $225M $2.9B $10.94 (27%) 4/26 $462 $7.2 $51.30 133% 10/5 $133M $5.6B $90.98 405% 5/24 $75M $2.2B $4.43 187% 4/26 $629 $8.8 $51.84 79% 10/27 $146M $2.5B $46.32 172% 10/18 $192M $8.0B $147.02 513% 4/26 $175 $4.3 $40.79 172% 10/26 $116M $1.9B $41.91 91% 5/3 $152 $1.0 $13.95 (27%) 11/9 $80M $1.5B $66.96 235% 5/16 $311 $2.4 $31.74 112% 11/14 $131M $2.0B $54.08 238% 6/14 $180 $3.9 $55.79 132% 11/16 $240M $2.5B $28.72 139% 6/28 $193 $1.1 $40.33 92% 7/26 $115 $0.7 $6.57 (45%) 7/26 $251 $3.0 $31.66 38% 9/25 $180 $2.3 $18.21 52% 10/4 $252 $5.9 $79.87 122% 10/11 $264 $5.0 $39.36 132% 10/18 $375 $6.1 $19.52 30% Avg. $135M $5.3B 331% Avg. $148M $4.0B 229% Avg. $306M $4.5B 85% Median $133M $2.5B 181% Median $131M $2.5B 187% Median $251M $4.3B 79% 2016 2017 2018 * * Source: Capital IQ. Prices and Market Cap as of 3/31/2019. Prices and Market Cap for Apptio, Mulesoft, and SendGrid as of acquisition * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • Software companies continue to perform well, with the average company above up 180% from its IPO price. * This presentation includes proprietary information of Battery Ventures
  32. 32. 31 The M&A Market This presentation includes proprietary information of Battery Ventures
  33. 33. Despite volatility and elevated multiples, software M&A picked up in 2018 32Source: Capital IQ as of March 20, 2019. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ 2014 Peak: 9.3x (Jan 17, 2014) Min: 3.4x (Feb 10, 2016) 2018 Peak: 9.7x (Sep 14, 2018) 2019 Peak: 10.2x (Feb 28, 2019) 0.0x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x Oct-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Feb-19 (8.7x) (~8.8x) (9.5x) (10.2x) (6.5x) (5.9x) (8.9x) (6.7x) (9.1x) (6.3x) (8.1x) (8.3x) (15.7x) (15.0x+) (10.5x) (~5.5x) (8.2x) (6.1x) (~16.3x) AverageCloudSector EV/NTMRevenueMultiple 2016 2018 (7.0x) (6.7x) (8.4x) Current: 9.7x (4.1x) (3.2x)(3.3x) (2.7x) (4.5x) (2.3x) (3.6x) (3.9x) (12.0x) 6.0x-8.0x Range Average NTM Rev.Trading Mult.Over Time:6.2x % of Days Trading Between 6.0x-8.0x: 38% >12.0x SaaS Index EV / NTM Revenue Multiple Legend (11.5x) (~12.7x) (~10.6x) (7.8x) (6.5x) (6.9x) (6.2x) (5.3x) Responsys was the only transaction to occur during this >7x multiple period Median NTM Rev Multiple:6.9x (3.3x) (3.2x) SaaS Index Number of Deals Average Multiple >8x 8 9.6x 6-8x 12 8.8x <6x 22 6.1x Transaction Activity at Various SaaS Index Trading Levels ($500MM+) (6.9x) • Despite NTM revenue multiples being historically high, software M&A picked up in 2018, with the record for NTM multiple at acquisition being broken three times in the year (TEV >$1B). * * * * This presentation includes proprietary information of Battery Ventures
  34. 34. $28.9B $16.7B $45.4B $54.9B $44.5B $51.1B $63.5B $63.8B $79.5B $56.3B $174.5B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Software M&A since 2008 33Source: 451 Group Software acquisitions over time • 2018 set a new high-water mark for total software acquisitions, exceeding $100B for the first time and more than doubling the next closest year. This presentation includes proprietary information of Battery Ventures
  35. 35. There were the same number of $1B+ SaaS deals in 2018 as all of 2014-2017 34 Acquirer Target Total deal amount $9.5B $8.3B $4.0B $3.9B $3.7B $3.6B $2.8B $2.6B $2.4B $2.3B $2.3B $1.8B 2014-2017 Source:451 Group, Qatalyst Partners * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Acquirer Target Total deal amount $1.8B $1.7B $1.4B $1.4B $1.3B $1.2B $1.2B $1.2B $1.2B $1.1B $1.1B $1.0B Acquirer Target Total deal amount $8.0B $7.5B $6.6B $5.7B $4.75B $2.6B $2.4B $2.4B $2.1B $1.9B $1.9B $1.8B Acquirer Target Total deal amount $1.7B $1.6B $1.6B $1.5B $1.5B $1.5B $1.5B $1.4B $1.4B $1.3B $1.2B $1.1B 2018 * * * * This presentation includes proprietary information of Battery Ventures
  36. 36. 2018 M&A snapshot 35 Source: 451 group, Capital IQ. Note: Percentages represent M&A volume unless otherwise noted. Enterprise software transactions >$500M. (1) Deal count percentages shown. PE represented 33% of volume (2015 – 2017) and 25% of volume (2018). (2) Deal count percentages shown. SaaS represented 38% of volume (2015 – 2017) and 40% of volume (2018). (3) Deal count percentages shown. Stock represented 12% of volume (2015 – 2017) and 15% of volume (2018). (4) Deal volume percentages shown. Higher Purchase MultiplesLarger Average Deal Size $2.3Bn +45% $3.3Bn More Private Equity Deals (1) 66% Strategic 34% Financial Sponsor 60% Strategic 40% Financial Sponsor More SaaS Deals (2) 33% SaaS 67% Non- SaaS 48% Non-SaaS 52% SaaS More Stock Deals (3) 7% Stock 93% Cash 81% Cash 19% Stock 2015 - 2017 2018 2015 - 2017 2018 2015 - 2017 2018 2015 - 2017 2018 Infrastructure Becomes Sexy Again (4) 38% Infrastructure 62% Applications 64% Infrastructure 36% Applications Buyers More Comfortable w/ Open Source (4) 1% Open Source 99% Proprietary 61% Proprietary 39% Open Source Horizontals Trump Verticals (4) 29% Vertical 71% Horizontal 86% Horizontal 14% Vertical 2015 - 2017 2018 2015 - 2017 2018 2015 - 2017 2018 4.4x NTM Rev. +99% 8.7x NTM Rev. 2015 - 2017 2018 This presentation includes proprietary information of Battery Ventures
  37. 37. Eight of the top ten all-time software acquisition multiples were paid in 2018 36 8 of The Top 10 All-Time Highest Software Acquisition Multiples Were Paid in 2018 for Transactions >$1B 2018 Transactions Target: (NTM Revenue Multiple) Acquiror: Deal Size ($Bn): $8.0 $6.5 $7.5 $2.4 $3.7 $2.0 $4.8 $1.6 $8.3 $34.7 Deal Value as % of Acq. Market Cap.: 6% 7% 1% 1% 2% 27% 4% 6% 8% 30% Pre-2018 Transactions Stock Component?: -   - -  - - - - ~16.3x 15.7x 15.0x+ ~12.7x 12.0x 11.5x ~10.6x 10.5x 10.2x 9.3x • Eight of the 10 largest software acquisitions of all time occurred in 2018, at prices ranging from 1% of acquirer market cap to 27%. This presentation includes proprietary information of Battery Ventures Source: Capital IQ, 451 Group, company websites and filings * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ * *
  38. 38. With Workday entering the M&A fray, ServiceNow and Amazon stand as the only enterprise businesses on the sidelines 37 $50Bn, 28% $47Bn, 26% $75Bn, 42% $8Bn, 4% 0 Deals Back Office Apps Vertical Front Office Apps Infrastructure 0 Deals Back Office Apps Vertical Front Office Apps Infrastructure 7 Deals – $15Bn Volume 15.7x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 1 Deals – $0.6Bn Volume 4.7x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 4 Deals – $8Bn Volume 10.6x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 7 Deals – $29Bn Volume 16.3x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 3 Deals – $37Bn Volume 15.0x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 6 Deals – $40Bn Volume 9.3x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 7 Deals – $12Bn Volume 12.7x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 4 Deals – $4Bn Volume >15.0x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure 14 Deals – $29Bn Volume 9.1x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure Back Office Apps Vertical Front Office Apps Infrastructure 1 Deal – $2Bn Volume 10.5x Highest Multiple Back Office Apps Vertical Front Office Apps Infrastructure Infrastructure (Excl. Red Hat) $40Bn, 28% • With Workday’s acquisition of Adaptive Insights, ServiceNow and Amazon stand as the only enterprise software companies to not make a meaningful software acquisition. Infrastructure makes up 42% of acquisition dollars in the companies above. This presentation includes proprietary information of Battery Ventures Source: Qatalyst Partners * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ * * *
  39. 39. Vista and Thoma have separated themselves from the PE pack 38 • Thoma Bravo and Vista Equity Partner have respectively completed 28 and 26 software acquisitions over $500M since 2009, with both firms investing $25B+ into software companies during that time period. 28 26 6 6 6 5 5 3 3 2 2 2 2 2 1 1 Selected Statistics Total Txn Value ($Bn) $28.0 $35.0 $16.6 $15.3 $11.3 $9.9 $8.9 $9.4 $6.3 $11.7 $6.3 $5.0 $3.2 $3.0 $2.0 $0.5 Largest Deal ($Bn) $4.5 $4.2 $11.0 $6.9 $5.3 $6.9 $4.4 $6.9 $3.5 $8.4 $4.3 $4.5 $2.0 $2.2 $2.0 $0.5 Highest NTM Rev. Multiple 7.0x 7.0x 8.4x 3.1x 4.3x 4.2x 2.5x 3.1x - - 3.2x 7.0x - - 1.5x - NumberOfTransactions (1) Enterprise Software Financial Services (1) (1) (1) (1) (1) (2) (1) Selected Software Transactions >$500MM Since January 2009 • Source: Qatalyst Partners * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ * This presentation includes proprietary information of Battery Ventures
  40. 40. The gap between strategics and private equity in both amount and valuation is closing 39Source: 451 Research Group. Includes deals with announced values in the Application Software and Information/IT Management industries 0x 1x 2x 3x 4x 5x 6x 7x 8x 9x 10x '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 LTMRevenueMultiple Private Equity Strategic 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 Percentageofaqusitions($) Private Equity Strategic Revenue multiples of acquisitionsSoftware acquisitions by acquirer type • 23.7% of software acquisition dollars came from private equity firms, down from 35.7% in 2017. The trend of private equity acquirers paying multiples similar to strategic acquirers began in 2014 and has continued in a period of higher pricing. This presentation includes proprietary information of Battery Ventures
  41. 41. 40 The Venture Market This presentation includes proprietary information of Battery Ventures
  42. 42. Software investing has plateaued at around 40% of the industry 41 27% 25% 28% 33% 35% 38% 42% 40% 40% 39% 40% 73% 75% 72% 67% 65% 62% 58% 60% 60% 61% 60% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Software Other Dollars by sector • Software continues to grow as an asset class, but it has remained a consistent ~40% of venture investing since 2015. Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  43. 43. In 2018, venture investing in software broke out in terms of dollars invested and continued to decline in number of deals 42 Number of dollars and deals into software businesses • 2018 represents an all-time high for dollars invested into software businesses, breaking out of a four year plateau ~$30B, but the number of deals has continued its four-year decline. $9.2B $5.9B $7.5B $12.2B $12.9B $16.0B $28.0B $31.8B $30.2B $33.7B $45.5B 1,459 1,167 1,514 2,179 2,867 3,557 4,147 4,009 3,563 3,438 3,277 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 0 5 10 15 20 25 30 35 40 45 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  44. 44. All core regions were up in terms of absolute dollars 43 $512M $277M $498M $672M $874M $1.1B $2.4B $3.5B $3.1B $5.3B $5.5B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 United States $8.6B $5.5B $6.9B $11.3B $11.8B $14.6B $25.1B $27.6B $26.2B $27.5B $38.4B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $116M $91M $114M $192M $284M $326M $452M $547M $558M $750M $1.1B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $4M $6M $13M $52M $27M $81M $129M $163M $256M $197M $453M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Dollars invested into different geographies Canada • This boost in total dollars invested was driven in large part by the US ($27.5B to $38.4B), but Canada and Oceania continue to grow their ecosystems at a rapid rate, and Europe saw an all-time record in dollars invested as well. Europe Oceania % yearly total 93% 94% 92% 93% 91% 91% 89% 87% 87% 82% 84% % yearly total 1% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 6% 5% 7% 6% 7% 7% 9% 11% 10% 16% 12% 0% 0% 0% 0% 0% 1% 1% 1% 1% 1% 1% This presentation includes proprietary information of Battery Ventures Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above
  45. 45. In the US, the Bay Area was up significantly in terms of dollars and percentage 44 Source: Data from Pitchbook. Includes businesses with a headquarters in the United States Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above Bay Area Dollars invested into different US geographies Tri-State • Over the last decade, the Bay Area has swung from representing 45-60% of the software ecosystem, while the greater NYC area has risen to the teens. New England $3.9B $3.0B $3.5B $5.8B $6.1B $7.4B $14.9B $13.8B $12.0B $12.9B $20.2B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $742M $419M $648M $1.3B $1.1B $1.5B $2.1B $3.5B $3.5B $3.6B $4.7B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $887M $630M $677M $776M $1.0B $1.3B$1.3B $2.3B $1.8B$1.9B $2.5B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Los Angeles Area Rest of US $266M$181M$142M $327M $468M $623M $1.3B $1.4B$1.5B$1.4B $2.4B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $2.8B $1.3B $1.9B $3.2B$3.1B $3.8B $5.1B $5.7B $7.3B$7.2B $8.2B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 % yearly total 45% 54% 51% 51% 52% 51% 60% 52% 46% 48% 53% 9% 8% 9% 11% 9% 10% 8% 13% 14% 13% 13% 10% 11% 10% 7% 9% 9% 5% 9% 7% 7% 7% 3% 3% 2% 3% 4% 4% 5% 5% 6% 5% 6% % yearly total 33% 24% 28% 28% 26% 26% 21% 21% 28% 27% 22% This presentation includes proprietary information of Battery Ventures
  46. 46. State of software Seed rounds 45 Number and Dollars 11.9% 12.4% 12.2% 11.9% 11.9% 11.1% 12.3% 16.4% 18.0% 20.0% 20.2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $3.7M $2.5M $3.1M $3.7M $3.7M $4.0M $4.3M $5.0M $5.0M $6.0M $6.7M $0.5M $0.4M $0.4M $0.5M $0.5M $0.5M $0.6M $1.0M $1.1M $1.5M $1.7M $0M $1M $2M $3M $4M $0M $2M $4M $6M $8M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Pre-money Valuation Median Deal Size $189M $185M $304M $601M $1.0B $1.6B $2.0B $2.4B $2.5B $2.7B $2.8B 281 318 515 932 1,509 2,086 2,338 2,196 1,800 1,620 1,413 0 500 1,000 1,500 2,000 2,500 $0 $1B $2B $3B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count Investments into software Seed rounds Deal Dynamics Median Dilution • More dollars are being invested into fewer deals at the seed stage. This has meant incrementally more dilution for entrepreneurs but significantly more money. This presentation includes proprietary information of Battery Ventures Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above
  47. 47. State of software Series A rounds 46 29.0% 29.7% 28.0% 26.9% 24.4% 26.8% 23.9% 24.1% 25.0% 27.3% 25.9% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $6.2M $6.0M $6.2M $6.8M $7.9M $8.9M $11.5M $14.0M$15.0M$16.0M $20.0M $2.5M $2.5M $2.4M $2.5M $2.6M $3.3M $3.6M $4.4M $5.0M $6.0M $7.0M $0M $5M $10M $15M $0M $10M $20M $30M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Pre-money Valuation Median Deal Size $2.2B $1.6B $1.7B $2.9B $3.4B $4.0B $5.7B $6.6B $6.8B $7.5B $9.3B 573 443 513 690 765 849 1,070 1,054 1,041 1,034 1,022 0 200 400 600 800 1,000 1,200 $0 $1B $2B $3B $4B $5B $6B $7B $8B $9B $10B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count Number and Dollars Investments into software Series A rounds Deal Dynamics Median Dilution • The Series A stage is in the midst of a five-year plateau in number of deals ~1,000. The typical Series A is up to $7M on a $20M pre-money valuation, which is significantly up from 2008, while dilution is actually down. Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  48. 48. State of software Series B rounds 47 $2.8B $1.5B $2.2B $3.1B $2.9B $3.6B $5.6B $6.7B $5.9B $8.3B $9.9B 328 213 228 299 308 334 409 417 389 426 460 0 100 200 300 400 500 $0 $2B $4B $6B $8B $10B $12B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count $18.6M $13.5M$17.5M $23.3M$21.2M $29.8M$33.4M $41.8M$40.0M $50.0M $62.5M $7.0M $5.9M $7.0M $7.0M $7.3M $8.0M$10.0M$12.0M$13.0M$15.0M$17.2M $0M $10M $20M $30M $40M $0M $25M $50M $75M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Pre-money Valuation Median Deal Size 27.4% 30.5% 28.6% 23.1% 25.5% 21.2% 23.1% 22.3% 24.5% 23.1% 21.6% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Number and Dollars Investments into software Series B rounds Deal Dynamics Median Dilution • Series B saw a record for number of deals and dollars invested in 2018, accompanied by higher valuations and deal sizes, along with less dilution. Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  49. 49. State of software Series C rounds 48 $2.8B $1.5B $2.2B $3.1B $2.9B $3.6B $5.6B $6.7B $5.9B $8.3B $9.9B 143 90 151 135 163 162 198 175 185 196 185 0 50 100 150 200 250 $0 $2B $4B $6B $8B $10B $12B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count 20.7% 24.3% 22.4% 18.0% 18.2% 16.6% 15.6% 17.4% 20.6% 17.6% 17.4% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Number and Dollars Investments into software Series C rounds Deal Dynamics Median Dilution • Series C investing reached a new peak for dollars invested, with the number of deals slightly down year-over-year. Valuations and deal sizes also rose in 2018, with flat dilution. This presentation includes proprietary information of Battery Ventures Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above $38.3M $25.0M$27.8M $45.7M$53.2M$60.4M $81.3M $100.0M $90.0M $117.4M $135.0M $10.0M$8.0M $8.0M$10.0M$11.8M$12.0M $15.0M $21.0M$23.3M$25.0M $28.5M $0M $10M $20M $30M $40M $50M $0M $50M $100M $150M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Pre-money Valuation Median Deal Size
  50. 50. State of software Series D+ rounds 49 $2.2B $1.6B $1.6B $3.3B $3.4B $4.3B $9.3B $11.0B $9.8B $9.4B $17.1B 141 115 117 139 152 176 205 228 194 190 213 0 50 100 150 200 250 $0 $5B $10B $15B $20B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Capital Invested Deal Count $52M $31M $37M $72M $90M $76M $181M$163M $134M $202M $450M $9.7M $8.2M $8.0M $11.0M$15.0M$12.1M $25.0M$25.0M $19.5M $25.0M $50.0M $0M $20M $40M $60M $80M $0M $250M $500M 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Median Pre-money Valuation Median Deal Size 15.6% 20.8% 17.8% 13.2% 14.3% 13.8% 12.1% 13.3% 12.7% 11.0% 10.0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Number and Dollars Investments into software Series D+ rounds Deal Dynamics Median Dilution • Late-stage growth saw a sharp increase in activity, with 2018 dollars invested growing over 80% year-over-year. Median deal size doubled and median post money valuation reached $500M. Despite these much larger deal sizes, dilution decreased. Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  51. 51. As round and fund sizes have gone up, so too have valuations 50 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Seed Series A Series B Series C Series D+ Seed: 179% Series A: 322% Series B: 336% Series C: 353% Series D+: 859% Median pre-money valuation indexed since 2008 • Valuation increases continue to track the growth in average deal sizes, though the valuations at Series D+ have clearly broken away from the pack during the last two years. This presentation includes proprietary information of Battery Ventures Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above
  52. 52. $12.5B $7.4B $13.2B $51.5B $44.2B $42.1B $74.2B $42.5B $74.9B $39.8B $109.0B $9.2B $5.9B $7.5B $12.2B $12.9B $16.0B $28.0B $31.8B $30.2B $33.7B $45.5B 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Liquidity Capital Invested When comparing liquidity to capital invested in the ecosystem, 2018 was the best year since 2014 51 1.35x 1.26x 1.76x 4.21x 3.42x 2.63x 2.65x 1.34x 2.48x 1.18x 2.40x Ratio of liquidity/ capital invested Liquidity/capital invested • While 2017 trailed only 2009 and 2015 in terms of lowest ratio between liquidity and capital invested, 2018 exceeded the prior 10- year average of 2.23x. Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2018 is different than data presented above This presentation includes proprietary information of Battery Ventures
  53. 53. 52 The Themes in the Market This presentation includes proprietary information of Battery Ventures
  54. 54. Key Themes in 2018 53 AWS is the clear leader in public cloud (with a lot of feuding) 1 This presentation includes proprietary information of Battery Ventures Open source goes mainstream2 Battle brewing for developer mindshare 3 Automation and artificial intelligence are here 4 Europe is far less penetrated than the US despite similar demographics 5 The “bottoms up” sales motion goes from niche to mainstream 6 Product management becomes more data driven 8 Product >> sales spend for a new wave of software companies 7 Culture matters, and remote work and distributed teams are here to stay 9 10 New acquirers emerge as more SaaS companies reach $1B and $5B+ scale
  55. 55. State of the public cloud: AWS the clear leader, lots of feuding 54 Source: Qatalyst Partners Open Data Initiative announced 9/24/18 enhances interoperability and data exchange between applications and platforms – Adobe Experience Cloud, Dynamics 365 and SAP HANA – through a common data model using a common data like service on Microsoft Azure. Worldwide IaaS Public Cloud Services Market Share (2017) 13.3% 4.6% 3.3% 1.9% 25.0% 51.8% State of the Cloud Source: Gartner (August 2018). Other Vendors “Salesforce’s growing strategic relationship with AWS is fueled by a shared commitment to customer success. Our newest integrations will empower CIOs to securely share and synchronize data across two of the world’s most trusted cloud platforms to accelerate their digital transformations” - Bret Taylor, President and Chief Product Officer, Salesforce , Sept 25, 2018 to Amazon’s Consumer Business Turned off its Oracle Data Warehouse Microsoft, Adobe and SAP Form Open Data Initiative Using Azure Oracle Cofounder Larry Ellison Slams AWS for Security, Cost and Performance Speaking on stage at the Moscone Centre in San Francisco, Ellison repeatedly slated AWS for overpricing customers and guaranteed that moving to the Oracle Generation 2 Cloud would cut database bills in half. Thomas Kurian Named Google Cloud CEO After 22 Years at Oracle Salesforce Deepens Global Strategic Alliance with AWS Oracle’s Thomas Kurian Is at Odds With Larry Ellison on Cloud Kurian wants Oracle to make more of its software available to run on public clouds from chief rivals Amazon.com Inc. and Microsoft Corp. as a way to diversify from its own struggling infrastructure, a view opposed by Ellison. Red Hat and Microsoft Co-Develop the First Red Hat OpenShift Jointly Managed Service on a Public Cloud Microsoft and Red Hat expand partnership around hybrid cloud, container management and developer productivity This presentation includes proprietary information of Battery Ventures
  56. 56. $2.9B $5.8B $34.4B $2.4B $5.4B $7.5B $1.8B $6.5B $1.2B $5.2B $1.1B $9.4B $11.2B $53.6B Private Unicorns 2018 IPOs M&A Open source goes mainstream 55 Source: GitHub and Pitchbook Data Data as of 3/31/2019 • * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. • For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • 2018 was a landmark year for the open source community, with combined valuations across all activity equaling over $70B, and the number of open source repositories growing ~40% year-over-year. * * This presentation includes proprietary information of Battery Ventures
  57. 57. Battle brewing for developer mindshare 56 Source: Capital IQ Data as of 3/31/2019 • * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. • For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Developer Workflow & Collaboration Monitoring/Logging Ticketing On-call Operations Market Cap: $905B Market Cap: $27B Market Cap: $19B Market Cap: $6B Market Cap: $238B Market Cap: $45B Market Cap: $875B Market Cap: $817B Market Cap: $27B This presentation includes proprietary information of Battery Ventures * *
  58. 58. Automation and artificial intelligence are here 57 • Automation and artificial intelligence are here, with a number of software companies leveraging data and AI as a primary wedge to disrupt legacy incumbents, growing TAMs or even creating new markets. Incumbent Automation + AI Sales Marketing Customer service Expenses Document capture Repetitive processes ITSM Application integration Marketing automation Knowledge management Call center Services time tracking * * * * * * * * * * This presentation includes proprietary information of Battery Ventures Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
  59. 59. Europe has similar demographics to the United States but is far less penetrated 58• Sources: Eurostat, Federal Reserve, GSMA • Europe includes EU and EFTA member states. Assumes EUR/USD exchange rate of 1.148 (rate as of 12/31/2018). • Despite similar demographics, Europe lags the US in amount of private investment ($5.5B vs.$122B) and number of unicorns (68 vs. 138). Activity in Europe is growing however, with private investment up 6.7x since 2014. Europe:US ratioEurope in 2018US in 2018 Population GDP (nominal) Total dollars invested Services as % of GDP ~530M~330M ~$20T ~$54B$122B ~$21T ~73%~80% ~0.9x 1.6x ~1.0x 0.4x vs. vs. vs. vs. Smartphone penetration ~70%~77% ~0.9xvs. Number of unicorns 68138 0.5xvs. This presentation includes proprietary information of Battery Ventures
  60. 60. The “bottoms up” sales motion goes from niche to mainstream 59 Source: Capital IQ and Pitchbook Data Public company and acquisition data as of 3/31/2018. Private company data as of 4/10/2019. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • Bottoms-up has arrived, as the market cap of bottoms-up 2018 IPOs is similar to the private valuations of bottoms-up unicorns. The 2018 M&A class showed the diversity of acquirers for bottoms-up businesses, from traditional vendors like Microsoft and Cisco to bottoms-up native businesses like Atlassian and Twilio. ** * * $12.2B $30.3B $29.9B 2019 IPOs M&A IPO New Unicorns This presentation includes proprietary information of Battery Ventures
  61. 61. Product >> sales spend for a new wave of software companies 60 Source: Capital IQ Public company data as of FY18. • Salesforce is 12 times bigger than Atlassian and spends 25 times more on sales and marketing, but only 3.7 times more on research and development. Revenue $10,480M $874M Gross Margin 74% 80% R&D Expense $1,553M $415M R&D % of Revenue 15% 48% S&M Expense $4,829M $188M S&M % of Revenue 46% 22% FY18 This presentation includes proprietary information of Battery Ventures
  62. 62. Product efficiency becomes as important as S&M efficiency 61Data from Pendo* and Pendo* Product Feature Adoption Report – Feb 2019 * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ • 80% of developed software features are rarely or never used. With approximately $37B of R&D spend by publicly traded cloud companies, ~$30B of public cloud R&D is spent developing features that are rarely or never used. Rare Last 5% of usage 56% 24% Never Used Last 5% of usage Frequent Top 80% of usage 12% 8% Moderate Next 15% of usage This presentation includes proprietary information of Battery Ventures
  63. 63. Culture pays off: highest rated cloud computing companies 62 The private- and public-company reports identify cloud computing companies that are highest rated on Glassdoor, based on company ratings shared by employees. To be considered, a cloud company must have received at least 30 company reviews on Glassdoor as of 3/21/19. The private-company report tracks independent, non-public cloud companies that, according to Battery research and data from research service Crunchbase, are based in the U.S.; have a B2B business model; are categorized as SaaS, cloud-computing and/or enterprise software, according to Crunchbase; have more than 200 employees (as of 4/12/2019, according to company data provided to LinkedIn and Battery research); and have raised funding on or after 7/01/2015). The public-company report tracks public cloud companies with a B2B business model that have at least $500 million in total enterprise value as of March 31, 2019, according to Capital IQ.. Trading data from Capital IQ as of 3/31/2019. Headcount data from LinkedIn. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Rank Company Glassdoor Rating 1 4.9 2 4.9 3 4.9 4 4.9 5 4.9 6 4.9 7 4.9 8 4.9 9 4.8 10 4.8 11 4.8 12 4.8 Private (Top 25) • Battery used data from Glassdoor for the third year to create the Highest Rated Public Cloud Computing Companies to Work For. It’s clear that focusing on culture leads to rewards: our 50 top private companies collectively added 41% of headcount in the past 12 months, and the 25 public companies trade at a median NTM multiple of 9.28x vs. 6.62x for other cloud companies. Rank Company Glassdoor Rating 13 4.8 14 4.8 15 4.7 16 4.7 17 4.7 18 4.7 19 4.7 20 4.7 21 4.7 22 4.7 23 4.7 24 4.6 25 4.6 Rank Company Glassdoor Rating 1 4.6 2 4.5 3 4.5 4 4.4 5 4.4 6 4.4 7 4.4 8 4.3 9 4.3 10 4.3 11 4.3 12 4.3 Rank Company Glassdoor Rating 13 4.3 14 4.3 15 4.3 16 4.3 17 4.2 18 4.2 19 4.2 20 4.2 21 4.2 22 4.2 23 4.2 24 4.2 25 4.2 * * * * * * Public (Top 25) This presentation includes proprietary information of Battery Ventures *
  64. 64. Remote work and distributed teams are here to stay 63 Rationale 2 Flexibility of location Select distributed vendors 1 Flexibility of daily schedule 3 Increased employee loyalty 4 Frequently cost advantages War on talent isn’t slowing New set of modern enablers ** • Enabled by a new wave of cloud collaboration tools, companies are embracing distributed work as a core aspect of their operations and a key differentiator in the war on talent. * * This presentation includes proprietary information of Battery Ventures Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
  65. 65. Public SaaS Acquisitions >$1B The number of $1B+ and $5B+ SaaS companies continue to grow, presenting new potential acquirers in the market 64 Number of companies over $1B and $5B * • While the dollars (and valuations) in the software ecosystem continue to rise, so too do the number of companies that have reached $1B+ and $5B+ acquisitions or market capitalizations. * * 0 10 20 30 40 50 60 70 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Number of Companies over $1B Number of Companies over $5B 64 29 This presentation includes proprietary information of Battery Ventures Source: Capital IQ Data as of 3/31/2019 * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
  66. 66. 65 PRIOR YEARS’ THEMES THAT ARE STILL RESONATING This presentation includes proprietary information of Battery Ventures
  67. 67. 2018: Serverless breaks out as the new compute platform 66 • While new in name only, 2018 was the year that serverless broke out as a platform and the term became nearly ubiquitous, even though adoption is still early. • In order to further abstract infrastructure management, AWS, Azure, GCP, and IBM have all created serverless functions. VM VMVM Virtual Machines Containers Bare Metal Serverless Growth of serverless market $1.9B $7.7B 2016 2021 Cloud Hosting Azure Functions AWS Functions IBM Functions Google Functions Abstraction Time * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/. Left graph source is adapted from CNCF Blog. Right chart source: Research and Markets Function-as-a-Service Report * * * This presentation includes proprietary information of Battery Ventures *
  68. 68. 2018: It might not be crazy to compete with cloud giants after all… 67 Select Private Vendor Cloud computing Azure VM Cloud data warehouse Azure Data Warehouse Application monitoring Azure Monitor Google App Engine Data processing Azure HDInsight Google Dataproc Machine learning platform Azure Machine Learning Cloud security Azure Security Center NA Data streaming Azure Event Hub Google Dataflow Security and access control Amazon Cognito Azure Active Directory Google Identity Management CDN Amazon Cloudfront Azure CDN Google CDN Cost management Amazon Trusted Advisor Azure Cost Management NA Provisioning NA NA Key management Amazon KMS/ Azure KeyVault Google Key Management * * This presentation includes proprietary information of Battery Ventures Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
  69. 69. 2018: Data governance and data sovereignty are now a need-to-haves 68 • May 2018 was the official go-live date of GDPR in Europe, but enterprises and SMBs alike spent 2017 and the beginning of 2018 accounting for data and data processes. • This has become an even more relevant as the public outrage over Facebook’s handling of data makes headlines around the world. GDPR impacts are broad reaching Facebook isn’t helping public perception Select vendors that can help you CYA *  Top Left Image Source: Europa.eu  Top Right Image Source: Denver Post  Bottom Right Select Vendors Source: GDPR Index  * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns.  For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/This presentation includes proprietary information of Battery Ventures
  70. 70. 2017: Microservices architecture and rapid product delivery are must-haves 69 Sample Tools Infrastructure Orchestration / Runtime Provisioning / Deployment Visibility / Monitoring Security / Governance Best-in-Class Good Average Many times a day Many times a week Every week Mainframe 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Client Server Multi-Tenancy Cloud-Native SALESFORCE AWS O365 * * * Three Tier This presentation includes proprietary information of Battery Ventures Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Select logos have been updated from 2017 version *
  71. 71. Product now drives software sales 70 1970-2000 2000-2015 2015- Era Sales-driven software purchases Marketing-driven software purchases Product-driven software purchases Sample companies to emerge Sample enablers Best-in- Class Good Average Net promoter score 50+ 30-50 10-30 * * * * * * * This presentation includes proprietary information of Battery Ventures • In the “chicken or the egg” debate of product vs. distribution, product-led companies are increasingly finding success. Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
  72. 72. 2017: There are competitors in all segments of the software market Enterprise Mid-market SMB CRM E-Commerce B2C marketing Marketing automation HCM/Accounting Applicant tracking Customer service Telephony Procurement Expense management System management * * * * * 71 * This presentation includes proprietary information of Battery Ventures Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Select logos have been updated from 2017 version
  73. 73. 2017: Software innovation is now global * * * * * ** * * * * * * * * ** * * * Sample company examples from disparate geographies * * * * * * * This presentation includes proprietary information of Battery Ventures 72 Source: Battery research. Examples given are illustrative. * Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Select logos have been updated from 2017 version
  74. 74. 2017: In software, being first seldom decides a market 73 (1) Disclosed acquisition price according to 451 Research  (2) Enterprise value as of 3/31/2019  (3) Most recent private company financing valuation Sample Vendors Market Core Competitive Time Early to Market Valuation Market Leader Valuation Relational database 1980 – 1986 N/A $206.2B(2) Spreadsheets 1982 – 1987 N/A N/A Expense management 1996 – 2001 $160M(1) $8.3B(1) Web conference 1999 – 2002 $200M(1) $3.2B(1) CRM 2000 – 2003 $5.9B(1) $107.0B(2) Applicant tracking 2000 – 2004 $115M(1) $1.9B(1) Learning management 2007 – 2010 $400M(1) $3.2B(2) Pharma CRM 2008 – 2012 $415M(1) $19.3B(2) SMB e-commerce 2008 – 2013 N/A $22.6B(2) Enterprise e-commerce 2008 – 2013 $1.0B(1) $2.9B(1) Online payments 2012 – 2016 $800M(1) $22.5B(3) This presentation includes proprietary information of Battery Ventures
  75. 75. 74 CONCLUSION This presentation includes proprietary information of Battery Ventures
  76. 76. It’s not easy to get there… 75 50+ employees 200+ employees 500+ employees 1,000+ employees 5,000+ employees 8,500 companies 2,700 companies 1,200 companies 650 companies 240 companies • The road to 1K employees is a long one for many start-ups, with over 101K software companies in the U.S. and only 650 at more than 1,000 employees. Source: LinkedIn employee data on software companies as of 4/2/2019 32,700 companies 11+ employees This presentation includes proprietary information of Battery Ventures
  77. 77. But there has never been a better time to build a software company 76 * Denotes a current or former Battery portfolio company. Past performance is not indicative of future returns. For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/ Note: Includes public cloud companies with TEV >$500M as of 3/31/19 according to Capital IQ, cloud companies acquired for over $500M since 2009 according to Pitchbook, and private cloud companies valued at over $1.5B as of 3/31 according to Crunchbase. Excludes companies based in Asia 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Nasdaq composite index * * * * * * * * * * * * * * * * * This presentation includes proprietary information of Battery Ventures
  78. 78. Biographies 77 Logan focuses on growth investments for business-to-business software companies. He is currently involved in Battery’s investments in Amplitude, Braze, Clubhouse, Dataiku, Kustomer, LogRocket, Narvar, Pendo, Redox, StreamSets and Workato. He was previously involved with Battery’s investment in TrendKite (acquired by Cision). In 2017, Logan was named to Forbes’ “30 Under 30” list of young venture capitalists. He has also been published in Forbes and TechCrunch discussing the anatomy and growth benchmarks of successful SaaS companies. Twitter: @loganbartlett Neeraj joined Battery in 2000 and invests in SaaS and internet companies across all stages. He was a founding investor in BladeLogic (NASDAQ: BLOG, acquired by BMC) and has invested in several other companies that have gone on to stage IPOs, including Bazaarvoice; Coupa; Glassdoor.com (acquired by Recruit Holdings); Guidewire Software; Marketo (acquired by Vista Equity Partners); Nutanix; Omniture (acquired by Adobe); RealPage; and Wayfair. He also invested in several Battery portfolio companies that have experienced M&A events, such as APlaceForMom (acquired by Warburg Pincus), AppDynamics (acquired by Cisco), Brightree (acquired by ResMed), Consona (acquired by Vista Equity Partners), Internet Brands (acquired by Hellman & Friedman), OpsGenie (acquired by Atlassian), TrendKite (acquired by Cision), and VSS Monitoring (acquired by Danaher). Neeraj’s current private investments include Amplitude, BloomReach, BounceX, Braze, Catchpoint, Chef, Clubhouse, Cohesity, Dataiku, InVision, Kustomer, LogRocket, Optimizely, Pendo, SmarterHQ, Sprinklr, StellaService, Tealium, Thundra, Workato and Yesware. Neeraj has been recognized on the Forbes Midas List, which ranks the top 100 venture capitalists in the world, for the past nine consecutive years. In 2019, he cracked the top ten on the list by reaching number nine. Twitter: @neerajvc Neeraj Agrawal – General Partner Logan Bartlett – Principal Brandon Gleklen – Associate Michael Hoeksema – Associate This presentation includes proprietary information of Battery Ventures

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