Data trends: Visualizing the global cloud industry in 2023
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At Bessemer, we surveyed 405 cloud companies as a status check for the private cloud computing industry, tracking their financial performance, artificial intelligence (AI) adoption, leadership priorities, and biggest challenges. We aimed to answer the question: Where does the cloud industry stand in 2023, the year where pressures to drive profitable growth intensified and AI eclipsed every business conversation and captivated the world? According to Bessemer Partner Byron Deeter, the global cloud industry is stronger than ever. “How do you think AI is delivered? Tens of thousands of GPUs working together in the cloud,” said Byron. “Our 2023 Cloud 100 applicants have never been stronger — proof that AI is the next horizon of cloud.” While our Cloud 100 Benchmarks act as an industry yardstick for best-in-class private cloud performance, this survey widens the aperture by more than 4x to assess performance of private cloud companies of every stage and scale. In 35 charts, we visualize the quantitative and qualitative trends moving the private cloud industry across 23 countries and 114 cities. Five cloud industry insights for 2023 The top five cloud companies voted most likely to IPO next are Stripe, Databricks, Canva, Klavyio, and Snyk. San Francisco is the cloud industry epicenter in terms of headquarters and hiring: 52% of cloud companies reside in California, with 21% of companies headquartered in San Francisco. AI has already taken over SaaS: By the end of the year, 86% of cloud companies surveyed will have an AI-driven feature. Cloud leaders ranked setting competitive differentiation in the product and go-to-market strategy as the biggest challenge facing their companies. Driving profitable growth was ranked as the leading objective whereas fundraising was ranked one of the lowest priorities for 2023. Cloud companies are still well funded: A majority of surveyed cloud companies have raised over $100 million or more in total funding. More than half of the surveyed companies have less than $50 million on the balance sheet, whereas almost a third have $100 million or more. Of the cloud companies that have raised $1 billion or more, over 70% have more than $300 million on the balance sheet. Read the full report: https://www.bvp.com/atlas/data-trends-visualizing-the-global-cloud-industry-in-2023
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Data trends: Visualizing the global cloud industry in 2023
- 1. 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Visualizing the private cloud market in 2023 405 COMPANIES, 35 CHARTS
- 2. In our largest survey yet, encompassing 405 companies, we uncover and analyze the latest geographic, leadership, and financial trends in the global cloud industry. 1 – 2 – 3 – 4 – 5 – 6 – On the category On the geography On the size On the leadership On the financials On the market
- 3. COMPANIES 405 CITIES 114 COUNTRIES 23 We surveyed 405 cloud companies as a status check for the private cloud computing industry 5% IDENTIFY AS ‘FULLY REMOTE’ INTRO
- 4. “Our 2023 Cloud 100 applicants have never been stronger—proof that AI is the next horizon of cloud.” BYRON DEETER PARTNER, BESSEMER INTRO
- 6. 1 – On the Cloud Category Vertical Software is a top ranking cloud category with Cybersecurity on its heels 19% 16% 13% 11% 10% 9% 6% 6% 6% 5% Vertical software Cybersecurity Data/Infrastructure Sales, Marketing, and Customer Experience Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software CATEGORIES REPRESENTED
- 8. 2 – On the Geography 1. San Francisco, California - 84 2. New York, New York - 44 3. Tel Aviv, Israel - 18 4. Boston, MA - 13 5. London, UK - 12 6. Palo Alto, California - 10 7. Paris, France - 8 8. Mountain View, California - 8 9. Santa Clara, California - 8 10. San Mateo, California - 8 TOP 10 GLOBAL CITIES REPRESENTED While innovation is global, San Francisco still has a strong gravitational pull for the cloud industry
- 9. 2 – On the Geography 1. San Francisco, California - 84 2. Palo Alto, California - 10 3. Mountain View, California - 8 4. Santa Clara, California - 8 5. San Mateo, California - 8 SILICON VALLEY CITIES REPRESENTED HEADQUARTERED IN SAN FRANCISCO 21% The Bay Area is the cloud industry epicenter
- 10. 2 – On the Geography TOP 5 USA STATES REPRESENTED (19) OF THE USA STATES ARE REPRESENTED 38% 52% of cloud companies reside in California 52.4% 15.7% 5.4% 4.9% 3.8% CA NY MA FL TX
- 11. FILTERED BY CATEGORY Among surveyed Vertical Software companies, we see broad geographic representation across the United States, Western and Central Europe, and India. Vertical software 2 – On the Geography
- 12. FILTERED BY CATEGORY Cybersecurity Of those surveyed, there’s a strong contingency of Cybersecurity cloud companies hailing from the West Coast of the United States. 2 – On the Geography
- 14. The typical (median) cloud company has 478 full-time employees (FTEs), whereas the average cloud company has 230. NUMBER OF FULL- TIME EMPLOYES 25% 18% 16% 16% 9% 8% 5% 2% Less than 50 50-99 100-249 250-499 500-999 1000-1999 2000-4999 5000+ 3 – On the Size MORE THAN 100 FTEs ~57%
- 16. AI is already reshaping the majority of SaaS products and features Do you currently have any AI-driven features in your product? Do you plan on launching any new AI products in the next 6 months? 4 – On the Leadership 86% OF CLOUD COMPANIES WILL HAVE AN AI FEATURE BY THE END OF THE YEAR CURRENT STATUS ROADMAP – 6MO No Yes 14% 86% 18% 82%
- 17. In the Developer category, we see a significant shift in AI development 0% 20% 40% 60% 80% 40% No Yes 60% AI driven features 0% 20% 40% 60% 80% 10% No Yes 90% 80% AI driven features Do you currently have any AI-driven features in your product? Do you plan on launching any new AI products in the next 6 months? CURRENT STATUS ROADMAP – 6MO Developer FILTERED BY CATEGORY 4 – On the Leadership
- 18. Two other categories are characterized by AI innovation: Collaboration & Design and … 0% 20% 40% 60% 80% 17.65% No Yes 82.35% AI driven features 0% 20% 40% 60% 80% No Yes 100% 100% 0% AI driven features 4 – On the Leadership FILTERED BY CATEGORY Do you currently have any AI-driven features in your product? Do you plan on launching any new AI products in the next 6 months? CURRENT STATUS ROADMAP – 6MO Collaboration & Design Enterprise Software
- 19. Two other categories are characterized by AI innovation: Collaboration & Design and Enterprise Software. 0% 20% 40% 60% 80% No Yes 100% 100% 0% AI driven features 4 – On the Leadership FILTERED BY CATEGORY Do you currently have any AI-driven features in your product? Do you plan on launching any new AI products in the next 6 months? CURRENT STATUS ROADMAP – 6MO Enterprise Software 0% 20% 40% 60% 80% 9.09% No Yes 90.91% AI driven features
- 20. Breakdown of companies with a founder CEO vs. non-founder CEO 4 – On the Leadership No Yes 57 348 Is the company’s CEO also the founder of the company?
- 21. CLOUD COMPANIES WITH THE FOLLOWING FACTORS ARE MORE LIKELY TO HAVE NON-FOUNDER CEOS: 4 – On the Leadership No 57 1. are in Cybersecurity 2. have 250+ employees 3. have $100+ million funding Vertical software Cybersecurity Data/Infrastructure Sales, Marketing, and Customer… Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software 17.5% 29.8% 14.0% 10.5% 3.5% 5.3% 7.0% 5.3% 1.8% 4.7% Less than 50 50-99 100-249 250-499 500-999 1000-1999 2000-4999 5000+ Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ 3.5% 0.0% 1.8% 15.8% 7.0% 50.9% 12.3% 8.8% 1% 1% 2% 4% 4% 2% 1% 0%
- 22. Setting competitive differentiation in the product and go-to-market strategy is the top ranking challenge among cloud companies 4 – On the Leadership From the options, what is the biggest challenge your company faces today? STRATEGY ENDURANCE OTHER CULTURE VISION Setting competitive differentiation in the product and GTM 38% 35% 13% 9% 5% Driving efficiency and future proofing the business across the org Hiring, cultivating, and retaining top talent Setting a new focus in the age of AI A challenge that does not fall in the options available
- 23. 4 – On the Leadership What are your biggest priorities in 2023? 36% 29% 23% 7% 3%1% 1% Driving profitable growth Ramping GTM engines Innovating our product roadmap Category creation / evangelism Other Fundraising Building out our leadership team Driving profitable growth is the top ranking priorities among cloud companies
- 24. The majority of cloud companies report seeing the most hiring opportunity in product, engineering, and design 4 – On the Leadership 58% 30% 6% 6% Product/Engineering/Design GTM - Sales, Sales Enablement, etc. Customer Success GTM - Marketing, Product Marketing, etc. Where do you see the most hiring across your organization in 2023?
- 25. 4 – On the Leadership Based on the survey, San Francisco prioritizes hiring in product, engineering, and design significantly higher than other locations, whereas New York leads in prioritizing Sales and Sales Enablement. 39 11
- 26. 4 – On the Leadership 0 5 10 15 20 Vertical software Cybersecurity Data/Infrastructure Sales, Marketing & Customer Experience Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software 18% 14% 18% 8% 8% 11% 8% 10% 5% 3% 134 Where do you see the most hiring across your organization in 2023? Product/ Engineering/Design FILTERED BY CATEGORY
- 27. 4 – On the Leadership 0 5 10 15 20 Vertical software Cybersecurity Data/Infrastructure Sales, Marketing & Customer Experience Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software 25% 19% 10% 14% 12% 13% 4% 0% 1% 1% 69 GTM – Sales, Sales Enablement, etc. FILTERED BY CATEGORY Where do you see the most hiring across your organization in 2023?
- 28. 4 – On the Leadership 0 5 10 15 20 Vertical software Cybersecurity Data/Infrastructure Sales, Marketing & Customer Experience Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software 14% 21% 7% 21% 7% 7% 0% 0% 7% 14% 14 Customer Success FILTERED BY CATEGORY Where do you see the most hiring across your organization in 2023?
- 29. 4 – On the Leadership 0 5 10 15 20 Vertical software Cybersecurity Data/Infrastructure Sales, Marketing & Customer Experience Fintech AI Apps & Infrastructure Developer Collaboration & Design HR Enterprise software 14% 21% 7% 21% 7% 7% 0% 0% 7% 14% 13 GTM – Marketing, Product Marketing, etc. FILTERED BY CATEGORY Where do you see the most hiring across your organization in 2023?
- 31. A majority of surveyed cloud companies have raised over $100 million or more in total funding 2.5% 2.0% 6.9% 21.7% 10.6% 41.2% 10.6% 4.4% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ 0% 10% 20% 30% 40% 50% 60% 70% TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 5 – On the Financials 15% BUSINESSES RAISED $500 MILLION TO $1 BILLION
- 32. Of the 24 total Developer companies surveyed 63% have raised $100 million to $500 million in total funding. 0.0% 0.0% 8.3% 16.7% 8.0% 62.5% 4.2% 0.0% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ 5 – On the Financials Developer FILTERED BY CATEGORY TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M)
- 33. 5 – On the Financials FILTERED BY CATEGORY TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) Of the 19 total Enterprise Software companies surveyed 68% of those businesses have raised $100 million to $500 million in total funding. Enterprise Software 0.0% 0.0% 0.0% 15.8% 10.5% 68.4% 5.3% 0.0% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+
- 34. Every HR company raised more than $50 million in total funding. Of the 22 HR companies, 27% raised $500 million to $1 billion, a 16%+ jump when compared to the total survey breakdown. 5 – On the Financials FILTERED BY CATEGORY TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 0.0% 0.0% 0.0% 0.0% 22.7% 45.5% 27.3% 4.5% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ HR
- 35. Fintech, Design & Collaboration, and Cybersecurity Among the total 18 cloud companies that have raised $1 billion or more in total funding we see the top three categories: 5 – On the Financials
- 36. 10% of the Fintech category raised $1 billion or more in total funding, a ~6%+ jump in comparison to the total survey set. 5 – On the Financials Fintech FILTERED BY CATEGORY TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 2.4% 2.4% 14.3% 21.4% 9.5% 31.0% 9.5% 9.5% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+
- 37. 9% of the Design & Collaboration category raised $1 billion or more in total funding, a ~5%+ jump in comparison to the total survey set. 5 – On the Financials TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 0.0% 4.3% 8.7% 26.1% 0.0% 43.5% 8.7% 8.7% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ FILTERED BY CATEGORY Collaboration & Design
- 38. 8% of the Cybersecurity category raised $1 billion or more in total funding, a ~4%+ jump in comparison to the total survey set. 5 – On the Financials FILTERED BY CATEGORY Cybersecurity TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 3.0% 0.0% 3.0% 25.8% 10.6% 34.8% 15.2% 7.6% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+
- 39. The Data Infrastructure category has the most bootstrapped businesses, a ~4%+ jump in comparison to the total survey set. 5 – On the Financials Data/Infrastructure FILTERED BY CATEGORY TOTAL AMOUNT OF FUNDING RAISED TO DATE ($M) 5.9% 2.0% 7.8% 21.6% 7.8% 41.2% 9.8% 3.9% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+
- 40. More than half of cloud companies have less than $50 million on the balance sheet, whereas almost a third have $100 million + HOW MUCH CASH DOES THE COMPANY HAVE ON THE BALANCE SHEET AS OF DECEMBER 31, 2022? 5 – On the Financials 56% 14% 13% 8% 7% 2% $0-$50M $50-$100M $100-$200M $200-$300 $300+ Other While total funding trends indicate investor enthusiasm and traction, cash on the balance sheet represents runway and endurance for businesses. RUNWAY & ENDURANCE
- 41. For companies with $300 million or more of cash on the balance sheet, Cybersecurity is the highest industry category. 5 – On the Financials 31% 8% 15% 23% 15% 8% $0-$50M $50-$100M $100-$200M $200-$300 $300+ Other Cybersecurity Data/Infrastructure Sales, Marketing & Customer Service Fintech Ai Apps & Infrastructure Collaboration & Design CASH ON THE BALANCE SHEET
- 42. Of the companies that have raised $100 to $500 million in total funding, 62% have $100 million or more in cash on the balance sheet. FILTERED BY CATEGORY 5 – On the Financials $0-$50M $50-$100M $100-$200M $200-$300 $300+ Other CASH ON THE BALANCE SHEET 41.2% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ TOTAL FUNDING
- 43. When we look at the smaller cohort of companies that have raised $1 billion or more in total funding, we see that over 71% have $300 million cash on the balance sheet. $0-$50M $50-$100M $100-$200M $200-$300 $300+ Other 14.29% 71.43% 14.29% 5 – On the Financials CASH ON THE BALANCE SHEET FILTERED BY CATEGORY 41.2% Bootstrapped 1M or less 1-10M 10-50M 50-100M 100-500M 500M-1B 1B+ TOTAL FUNDING
- 44. Cybersecurity The cloud category that had the highest number of companies with $300 million or more of cash on the balance sheet: Cybersecurity 5 – On the Financials
- 45. 2:1 IS A GREAT TARGET TO HAVE IN A MORE DIFFICULT MACRO FOR CLOUD More than 70% of cloud companies have not met the Rule of 40 13% 8% 2% 17% 17% 3% 40% 1:1 growth to FCF margin 1:2 growth to FCF margin 1:3 growth to FCF margin 2:1 growth to FCF margin 3:1 growth to FCF margin 5:1 growth to FCF margin other If the company’s Rule of 40 is above 40%+, what is the approx. ratio of ARR growth to FCF margin for 2022? What is the company’s Rule of 40 (calculated as TTM ARR growth rate + FCF margin) for 2022? 25% 7% 10% 6% 11% 27% 14% 0% 5% 10% 15% 20% 25% 30% less than 0% 0-10% 10-20% 20-30% 30-40% 40% and higher Other 5 – On the Financials
- 47. The predicted next big SaaS IPO are all Cloud 100 companies 6 – On the Market 1. Stripe 2. Databricks 3. Canva 4. Klaviyo 5. Snyk TOP-5 CLOUD COMPANIES VOTED MOST LIKELY TO IPO NEXT
- 48. Curious to learn more about this cloud survey? Email the Atlas Editors at content@bvp.com with your questions and we’d be happy to see if we can share more insight. Dive into our Cloud 100 Benchmarks for 2023. Learn more about the definitive ranking of the world’s top 100 private cloud companies. bvp.com/cloud100 CLOUD 100 BENCHMARKS FOR 2023