Discover more from What's Hot in Enterprise IT/VC
What's 🔥 in Enterprise IT/VC #268
Open source infra on 🔥 with 🪳 + Sysdig rounds...on flip side, lessons learned on how too much 💰 too early can kill a company...
The flight to 🔥 enterprise infra companies and high quality continues with Cockcroach Labs raising $278M at a $5B valuation, more than doubling in less than 12 months 😲 and Sysdig raising $350M at a $2.5B valuation!
Why may you ask?
First up is 🪳 (distributed SQL cloud db). Huge market and once again, the transition to open source downloads to ☁️ is 🔑 - here’s more from their blog:
The company has tripled its annual recurring revenue in the last year, seeing a 500% growth in cloud revenue in the last quarter alone as customers shifted spending to the transactional database-as-a-service. More than 50% of the company’s customers now run their applications on the CockroachDB Dedicated fully managed cloud service, and the CockroachDB Serverless beta launch has already brought well over 10,000 new users to the platform. Cockroach Labs continues to build a loyal following among developers with over 22,000 Github stars and more than 500 open source contributors. With 100% YoY growth in headcount, Cockroach Labs continues to expand with offices in New York, San Francisco, and Toronto plus “clusters” in Denver, Seattle, London, and other cities.
Here’s more on Sysdig (container + k8s security)
This round of funding is a reflection of investor conviction in our vision and in the momentum that we see in our business as we execute against this vision.
Our security annualized revenue run-rate (ARR) has more than tripled over the last year.
Our customer base has grown to nearly 700 customers, spanning large enterprises, government agencies and mid-sized companies. The average annualized spend of our top 50 customers is more than $800K, illustrating the scale of deployment within large global enterprises.
Our net dollar retention as of the most recent fiscal quarter is 149%, illustrating the pace at which customers are expanding the footprint of their modern cloud applications.
Most customers deploy our platform for multiple use-cases as we have innovated rapidly to expand the functionality of our platform. Earlier this year, we added the ability to manage privileged cloud access to our platform. We also acquired Apolicy, expanding the Sysdig platform to include infrastructure as code (IaC) security.
The open source movement that we started continues to thrive as Falco downloads increased to 37 million – an increase of 335% since it became an incubating project in the cloud native computing foundation (CNCF) in January 2020.
And this halo effect for enterprise infra and dev first companies continues to day one where I’m regularly seeing rounds that should be $3-4M in size balloon to $8-10M. And then you have some Series B rounds like this 🤯 in the OSS and dev first space where $1M of ARR can equal a $1.5B valuation!
Airbyte is said to have targeted a valuation of $1.5 billion to $1.6 billion, multiple sources told Forbes. The funding round comes while the company’s annual recurring revenue is less than $1 million, according to the sources. Crossover funds Coatue and Altimeter Capital are believed to be investors on the round, according to one of the people with knowledge of the matter.
Investors have demonstrated a willingness to fund companies backed by strong open-source usage, even if the revenue is sparse; for example, Anyscale recently raised at a $1 billion valuation despite reports that its annual recurring revenue was less than $5 million.
I keep saying, but will repeat myself, some folks can handle the extra cash and high expectations and others cannot. With that, I encourage you to read the 🧵 below from Joe Fernandez from Klout which at the time was one of the hottest startups out there but one of the biggest issues that killed the company was raising too much 💰.
This will likely happen to many companies in 2022.
And we also can’t forget that these high valuations will need to lead to higher ones to have venture capitalists continue to pump 💰 into companies.
Some of the leading research analysts on Wall Street are actually downgrading a number of high flyers because of high expectations and inflation.
In a new 2022 outlook report on software technology released earlier this week, JPMorgan analysts including Sterling Auty and Jackson Ader lowered their ratings on 13 companies, while upgrading just five. Inflation and concerns about interest rates have led investors to put 2021 behind them and focus more on the coming year. That’s drawn them out of high-growth, high-multiple stocks and into sectors that are generally viewed as more resistant to inflationary pressures and rate hikes.
“The reasons for the downgrades include a combination of limited upside to our price targets, valuation in light of risk that interest rates rise in 2022, adjusting discount rates for the current rate environment and re-evaluating reasonable cash flow expectations,” the analysts wrote.
As always, 🙏🏼 for reading and please share with you friends and colleagues.
If you’re an emerging manager, listen to this 🎙️ I did with Samir Kaji on Venture Unlocked. Was incredibly fun 😄 to relive the early days of @Boldstartvc + discuss our journey from $1m Fund I + $16m Fund II and how our vision for being a day one partner for technical developer first + SaaS founders has not changed...we go deep on building a firm + lessons learned
👇🏼💯🧵 history does not repeat, it rhymes…
Adam nails it again
My colleague @shomikghosh21 sharing why we love open source and developer first companies and what we look for when taking that leap of faith and writing that first 💰
Product velocity in open source matters…and don’t forget to remember and 📢 the contributors that helped get you there
“In many discussions about Nix, the comparison of Nix and Docker comes up frequently. This question could be dismissed by saying that Nix and Docker are different tools that solve different problems. One is a toolkit for building and deploying containers and the other is a package and configuration manager. However, these tools do have some overlap: they can both be used to create reproducible environments. A reproducible environment is one that can be recreated from scratch in an identical way (ideally bit-for-bit). Practically, this means having the same tools, versions, and configuration between the environments.
Reproducible environments are useful to ensure all developers on a project have the exact same set of tools. Additionally, you can develop in an environment that is similar to the production environment -- leading to less surprises when deploying.”
In light of the AWS meltdown last week, I forgot to include Jeli.io’s Post Incident playbook, built with care and many years of experience from companies like Netflix, Slack, Etsy, Fastly and more…keeping the💡 on 99.99999% of the time is getting harder and harder as platforms get more and more distributed with more and more dependencies
Who doesn’t like Web3 and that every owns idea? Free money if you’ve been a loyal metamask user (crypto wallet)
How huge is the log4j vulnerability? Here’s a list of over 4000 software products affected at current tally
APIs are everywhere but how do you make the OpenAPI more dev friendly? Read Aidan Cuniffe’s post from Optic.
“Optic 11 is going to fully support OpenAPI 3 when it launches. Not by generating OpenAPI, but rather by helping your developers write and review the OpenAPI files they already have. That means even if you already have a complete or partial API specification, you can start using Optic. And if you're hoping to make your first OpenAPI specification from scratch, Optic will help you get up to speed.
We're keeping all the same ideas: diffing traffic, tracking changes, producing real changelogs, but with an entirely new engine.
It's all about making it easy to start working API-first with your team. Here are some fun demos:”
Monthly market check on SaaS and Cloud multiples with Jamin Ball - growth continues to be rewarded!