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. 2
WHY WE’RE LONG SOFTWARE
This presentation includes proprietary information of Battery Ventures
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. $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. 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. 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. 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. 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. 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. 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. 11
4 Software is displacing service & labor
This presentation includes proprietary information of Battery Ventures
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. 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
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
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. 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. 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. 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. 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. 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. (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. 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. (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. 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
$300-500K
ARR / Employee
This presentation includes proprietary information of Battery Ventures
28. Median Statistics
IPO Size ($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. 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. 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 $6.1B
• Thirteen out of 15 of the 2018 software IPOs above have seen NTM revenue multiple expansion since their IPO, and all but one
have increased market capitalization.
*
This presentation includes proprietary information of Battery Ventures
31. Software companies continue to perform well in the public markets
30
IPO Date$ 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. 31
The M&A Market
This presentation includes proprietary information of Battery Ventures
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. $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. 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. 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. 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. 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. 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 >$500MM Since January 2009
• Source: Qatalyst Partners
* Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns.
For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
*
This presentation includes proprietary information of Battery Ventures
40. The gap between strategics and private equity in both amount and valuation is closing
39Source: 451 Research Group. Includes deals with announced values in the Application Software and Information/IT Management industries
0x
1x
2x
3x
4x
5x
6x
7x
8x
9x
10x
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
LTMRevenueMultiple
Private Equity Strategic
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
'02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18
Percentageofaqusitions($)
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
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. $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. 52
The Themes in the Market
This presentation includes proprietary information of Battery Ventures
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. 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. $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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 65
PRIOR YEARS’ THEMES THAT ARE STILL RESONATING
This presentation includes proprietary information of Battery Ventures
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. 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. 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. 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. 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. 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. 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. 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
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. 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. 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