The startup acquisition market is poised to have its best year in nearly a decade. If acquirers maintain the same pace from the first nine months of the year through Q4, more than 450 venture-backed startups will have been acquired, generating more than $25B in proceeds. Given this state of affairs, it's a good time to take stock of the major trends in the startup market. I've observed four.
This post is part of a continuing series evaluating the S-1s of publicly traded SaaS companies in order to better understand the core business and build a library of benchmarks that might be useful to founders. Today, we'll explore one of the enterprise behemoths, both in market cap and average revenue per customer: WorkDay.
The WSJ published a recent chart of the 49 startups with billion dollar valuations. According to their research, there have never been as many privately held companies with such high valuations ever. The absolute number of these massively valuable companies alone is amazing. Ten years ago, most of them would have gone public by now. But what other insights can we tease from the data about these very special businesses?
Yesterday, I attended an event held by the IT team of a major bank. When the data analytics team took the stage, I listened with great interest as the chief of the group described their internal struggles with data and the areas where startups might help them achieve their goals. He articulated his team's needs and goals in a very concise way by bucketing his users into three personas.
I started working in venture capital three months before Lehman imploded. After the bankruptcy, the fundraising market contracted as investors internalized the new normal of the public markets. Over the past six years, the fundraising markets flipped from quite bearish to mildly bullish to extremely bullish. Or at least, that's the way it feels to me. I've struggled often to convey the magnitude of the change and its unevenness.
The market for startups raising capital has changed dramatically over the past few years. Round sizes have ballooned: startups raise 50%+ more capital in Series As than a few years ago. The looming Series A crunch never occurred. Instead, we've seen the bifurcation of the Series B market. Series Bs are the spring of hope for some startups who raise megarounds and the winter of despair for others who must compete for increasingly scarce Series B dollars.
Come work at Redpoint! The Redpoint Software team would like to add a new associate to the software team in our Menlo Park office. We're looking for someone to work alongside the tightly-knit group managing Redpoint's early stage software practice. This person will work shoulder-to-shoulder with all the members of the team, discovering new startups, evaluating their market opportunities, working with portfolio companies, expanding the firm's network and contributing to investment decisions
I met a founder a few days ago who captured the idea of building brand equity really well. He said something along the lines of, "Every time we provide a magical experience to a customer, we invest in our brand equity. Each time we do something that disappoints them or overtly extracts value from our users, we expend brand equity." This founder prided himself on continuously investing in and increasing his business's brand equity over long periods of time.
Founded in 2007, MobileIron is a leader in the Mobile Device Management sector. MDM provides enterprises software to manage the mobile phones and tablets of their employees. MobileIron provides three different products: a server product called Core to define and deploy security policies, a client product named Client that enforces these policies on each device and a gateway called Sentry that secures traffic from the device to the enterprise's servers. MobileIron employs a hybrid delivery model. The company delivers its product both as perpetual license software and as-a-Service. We will explore the differences in these delivery models and the implications for the business.
Bill Gurley and Fred Wilson have focused on burn rates as an important topic for startups. The immediate question that follows this commentary is: How much does the typical startup burn throughout its life? And what is a "risky" burn rate for a company?