State of the OpenCloud 2020

State of the OpenCloud 2020
Dharmesh Thakker
Chiraag Deora
Danel Dayan
Jason Mendel
October 7, 2020
This presentation includes proprietary information of Battery Ventures

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 October 7, 2020 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 Dharmesh Thakker, Chiraag Deora, Danel Dayan, and Jason Mendel 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.
1
Disclaimers

We’re Long Cloud
Infrastructure
& Open Source
Software

This presentation includes proprietary information of Battery Ventures3
We’re long cloud infrastructure & open source software
Cloud-native infrastructure companies are creating value at an unprecedent pace
Infrastructure markets are larger than we all expected, and penetration is still early
Software performance is at historical highs, driven by increased cloud adoption
Cloud providers are executing at a massive scale while continuing to drive innovation
COVID-19 has accelerated two years’ worth of digital transformation in two months
2
1
3
4
5
With every new crisis, there is a new opportunity6

12%
14%
15%
17%
9%
11%
14%
17%
20%
22%
2018 2019 2020 2021 2022 2023
% Cloud Penetration (Pre-COVID-19 Estimates)
% Cloud Penetration (Post-COVID-19 Estimates)
Source: Gartner Market Databook, Goldman Sachs Global Investment Research.This presentation includes proprietary information of Battery Ventures4
COVID-19 has accelerated cloud adoption while the
pie continues to expand
$13B
$22B
$39B
$45B
Disruption Potential
COVID-19 has accelerated cloud adoption by 2% or $13B in 2020 alone with more
than $600B worth of disruption potential still transitioning from on-prem.
$623B $645B $592B $608B $630B $661B

$8 $9 $10 $12 $14 $16 $18 $20 $22 $25 $27
$31
$35
$39
$43
$48
$53
$58
$64
$71
$6 $7 $7
$8
$8
$9
$10
$11
$13
$14
$16
$17
$18
$19
$21 $23
$24
$25
$26
$27
$14
$16 $18
$20
$22
$25
$27
$31
$35
$39
$43
$48
$53
$58
$64
$71
$77
$84
$90
$97
73% 72% 70%
62%
58% 56% 54% 55% 57% 58% 57% 56% 53%
50% 48% 47% 45% 44% 41% 38%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
New Incremental Revenue vs. Prior Year
Prior Year LTM Revenue
Y/Y Growth
24 48 61 82
159
280
516
722
1,017
1,430
~2,000
~2,700
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: Company Data, Goldman Sachs Global Investment Research. Cloud vendors include Google Cloud, Tencent, Alibaba AliCloud, Microsoft Azure,
Amazon AWS, Oracle IaaS + PaaS, and Salesforce App Cloud.This presentation includes proprietary information of Battery Ventures5
Cloud providers are executing at a massive scale while continuing to
drive innovation
Public Cloud Revenue (US$B) AWS Annual Feature Releases
Public cloud vendors will reach ~$100B in revenue in 2020 while continuing to grow
both revenue and feature releases at ~40%.
2016 2017 2018 2019 2020

1.0x
16.0x
Oct ’18 Oct ’19 Oct ’20
Infrastructure Software Index
S&P 500
Software Index
$200
$550
Oct ’18 Oct ’19 Oct ’20
Source: CapIQ. Note: Market data as of 10/2/20. Infrastructure Software index comprised of 37 select names. Aggregate market cap only includes
companies in the Infrastructure Software Index that have been public since 10/2/18; Software index represents 112 select publicly traded software
companies with a market cap >$300M.This presentation includes proprietary information of Battery Ventures6
Software performance is near historical highs, driven by
increased cloud adoption
Infrastructure software has outperformed the broader market, despite the recent
volatility, as more companies embrace the cloud to accelerate digital transformation.
Infrastructure Software Index Aggregate Market Cap ($B) EV / NTM Revenue
13.2x
2.7x
10.4x
COVID-19COVID-19

Company Customers @ IPO
Customers @
Today
Total Addressable
Customers % Penetrated
51K
170K 1.5M 12%
28K
200K 1.0M 20%
4K
20K 300K 7%
4K
9K 100K 9%
Source: Company filings. US Census data as of 2020. Note: Twilio and Atlassian Total Addressable Customers based on company filings commentary and
capture the number of businesses with 10+ employees and companies with $10 million or more in revenue. Okta total addressable customers represent US
companies 250+ employees. MongoDB total addressable customers represents 50+ employees.This presentation includes proprietary information of Battery Ventures7
Infrastructure markets are larger than we all expected, and
we are still early
While % penetration is still early, the customer base for cloud-native companies
continues to expand.
3.4x
7.1x
4.7x
2.9x

Source: Capital IQ. Note: Market data as of 10/2/20 ¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here.This presentation includes proprietary information of Battery Ventures8
Cloud-native infrastructure companies are on an
accelerated path to value creation
Market
Cap
IPO
Market
Cap
Today
$543M
32
Yrs.
$225M
31
Yrs.
$265M
35
Yrs.
$30M
32
Yrs.
First-Generation
$3B
8
Yrs.
$10B
1
Yr.
$1B
4
Yrs.
$9B
1
Yr.
$2B
3
Yrs.
Cloud-Native
Average Value Creation Per Year: $29B Average Value Creation Per Year: $4B
$49M
63
Yrs.
Infrastructure has strong enduring value, with the cloud creating new opportunities
for value creation.
$185B$162B $181B$51B$98B$143B $44B$34B $31B $12B
1

Post COVID-19
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Google Trends.This presentation includes proprietary information of Battery Ventures9
Every new crisis brings a new opportunity for cloud-native companies
Digital Transformation Productivity Tools Telehealth Remote Work
Google
Trends
Popularity
COVID-19 has forced a migration to digital, flexible, and remote work environments,
ushering in a new future of work that will have lasting effects on society.
Post COVID-19 Post COVID-19 Post COVID-19
1
1
1
1
1
1
1

Themes of Interest

Design Develop Integrate Build
Feedback Test Feedback Test Feedback Test Feedback Test
Prominent bottlenecks still remain in the software development lifecycle
Waterfall (Pre 2000s) DevSecOps (2020 – onward)
Dev Ops
Automated Testing
Continuous Security
As teams move from waterfall to agile forms of development, testing becomes a bottleneck
as practices shift left (like security) from QA to developers in order to release faster.
Design
Develop
Test
Build
Release / Deploy
Secure / Maintain
Agile/DevOps (2000 – 2020)
Dev
Release Deploy Operate Monitor
Feedback Test Feedback Test Feedback Test Feedback Test
Ops
1
2
3
4
5
6

¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here.This presentation includes proprietary information of Battery Ventures12
Testing and security require the most automation to improve
time to launch
Version
control
Code
integration
Continuous
testing
Package
code
Packaged
deployment
Execute
code
Continuous
security
Real-time
feedback
As more responsibilities move to the developer, testing and security, which were previously
owned by ops teams, will need to be automated at every step of the process.
1
1 1
1
1
Feature
Flagging
SecurityRuntime
Continuous
Delivery
Binary
Management
Test
Automation
Continuous
Integration
Source
Code

Data Lake DatabaseData Warehouse Data Lake DatabaseData Warehouse
Unification Layer
Data Scientists Data Engineer Data Analyst Data Architect Business Analyst
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here.This presentation includes proprietary information of Battery Ventures13
Unification opportunities remain across the fragmented data landscape
Hyper fragmentation across cloud and on-prem data while data is increasingly used
in production has driven the need for unification layers.
Cloud On-Prem
Data Sources
Security / Privacy
ETL ETL
Data Management
(Compliance, Cataloguing, Discovery)
Real-Time Streaming BI / Data Science / Analytics Monitoring / QualityOrchestration
1
1
1
1
1
1
1
1
1
1

Software Engineer ML Engineer
Native Coding Language
IDE
Version Control
CI / CD
ETL
Monitoring
Data Visualization
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here.14
Developer platforms targeting AI/ML workflows
Machine learning is becoming more programmatic as ML engineers use best-of-
breed offerings for their models.
1
1
1
1
1
1
1
1

15
Next-generation identity solutions lead security in a zero trust world
Deployment
Modes
Security Model
Companies
Network-based Security Identity-based Security
Trusted Network
Directory Services Zero Trust Access Authentication Policy Enforcement
The proliferation of users, devices, data sources, and data-access controls has made identity management
important to prevent attacks. Less reliance on the network means more reliance on identity to enforce security.
Factory Workforce Customers
Data Center 3rd Party
SaaS Apps
Cloud
Resources
Factory
Enterprise
Workforce
Customers Data Center
3rd Party
SaaS Apps
Cloud
Resources Trusted
Identity
Enterprise

Security automation solutions for developers push further into
automation and remediation
Issues & Alerts Issues & Alerts Continuous and Real-time
Code Scanners
Dependency Scanners
Static Application Security
Vulnerability Scanners
Workload Scanners
Infrastructure-as-Code Scanners
Code Security Scanners
Interactive Security Scanners
Runtime Application Self Protection
Shift-Left
Waves
Features
Tools
Companies to
Emerge
The shift-left security movement is happening in waves starting with Application
Security, Cloud Security, and Remediation.
1
1
1
Application Security Cloud Security Remediation

Operational Best Practices
for OpenCloud Companies
17 This presentation includes proprietary information of Battery Ventures

18
Top 10 operational best practices from 2019
Focus on “Time to Value” to lock in
users / buyers
Build trust with users through clear and
transparent pricing
Know your open source software
licensing model
Align your org. around continuous learning &
product improvement
Product Playbook
Focus on individual software buyers /
influencers, in addition to traditional CIOs
Leverage open source as an efficient
customer-acquisition channel
Tap freemium and cloud-based trials to
acquire customers
Leverage new cloud marketplaces to discover
and reach customers
Re-wire sales comp plans to accommodate
bottoms-up, GTM motions
Carefully monitor and understand pay-as-you-go
transaction revenue streams
GTM Playbook

Don’t just focus on the top-down buyer, practitioners matter
even more
Tops-Down Sales Hierarchy Bottoms-Up Sales Hierarchy
CTO CIO CISO CRO …
VP IT VP Eng. VP Product VP Sales …
DevOps
Data
Engineer
Frontend
Developer
Cloud
Architect
Security
Engineer
SRE
Backend
Engineer
UX
Designer
QA
Engineer
Platform
Engineer
Buyer / Budget
Influencer
User
Purchasing is becoming federated as responsibilities shift to the influencer / user. Tops-down sales is a path to
the user while bottoms-up sales is a path to the budget. Manage both but engage users / influencers early.
1
DevOps
Data
Engineer
Frontend
Developer
Cloud
Architect
Security
Engineer
SRE
Backend
Engineer
UX
Designer
QA
Engineer
Platform
Engineer
Influencer / User
VP IT VP Eng. VP Product VP Sales …
Buyer
Budget
CTO CIO CISO CRO …

$0
$1,000
Cloud Product
T+ $100M: 3 Yrs.
$0
$100
0 1 2 3 4 5 6 7 8 9 10 11 12
ARR(US$inM)
Years from $1M to $100M ARR
2
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Company filings. Capital IQ. Battery
Ventures estimates. When ARR is not provided, implied ARR is annualized revenue run rate.This presentation includes proprietary information of Battery Ventures20
Build cloud first: cloud-native products will supercharge your
sales velocity
Time to Scale is Shorter With Cloud-native Products Cloud-native Companies Have Line of Sight to $1B ARR
IPO
Y+1 Y+2 Y+3 Y+4 Y+5Y-1Y-2 IPO
There are multiple ways to succeed as a cloud-native business, but having a cloud product will
supercharge your sales velocity – reaching $100M in ARR faster with line of sight to $1B ARR.
Non-Cloud Product
T+ $100M: 10 Yrs.
1 1
1

Leverage different paths to efficient customer growth
Open Source SaaS / Cloud-hosted OpenCloud
Customer Acquisition
Product Distribution
Community
Self-managed
FreemiumSelf-serve
Hosted
Paid Features Support / Services Platform
Customer Conversion
Sales Community
Freemium
Hosted
Platform
UsersUsage / ResourcesPricing Usage / Resources
OpenCloud companies are combining the best features of open source and SaaS. Leverage
these self-serve practices to enable a user journey that follows the path of least resistance.
3
1
1
1

Is your product
consumable by
usage?
Consider usage-based pricing / PAYG to drive faster sales cycles
PAYG pricing enables an efficient GTM by selling the way customers want to buy, while ultimately
arriving at the same large ACVs. Leverage consumption contracts with cloud providers.
4
Yes PAYG
Short Sales
Cycle
(1-2 months)
Small Land >$1M ACV
No
Annual
Contracts
Small
Expansions >$1M ACV
Large Expansions
Long Sales Cycle
(6-9 months)
Large Land

Customer success is paramount in a post-COVID world to manage churn
Measure product usage, manage churn, and facilitate expansion to create a
customer success funnel that supports sales.
5
Customer Success Best Practices
• Customer success teams are sales reps too:
‒ Incentivize customer success teams to
grow usage.
• Measure customer onboarding and
implementation within 90 days of a purchase.
• Churned customers are lost revenue for multiple
years.
• Expansion and customer advocates lead to a
customer success funnel that supports sales.
SalesFunnel
(NewCustomers)
SuccessFunnel
(ExistingCustomers)
Leads
Customers
Qualified Prospects
Retention
Referral / Advocate
Expansion
Referral / customer
feedback loop

24
Retention is critical to compounding ARR growth
$395
$275
$100
$182
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
95% Retention / 15% Growth
Churn impact is amplified in a recurring revenue model.
6

Understand and nurture your community to build
member loyalty and affinity
Customer
Ambassador
Fan
User
Observer
Buyer / Influencer
Contributors / Committers
Issue Comments
Pull Requests
Community Signups
Community Engagement
Downloads
IP Addresses
User Telemetry
GitHub Stars /
Watchers
Metrics to Track
Your community is a living organism that requires nurturing. Understand members
in your community to increase reach and build loyalty.
7

Leverage and work with foundations to turbo charge your community
350+ Apache projects and initiatives
7,700 core contributors
12,413 developers contributing
Notable Commercialized Projects
1,200 projects
91,047 contributors
150,483 members
Notable Commercialized Projects
Developer foundations, such as the Apache Foundation and the CNCF, have become
instrumental in the rise of OpenCloud Companies. Work with these foundations to
turbo charge your community, build in community guidelines and governance, and
battle test your product with practitioners.
8
1
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here.
1 1

Technical Debt
• Slow release velocity
• Inconsistent standards
• Bespoke deployment methods
• Lack of quality and testing
• Poor security standards
Manage technical debt by codifying policies and standards
early in development
Software Users Deployments
More code is being developed than ever before and technical debt will eventually
catch up. Build cloud-natively to streamline efforts from day one.
Managing Technical Debt
• Technical debt is dynamic. Tie
structural tech debt changes to
behavioral or business needs
• Leverage the best design practices
to codify standards early in company
formation
• Introduce automated testing at every
step of the process
• Monitor quality and bugs as
indicators of tech drift
• Quantify as much of the system as
possible (time to deployment, failed
merges, etc.)
Open Source Developers Cloud Hybrid
Microservices
& Containers
IT Operators On Prem
Multiple
Technologies
QA Devices
Security Servers
9

50M
Developers
WW
Open Source Contributions by Country
Source: GithubThis presentation includes proprietary information of Battery Ventures28
Build a distributed global developer workforce: Great developers are
everywhere
More and more code is being written outside the US. Target these developer hot
beds to build technical teams.
China
India
Germany
United Kingdom
Japan
Canada
France
Russia
Brazil
10
26.7%
.1%
29.3%
1.1%
36.2%
2.0%
1.9%
0.3%
1.58%
.002%
4.3%
0.4%
Active Users
 % change
from 2019

Focus on “time to value” to lock in
users / buyers
Build trust with users through clear and
transparent pricing
Know your open source software
licensing model
Align your org. around continuous learning &
product improvement
Leverage self-serve practices to enable a user
journey that follows the path of least resistance
Customer retention is critical to compounding ARR
growth
Leverage and work with foundations to turbo charge
your community
Product Playbook
Focus on individual software buyers /
influencers, in addition to traditional CIOs
Leverage open source as an efficient
customer-acquisition channel
Tap freemium and cloud-based trials to
acquire customers
Leverage new cloud marketplaces to discover
and reach customers
Re-wire sales comp plans to accommodate
bottoms-up, GTM motions
Carefully monitor and understand pay-as-you-go
transaction revenue streams
Tops down sales is a path to the user while
bottoms-up sales is a path to the budget
Consider usage-based pricing / PAYG to drive
faster sales cycles
Customer success is paramount in a
post COVID world to manage churn
GTM Playbook
29
Battery Ventures operational best practices playbook for OpenCloud
companies
Build cloud first: cloud-native products will
supercharge your sales velocity
Manage technical debt by codifying policies and
standards early in development
Build a distributed global developer workforce:
great developers are everywhere
Understand and nurture your community to build
member loyalty and affinity
Development Playbook

Building a Lasting
Public Company
Focus On KPIs
that Matter

0.0%
150.0%
SNOW CRWD OKTA TWLO DDOG ESTC MULE AYX CLDR FROG ZS MDB TENB PD SUMO DOMO NET FSLY TLND SWI PVTL APTI PING APPN DT
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Company filings. Excludes ForeScout,
SailPoint, Carbon Black, and Nutanix¹ due to lack of disclosed metrics. Talend financials based on constant currency.31
Last twelve months revenue growth at IPO
Best
>70%
Better
70-45%
Good
<45%
201920192019 201920192019 2019 2018 20182018 2018 20182018 20172017 2017 201720172017 2016 2016 20162020 20202020
Cloud infrastructure markets are large and growing; companies attached
to these mega-trends are experiencing the benefits of these tailwinds.
1 11
Median: 48%
Denotes 2020 cohort of Open Source and Cloud-native IPOs
Date of IPO
1

0.0x
2.5x
TWLO DDOG ESTC CRWD FROG FSLY SNOW NET OKTA MULE PD DT AYX ZS TENB PING MDB PVTL CLDR SWI TLND APPN SUMO APTI DOMO
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Note: Magic number calculated as ((Q(t) – Q(t-1))
subscription revenue *4)/S&M(t-1). ARR used instead of subscription revenue if disclosed. Source: Company filings. Excludes ForeScout, SailPoint, Carbon
Black, and Nutanix¹ due to lack of disclosed metrics. Ping Identity, Dynatrace, and SolarWinds exclude amortization/depreciation of acquired assets and
restructuring costs. Talend financials based on constant currency.32
Average magic number over last twelve months at IPO
Best
>1.0x
Better
1.0x-0.7x
Good
<0.7x
20192019 2019 201920192019 20192018 20182018 20182018 20172017 201720172017 2017 2016 20162020 20202020
Product-led growth and bottoms-up are enabling companies
to be more efficient in customer acquisition.
2016 2018
1 1 1
Date of IPO
Median: 0.7x
1

0.0%
180.0%
TWLO SNOW PVTL CRWD DDOG ESTC CLDR PD DT FROG AYX FSLY MDB SUMO TENB OKTA TLND ZS MULE APPN PING NET SWI DOMO APTI
SailPoint, Carbon Black, and Nutanix¹ due to lack of disclosed metrics. Ping Identity, Dynatrace, and SolarWinds exclude amortization/depreciation of
acquired assets and restructuring costs. Talend financials based on constant currency.33
Dollar-based net retention at IPO
Best
>140% Better
140-120%
Good
<120%
2016 2016201920192019 2019 201920192019 2018 2018 2018 20182018 2018201720172017 2017 2017 20172020 2020 2020
Bottoms-up and transaction-based revenue streams have far more
consistency and expansion potential than we all anticipated.
2016
1 1 1
Date of IPO
Median: 128%
1

0.0x
7.0x
TWLO FROG DDOG ESTC CRWD PD PING NET DT SNOW AYX OKTA MULE ZS FSLY TENB PVTL MDB SWI TLND SUMO APTI CLDR APPN DOMO
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Company filings. Excludes ForeScout, SailPoint,
Carbon Black, and Nutanix¹ due to lack of disclosed metrics. Ping Identity, Dynatrace, and SolarWinds exclude amortization/depreciation of acquired assets and
restructuring costs. Talend financials based on constant currency. LTV calculated as GAAP subscription gross margin / (gross churn (est.) + 11% discount rate).
CAC calculated as LTM GAAP S&M exp. / (Qo subscription revenue)*4 – (Q-4 subscription revenue)*4). ARR used instead of subscription revenue if disclosed.34
LTV:CAC at IPO
Best
>3.0x
Better
3.0-2.5x
Good
<2.5x
2019 20192019 201920192019 20192018 20182018 20182018 20172017 201720172017 2017 2016 20162020 20202020
Efficient customer acquisition while focusing on enterprise-grade
customers results in higher expansion potential.
2016 2018
1 1 1
Date of IPO
Median: 2.5x
1

0.0%
80.0%
DOMO MDB CLDR SUMO ESTC CRWD PD PVTL SNOW TENB DDOG NET FROG OKTA FSLY APTI TWLO ZS AYX PING TLND APPN MULE DT SWI
0.0%
140.0%
TWLO SWI PING FSLY DT FROG PVTL APPN DDOG NET APTI ESTC PD TENB SUMO ZS TLND MULE AYX CRWD MDB OKTA CLDR SNOW DOMO
SailPoint, Carbon Black, and Nutanix¹ due to lack of disclosed metrics. Ping Identity, Dynatrace, and SolarWinds exclude amortization/depreciation of
acquired assets and restructuring costs. Talend financials based on constant currency.35
Last twelve months R&D and S&M as percentage of revenue at IPO
S&M
R&D
Best
25-45%
Better
45-65%
Good
65-120%
Best
70-30% Better
30-20%
Good
20-10%
2019 2019 20192019 20192019 20192018 2018 20182018 2018 20182017 2017 20172017 201720172016 20162016
2016 201820192019 20192018 20172019 2019 20162018 2019 2018 2018 2016 2017201720192017 201720172018
2020
2020
2020
2020 2020
Bottoms-up companies have flexibility to invest in
research & development given efficient GTM engine.Denotes 2020 cohort of Open Source and Cloud-native IPOs
Median: 54%
11 1
1 11
Date of IPO
2020
Median: 28%
1
1

y = 34.964x + 9.8332
R² = 0.255
0.0x
10.0x
20.0x
30.0x
40.0x
50.0x
60.0x
(10%) 0% 10% 20% 30% 40% 50% 60%
y = 81.259x + 1.6377
R² = 0.7071
0.0x
10.0x
20.0x
30.0x
40.0x
50.0x
60.0x
0% 10% 20% 30% 40% 50% 60%
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Company filings and CapIQ. Note: Market data as
of 10/2/20. Excludes ForeScout, SailPoint, Carbon Black, Nutanix1 and recent 2020 IPOs (Snowflake, JFrog and Sumo Logic) due to lack of disclosed metrics.36
Index to the cloud and know your cloud metrics fundamentals
EV/NTM Sales vs. NTM Sales Growth
EV/NTMSalesMultiple
NTM Sales Growth %
EV/NTM Sales vs. Rule of 40
Rule of 40EV/NTMSalesMultiple
Software valuations are driven by growth, with investors rewarding high-growth
companies that are indexed to the cloud
1
1
1 1

¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Company filings. Note: Representative
companies include cloud infrastructure and software companies.37
Key metrics to focus on as a public company
# of Customers New Customers
Net $-Based
Retention /
Expansion Rate
Subscription
Contract Lengths Billing Frequency
% Recurring /
Subscription
Revenue ARR
Non-GAAP Gross
Margin
Non-GAAP Op.
Margin
    

 
      
      
      
      
      
      
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
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        
     
1
1
1
1

Future of
OpenCloud

$9.2
$9.2
$11.5
$15.0
$16.8
2015
2016
2017
2018
2019
$10.2B
$9.0B
$6.8B
$6.2B
$5.3B
$4.5B
$2.8B
$2.8B
$2.6B
$2.5B
$2.4B
$2.0B
$2.0B
$1.9B
$1.7B
$1.5B
$1.2B
$1.1B
$1.0B
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Pitchbook data as of 10/2/2020. Select
Private Unicorns based on private companies that are enterprise infrastructure-focused with valuations of $1.0B or greater as of October 2020.This presentation includes proprietary information of Battery Ventures39
The emerging set of open source and cloud-native companies are
promising
Select Private Unicorns
Last Disclosed Valuation
Financing Deal Value
$ in Billions$ Financing Deal Volume
Volume in Thousands
Open Source and cloud financings have continued to accelerate, and there is a
healthy backlog of private company unicorns gearing up for IPO.
1
1
1
1
1
1
$
2.2
2.3
2.5
2.9
3.3
2015
2016
2017
2018
2019

¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: CapIQ, Pitchbook, company filings.
Note: Representative companies include cloud infrastructure and software companies that have gone public since 2016. Market data as of 10/2/20.This presentation includes proprietary information of Battery Ventures40
Going public is just the beginning for open source and
cloud-native companies
Value Creation ($B)
Company Pre-IPO IPO IPO T+1 Current
$1.0 $1.4 $2.7 $44.2
1.6 1.4 1.9 15.3
1.2 2.0 2.7 30.5
0.7 3.2 6.2 10.8
1.1 2.1 4.2 19.6
4.0 7.7 13.1 32.0
0.6 8.7 12.1 34.5
1.2 2.8 3.4 2.9
0.4 4.6 6.7 7.9
12.4 42.5 89.9 80.8
Aggregate Value $24.2 $76.2 $142.9 $278.5
2019
2016
2017
2018
2017
2020
2018
2019
2020
2020
3.1x 5.9x 11.5x
The last few years have created multiple cloud-native companies that have
generated $10B+ of value, with much of the value being created once public.
1
1
3.1x 5.9x 11.5x
Date of IPO
1

36%
30%
24%
44%
36% 37%
31% 30%
34%
36%
45%
39% 41%
29%
64%
53%
27%
81%
49%
59%
37%
34%
51%
62%
90%
59%
53%
39%
0%
100%
Expected CAGR @ IPO
CAGR @ Current
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: CapIQ and company filings. Note:
Represents relevant EIT IPOs between 2016 and current. Excludes PVTL, APTI and MULE due to acquisition and recent 2020 IPOs SNOW, SUMO and
FROG due to lack of historical performance data post IPO.This presentation includes proprietary information of Battery Ventures41
The cloud continues to be bigger than we all expected, and
growth is accelerating
Revenue
Growth
Growth projections continue to discount the value of the cloud and the opportunity
for cloud-native companies.
1
1

$0
$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
¹ Denotes a past or current Battery company. For a full list of all Battery investments, please click here. Source: Battery Ventures; Forrester; Gartner; the
Yankee Group; BEA.gov; Input Research.This presentation includes proprietary information of Battery Ventures42
We’re still in the early innings for OpenCloud
TODAY
Assumed 2017-2050 CAGR
Global Software Revenue
~5%
$1 Trillion
~5
*
*
*
*
*
*
*
*
*
*
*
* *
*
*
Global
Software
Spend
(US$) *
*
*
*
*
*
*
*

The Battery team
Download slides here: https://www.battery.com/powered/
Dharmesh Thakker
dharmesh@battery.com
Chiraag Deora
chiraag@battery.com
Danel Dayan
ddayan@battery.com
Jason Mendel
jmendel@battery.com

State of the OpenCloud 2020

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