industry cloud playbook

Industry Cloud Playbook

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MAINFRAME

VerticalSAAS

2

CLIENT-SERVER and PC

Excludes vertical SaaS companies that have successfully transitioned to the cloud: Ultimate Software (75% recurring/subscription), Callidus Cloud (75%), Medidata (80%), Guidewire (50%)

Business Software in Waves

HorizontalSAAS

Consumerization of enterprise software and mobility (generational

shift)

Cloud makes it cheaper and easier for customers

to adopt software

Winner takes most dynamics

In some verticals, cloud functionality makes

software 10x more useful

Why are verticals moving to the cloud now?

1 2

3

4

3

Customers flock to the leader

Capital flows to the winner

Cross-selling opportunities

Enterprise Value 2014E Revenue

4*If Dealer.com is included, DealerTrack’s 2014E revenue guidance is $819m.As of June 5, 2014.

Large Companies Can Be Built

$1.7bn $443m

$3.1bn $574m

$3.2bn $282m

$2.9bn $341m

$1.3bn $229m

+18%

+19%

+34%

+13%

+29%

$838m $119m +26%

*

Plays Currently in Use

6

Replace Sleepy Incumbents

The Play Example Company

Find a big on-premise incumbent and build a better, cheaper and easier to use cloud replacement.

On-demand software for the auto industry

The cloud makes it possible to deliver software that is:

• more usable• cheaper• easier to maintain• accessible from any device• constantly being updated and

improved

7

Help Customers find New Ways to Grow

The Play Example Company

Make your software drive revenue for your customers through consumer-facing features.

Web-based property management software

• Cloud software lives online and drives revenue for its customers, something that was never possible with on-premise software

• Frequently creates an arms race in the industry that drives software adoption

8

Attack the SMB Market

The Play Example Company

Build software for SMBs that historically was only available to large enterprises. GPS vehicle fleet tracking software

• Not too long ago, small and medium sized businesses were off limits to software companies

• It was too expensive to hire field sales teams and still have software affordable enough for this market

• Today, it’s possible to sell software cheaply over the Internet

9

Tap into Data at Cloud Scale

The Play Example Company

Use the cloud to tap into massive data sets and leverage data in novel ways. Software for to the utility industry

• Customer data used to be siloed in a company's data center.

• The cloud now makes it possible to aggregate data across users

• We expect to see an increasing number of software businesses utilize shared data to drive insights for their customers

10

Build a Platform

The Play Example Company

Drive value and lock-in customers by becoming the center of a larger ecosystem of industry applications.

Ecommerce software platform

• Cloud connectivity & APIs allow IC companies to become platforms with an ecosystem of applications around them

• Building a platform drives long-term customer lock-in

• If your customers rely on you to act as the hub for other critical applications, it is very difficult for competitors to replace you

Plays of the Future

12

Possible Opportunities Ahead

Future Play Description

Mobile-centric Mobile applications for workers in the field (digitize paper-based processes, increase collaboration & communication, etc.,)

Software for Emerging Hardware Platforms

Software for emerging hardware platforms including: wearables, robots/drones, sensors and satellites

Enterprise Marketplaces

Marketplaces in fragmented, low-margin industries where improved procurement and vendor discovery can drive real impact on a company’s bottom line

Tackling Underserved or Changing Industries

Dozens of industries are still held captive by terrible software including: the nonprofit sector, banking, the public sector and asset heavy industries like oil & gas, mining and agriculture

Early Examples

1

2

3

4

What we look For

TAM > $500M ARR

Bet on the leader

Consistent 75%-100% YoY growth

Focus on next-generation product experience

Teams who have lived the problem

14

How we pick our bets

Qualitative Quantitative

Churn

CMRR

CLTV

Cash

CAC

Questions?Brian Feinstein is a partner at BVP, where he focuses on consumer Internet and enterprise software investments. He also leads BVP's efforts in Brazil and Russia. Brian has been involved in the firm’s investments in Procore, Clio, Mindbody, Gainsight, LiveAuctioneers, Playdom, Zoosk, United Capital, Knewton, and an unannounced mobile gaming business.

Trevor Oelschig is a partner in Bessemer’s Menlo Park office, where he focuses primarily on software and the consumer Internet. Trevor’s current portfolio includes PagerDuty, Shopify, Zopa, Instructure, Clio, Knewton, Zapier and 2U (IPO). His historical investments include Hunch (acquired by eBay), Smilebox (acquired by Perion Network) and Pure Networks (acquired by Cisco.)

Allen Miller is an InSITE Fellow and 2nd year MBA candidate at Columbia Business School where he is focusing on venture capital and entrepreneurship. Allen is currently interning with BVP and spent the first year of business school interning with DFJ Gotham Ventures.