In State of the Cloud 2021, we explore the major milestones and changes within the cloud economy and original analysis on what’s driving today’s private cloud valuations. In addition, we share new frameworks and emerging strategies to help founders measure growth endurance and drive go-to-market momentum. Plus, we dive into our seven predictions for 2021. Top takeaways Cloud companies have not just reset in the New Normal, but have thrived with a record-breaking market capitalization of more than $2 trillion. There’s been a changing of the guard afoot: MT SAAS has overtaken FAANG. Cloud multiples are rising to new heights, with both public and private cloud trading over 20x. Cloud growth rates and access to capital are at all-time highs, with the average Cloud 100 company growing 80% YoY and $186 billion going into private cloud companies in 2020 alone. Good-better-best of growth endurance is 70%-75%-80%. GTM strategies have adapted in the New Normal; best practices include product-led growth, usage-based pricing, and the adoption of cloud marketplaces.

1. State of the
Cloud 2021
The New Normal
Byron Deeter
PARTNER
@bdeeter
Elliott Robinson
PARTNER
@TheValuesVC
Mary D’Onofrio
PARTNER
@mcadonofrio
Hansae Catlett
INVESTOR
@hansaecatlett
Janelle Teng
INVESTOR
@NextBigTeng

2. Agenda
2020
New Normal
Public Cloud
Private Cloud Market Analysis
2021 Predictions
Recap

3. 2020

4. SCENARIO EXIT VALUE
Wipe out – failure to launch GTM and compete
against incumbents.
$0
Downside case – company fails to grow
meaningfully beyond a small set of customers.
$100M
Base case – company succeeds in capturing
meaningful market share.
$500M
Upside case – company becomes market leader. $1B
Just goes nuts – company becomes go-to solution
owning majority of market.
$5B+
Cloud Investment A - Scenario Planning
Global
pandemic?

6. -40%
-30%
-20%
-10%
0%
10%
2-Jan 29-Jan 25-Feb 23-Mar
% Change
S&P 500 (^SPX)
NASDAQ Composite Index
(^IXIC)
Dow Jones Industrial Average
(^DJI)
2020
Major indices dropped more than
30% over the course of three weeks

10. Welcome to the New Normal

11. Usage of digitally-enabled care skyrockets
Increase in
telehealth utilization
300x

12. Distance learning becomes the norm
of households with school
age children engaged in
distance learning
93%

13. Small and medium businesses evolve and adapt
The restaurant industry
is going through massive
digital transformation

14. Industries transition from offline to online
$10T
global construction
industry accelerates
shift to the cloud

15. We’ve seen two years’ worth of digital transformation in
two months. From remote teamwork and learning, to sales
and customer service, to critical cloud infrastructure and
security—we are working alongside customers every day
to help them adapt and stay open for business in a world
of remote everything.
“
– Satya Nadella, CEO of Microsoft

17. $0B
$50B
$100B
$150B
$200B
$250B
$300B
$350B
Top 5 public
cloud companies
by market cap
2020
Market Cap

18. $0B
$50B
$100B
$150B
$200B
$250B
$300B
$350B
Top 5 public
cloud companies
by market cap
2021
Up 70% 2020-2021
Market Cap

19. $0B
$50B
$100B
$150B
$200B
$250B
$300B
$350B
Top 5 public
cloud companies
comprise $1T+
of market cap
2021
$1T+
Market Cap

20. $0B
$50B
$100B
$150B
$200B
$250B
$300B
$350B
Top 3 public
cloud companies
each over $200B
market cap
2021
$200B
Market Cap

21. 0%
10%
20%
30%
40%
50%
Q1–17 Q2–17 Q3–17 Q4–17 Q1–18 Q2–18 Q3–18 Q4–18 Q1–19 Q2–19 Q3–19 Q4–19 Q1–20 Q2–20 Q3–20 Q4–20
IaaS crosses $150B run rate in 2020
Amazon dominates the public cloud infrastructure market
Share
of
worldwide
revenue
OTHERS

22. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Public cloud reaches $2 trillion
Total cloud market cap
Feb 2019
35% CAGR
Feb 2020
Feb 2021
$2.2T
$690B
$1T
45% CAGR
120% CAGR
65% CAGR
$0T
$1T
$2T

23. Bessemer Cloud Index since launch
0%
200%
400%
600%
800%
1,000%
1,200%
1,400%
Net Change
BVP Nasdaq Emerging Cloud Index
INSTITUTIONALIZED WITH
NASDAQ AS EMCLOUD
September, 2018
EMCLOUD
2013 2014 2015 2016 2017 2018 2019 2020 2021

24. WCLD performance since launch
$0
$10
$20
$30
$40
$50
$60
$70
Sep-2019 Dec-2019 Mar-2020 Jun-2020 Sep-2020 Dec-2020
Share Pricing
WCLD
Feb-2021

25. WisdomTree
Licensed the Index
for the WCLD ETF
#1 ETF on the
NASDAQ for 2020
#2 technology ETF
within US technology
ETFs for 2020

26. Introducing
our new BVP
Cloud Index

27. 2020 was marked
by record-breaking
IPO & M&A activity
IPOs
M&A ACTIVITY

28. Snowflake massively surpassed VMware’s
record as largest software IPO in history
Company IPO Date Market Cap at Pricing
Snowflake Sep ‘20
VMware Aug ‘07
Zoom Apr ‘19
Dropbox Mar ‘17
ZoomInfo Jun ‘20
Datadog Sep ‘19
CrowdStrike Jun ‘19 $6.7B
$7.9B
$8.2B
$8.3B
$9.3B
$10.9B
$34.0B
$0B $5B $10B $15B $20B $25B $30B $35B $40B

29. 13.5x 13.6x 14.4x 15.1x
17.9x
21.5x 21.8x 22.2x
25.5x
34.8x
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
40.0x
45.0x
Record breaking cloud M&A activity in 2020 with Slack
receiving the largest revenue multiple paid in history
Multiple
(EV/LTM
Revenue)

30. Changing of the guard: MT SAAS overtakes FAANG!
MT SAAS, EMCLOUD, FAANG, and Major Indexes Performance since 2020
-50%
0%
50%
100%
150%
200%
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21
Percent Change
EMCLOUD SPX DJI RUT MT SAAS FAANG
EMCLOUD
Performance:
Approx. +130%
MT SAAS
Performance:
Approx. +180%
Russell 2000
Performance:
Approx. +35%
FAANG
Performance:
Approx. +60%
S&P
Performance:
Approx. +20%
Dow Jones
Performance:
Approx. +10%

31. COVID-19 more than doubled the rate of
digital transformation across
different vertical industries

33. Hello
Unicorns Total cumulative value
527 private unicorns $1,964B
100 C100 companies $267B

34. What is driving
theincrease in
unicorns?
1. Cloud multiples are going up
2. Cloud companies are growing faster than ever
3. There is more demand than supply for cloud assets

35. 1.
What is driving
the increase in
unicorns?
Cloud multiples
are going up
1.
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Mar-19
Aug-19
Jan-20
Jun-20
Nov-20
Average
PRIVATE
PUBLIC
EMCLOUD Multiples
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

36. 1.
0.0x
5.0x
10.0x
15.0x
20.0x
25.0x
30.0x
35.0x
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Mar-19
Aug-19
Jan-20
Jun-20
Nov-20
Average Bottom Quartile Top Quartile
PUBLIC PRIVATE
EMCLOUD Multiples
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
What is driving
the increase in
unicorns?
Cloud multiples
are going up
1.

37. PUBLIC PRIVATE
9x
8x
11x
13x
23x
2016 2017 2018 2019 2020
Average
150%
2016 to 2020
Cloud 100 Multiples
What is driving
the increase in
unicorns?
Cloud multiples
are going up
1.

38. PUBLIC PRIVATE
60%
65%
90%
80%
65%
95%
100%
100%
Cloud 100 Growth Rates
Average Top quartile
What is driving
the increase in
unicorns?
Cloud growth rates
have gone up
2.
2017 2018 2019 2020

39. $14B
$186B
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capital Invested
1200%+
2010 to 2020
Capital Invested in Private Cloud Companies
What is driving
the increase in
unicorns?
There is more
demand than supply
for cloud assets
3.

40. What rationalizes these
increased valuations?

41. y = ~0.8x
0%
50%
100%
150%
200%
0% 50% 100% 150% 200%
EMCLOUD Growth Endurance (2010-2020)
What
rationalizes
these increased
valuations?
PRIVATE
PUBLIC
GROWTH ENDURANCE
Current Year’s Growth Rate
Last Year’s Growth Rate
=
Expect public cloud company
growth rates this year to be
80% of what they were last year

42. 0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
0
-
1
0
0
%
1
0
0
-
1
1
0
%
1
1
0
-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
+
PRIVATE
PUBLIC
DISTRIBUTION
What
rationalizes
these increased
valuations? 0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
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0
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1
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0
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1
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1
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0
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1
1
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-
1
2
0
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1
2
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3
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%
1
3
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4
0
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1
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1
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0
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1
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0
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+
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15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
0
-
1
0
0
%
1
0
0
-
1
1
0
%
1
1
0
-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
+
0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
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-
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0
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%
1
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-
1
1
0
%
1
1
0
-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
+

43. Leading cloud companies demonstrate
unprecedented growth endurance
0
10
20
30
40
50
60
70
80
90
100
110
-1 0 1 2 3 4
Growth Rate (%)
Years
from IPO
0
10
20
30
40
50
60
70
80
90
100
110
-1 0 1 2
Growth Rate (%)
Years
from IPO
Actual
Analyst
Actual
Analyst

44. 0
20
40
60
80
100
-1 0 1 2 3 4
0
20
40
60
80
100
-1 0 1 2
Actual
Analyst
Actual
Analyst
0
20
40
60
80
100
-1 0 1 2 3 4 5
Actual
Analyst
0
20
40
60
80
100
-1 0 1 2 3 4
Actual
Analyst
0
20
40
60
80
100
-1 0 1 2 3 4 5 6 7 8 9
Actual
Analyst
0
20
40
60
80
100
-1 0 1 2 3 4
Actual
Analyst
0
20
40
60
80
100
-1 0 1 2
Actual
Analyst
0
20
40
60
80
100
Actual
Analyst
-1 0 1 2 3 4 5 6 7
0
20
40
60
80
100
-1 0 1 2 3 4
Actual
Analyst

45. What
rationalizes
these increased
valuations?
y = ~0.7x
0%
50%
100%
150%
200%
0% 50% 100% 150% 200%
Cloud 100 Growth Endurance 2016-2020
PUBLIC PRIVATE
GROWTH ENDURANCE
Current Year’s Growth Rate
Last Year’s Growth Rate
=
Expect private cloud company
growth rates this year to be
70% of what they were last year

46. 0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
0
-
1
0
0
%
1
0
0
-
1
1
0
%
1
1
0
-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
DISTRIBUTION
PUBLIC PRIVATE
0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
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7
0
%
7
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8
0
%
8
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%
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%
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3
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1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
0
-
1
0
0
%
1
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0
-
1
1
0
%
1
1
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-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
0%
5%
10%
15%
20%
<
3
0
%
3
0
-
4
0
%
4
0
-
5
0
%
5
0
-
6
0
%
6
0
-
7
0
%
7
0
-
8
0
%
8
0
-
9
0
%
9
0
-
1
0
0
%
1
0
0
-
1
1
0
%
1
1
0
-
1
2
0
%
1
2
0
-
1
3
0
%
1
3
0
-
1
4
0
%
1
4
0
-
1
5
0
%
1
5
0
%
What
rationalizes
these increased
valuations?

47. The Good, Better, and Best of Growth Endurance
Implications for growth deceleration
0%
50%
100%
150%
200%
250%
300%
350%
1 2 3 4 5 6 7 8 9 10 11 12
Growth Rate
Years
$1MM ARR
BEST: 6 years
$100MM ARR
BETTER: 7 years
$100MM ARR GOOD: 12 years
$100MM ARR

48. Nail it before you
scale it!
In the New Normal, you really have to nail it
before you scale it
INITIATION
Founder Led Sales
TRANSITION
Sales Led Sales
EXECUTION
Scalable S&M

49. Product-led
growth
Usage-based
pricing
Cloud
Marketplaces
Three GTM strategies top cloud
companies employ in The New Normal

50. 1. Product-led growth
Attain market leadership by
prioritizing user needs as they grow
Karen Peacock, CEO of Intercom
“
Connecting the product team with customers was a
massive unlock for us and helped to scale us to the
upmarket company that we are. And the habit of
being product-first persists. It’s in our DNA.
“

51. $1B $2B $6B $17B $21B $41B
$97B
$211B
$687B
2012 2013 2014 2015 2016 2017 2018 2019 2020
Tremendous growth in market cap of public
product-led growth companies

52. 2. Usage-based pricing
Pick the usage-based value metric that is
predictable and communicates product value
“
Startups send notifications to customers on demo day, IPO day
and beyond. Providing a reliable product also means offering
pricing that reflects the value they receive as they grow.
“
Troy Goode, CEO and founder of Courier

53. 116%
120% 122%
130% 130%
136% 137%
162%
183%
10%
Public cloud mean
Usage-based mean
Companies employing usage-based pricing have best-in-class net
dollar retention, leading to a premium in valuations
Leverage usage-based pricing to grow
with your customers

54. 3. Cloud marketplaces
One of many early adopters to
see 10x YoY marketplace growth
Eugenio Pace, CEO and co-founder of Auth0
“
Cloud Marketplaces have been a real accelerant for
our business as they are helping us close larger
deals faster. We have grown the number of deals
through marketplace dramatically and are investing
more to double down in this exciting channel.
“

55. Digital channels provide promise and
cloud marketplaces are the natural option
50% $3B
of sales interactions will
happen through digital
channels by 2025
faster sales cycles
through cloud
marketplaces
predicted revenue
through cloud
marketplaces in 2021
80%

56. Aim for a GTM flywheel that creates
champions, not a static funnel
Champion
Captivate
Catalyze
Cultivate
Cycle of
creating
champions

57. Fire up the flywheel to drive momentum
Champion
Captivate
Catalyze
Cultivate
Cycle of
creating
champions
Established a diverse customer
advisory board and doubled the
number of champions
Grew alongside customers by
developing proprietary dashboards to
help them optimize usage and costs
Deployed a remote-first playbook for
strategic involvement and virtual
enablement trainings focused on
scalability and self-sufficiency
Provided dedicated support SWAT
teams during promotions and upgrades
Amplified individual user voices
through customer-led marketing
initiatives (#ThingsCustomersSay
series, Inaugural customer survey)
Renewed content marketing with a
focus on interactive, educational
pieces and thought leadership
Shortened time-to-value for
customers by 75 days even with a
fully-distributed workforce
Developed a culture of project
partnership with customer-centric
product innovation and cross-
functional collaboration

58. Results from Hyperscience’s flywheel
300% YoY ARR growth
10x increase in platform usage
140% overall account growth
170% net ARR retention
Peter Brodsky, CEO and Co-Founder of Hyperscience

59. 1. Unbundling of the Office
2. We’re bringing S-M-B back with SaaS
3. Diversity, equity, and inclusion software take their rightful place
4. Data and machine learning infrastructure accelerates to new heights
5. The rise of the “citizen” developer and creator
6. Fintech and crypto players are changing financial services forever
7. The vertical SaaS wave becomes a tsunami
2021
Predictions

60. Prediction 1: The unbundling of the Office
CALENDARS
PROJECT MANAGEMENT VIRTUAL OFFICE/TEAM ROOM
EMAILS/MESSAGING
EVENTS COLLABORATIONS

61. Prediction 2: We’re bringing S-M-B back with SaaS
SALES & MARKETING
VERTICAL
IT/OPS
CUSTOMER HR FINANCE/LEGAL

62. Prediction 3: Diversity, equity, and inclusion
software take their rightful place
DATA TRACKING/TALENT MANAGEMENT DEI CULTURE TRAINING & EDICATION
REPORTING RECRUITING

63. Prediction 4: Data and machine learning infrastructure
accelerates to new heights
AI/ML OPS DATA MONITORING
DATA
VISUALIZATION
DATA PIPELINE DATA MANAGEMENT/
GOVERNANCE
DATA ANALYTICS/SCIENCE

64. Prediction 5: The rise of the “citizen” developer
and creator
NO CODE/LOW-CODE APP-BUILDING TOOLS
CREATOR EMPOWEREMENT TOOLS

65. Prediction 6: Fintech and crypto players are changing
financial services forever
BANKING-AS-A-SERVICE
& CARD ISSUANCE
B2C & B2B LENDING IDENTITY / FRAUD
B2C & B2B PAYMENTS BROKERAGE /
WEALTH MGMT
CRYPTO

66. Prediction 7: The vertical SaaS wave becomes a
tsunami
AUTO REPAIR
SALON & SPA
FIELD SERVICES
EDUCATION
CONSTRUCTION
LEGAL
RESTAURANT
NETWORKING
BANKING DENTAL
USED CAR AUCTION
EARLY EDUCATION
REAL ESTATE
PUBLIC SECTOR HEALTHCARE
BARBERSHOP
REAL ESTATE AGENTS

67. State of the Cloud 2021
Top takeaways
1. Cloud companies have not just reset in the New Normal, but have thrived
(record-breaking market cap of $2 trillion)
2. Changing of the guard: MT SAAS has overtaken FAANG
4. Cloud growth rates and access to capital are at all-time highs, with the average Cloud 100
company growing 80% YoY and $186 billion going into private cloud companies in 2020 alone
3. Cloud multiples are rising to new heights, with both public and private cloud
trading for over 20x
5. Good-better-best of growth endurance is 70%-75%-80%
6. GTM strategies have adapted to the New Normal; best practices include product-led
growth, usage-based pricing, and the adoption of cloud marketplaces

68. Even in the New Normal,
we’re living in a cloud first world.
Byron Deeter
PARTNER
@bdeeter
Elliott Robinson
PARTNER
@TheValuesVC
Mary D’Onofrio
PARTNER
@mcadonofrio

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Footnotes/sources
Slide 5: CapIQ. Performance measured from January 2020 until March 2020.
Slide 10: Statistics from EHRN.org
Slide 11: US Census
Slide 13: USC Farnham Research
Slide 16: Cap IQ, Feb 2020
Slide 17-19: Cap IQ, Feb 2021
Slide 20: Canalys; SEC Form 10-K Filings
Slide 21: BVP Nasdaq Emerging Cloud Index
Slide 22: BVP Nasdaq Emerging Cloud Index
Slide 23: WisdomTree WCLD
Slide 24: WisdomTree WCLD
Slide 25: BVP Nasdaq Emerging Cloud Index
Slide 27 - 28: CapIQ and Morgan Stanley Data pack
Slide 29: CapIQ, FAANG and MT SAAS equal-weighted to 1/1/2010. Performance measured since January 2020 until February 2021.
Slide 34-35: CapIQ, including all past and present cloud index companies since January 2010 until February 2021.
Slide 36: Forbes Cloud 100 data from 2016-2020.
Slide 37: Forbes Cloud 100 data from 2016-2020.
Slide 38: Pitchbook, includes capital invested in all privately-backed companies tagged with SaaS with deal announced between 1-Jan-2010 and
31-Dec-2020
Slide 40-41: CapIQ, includes all years’ growth endurance data for past and present cloud index companies since January 2010 until February 2021.
Slide 42-43: CapIQ, including company filings and reports from Barclays, Credit Suisse, JP Morgan, Canaccord
Slide 44-45: Forbes Cloud 100 data from 2016-2020
Slide 50: CapIQ; Bessemer Venture Partners analysis; logos displayed for year companies went public
Slide 52: SEC Form 10-K Filings for companies that went public in the last five years; Bessemer Venture Partners analysis
Slide 54: Gartner; Crowdstrike quarterly earnings call; Bessemer Venture Partners analysis