In both the public and personal markets, appraisals for B2B software application business continue to climb. The average publicly traded cloud company trades at nearly 12x forward income, while in the personal markets, investors are substantially more aggressive. With record levels of private capital, continued outperformance in the general public markets and an absolutely no interest rate environment, it can be tough to think of an impetus for slowing down this runaway software train (even the COVID-19 pandemic has not yet succeeded!).
Just four or 5 years back, outsized exits in the business sector were outliers. In 2016, we built the slide below (showing value at the time of IPO/acquisition) to show the dominance of large B2C exits. Back then, the 14 most considerable venture-capital results came from customer business, and the very first enterprise result listed was LSI, a semiconductor business acquired for $6.5 B in 2014.
Image Credits: Menlo Ventures/CB Insights Times have altered. In 2019 alone, seven business exits would make this chart(Slack, Qualtrics, Datadog, CrowdStrike, Cloudflare, 10x Genomics and Zoom). As I write this, 14 business software application businesses boast a market cap going beyond $20B.
To further illustrate this point, the two most important personal venture-backed services (Stripe and SpaceX) are both enterprise businesses, and the leading 25 most valuable companies are now almost evenly split between customer and enterprise. If this truly reflects the pipeline for the next generation of considerable VC exits, we should anticipate the pendulum to continue to swing in favor of business investing.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.
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