Each month we share our thoughts on enterprise software, highlight our portfolio companies, update our readers on new financings and much more!
Unicorns, Unicorpses & Dino-Corns: The VC industry is running amok with the idea of potential unicorns becoming unicorpses – a word that first appeared in a post by Aileen Lee of Cowboy Ventures. Goldman Sachs in its “Views from the Valley” Series has now coined a new term – Dino-Corn – with reference to the large number of Unicorns that have been on their private company $1B+ valuation list since early 2014, but have not had an exit. For the few that have, public market valuations have been quick to signal that the private company mark-ups were too optimistic.
Box’s IPO was at a price quite a bit lower than its final IPO price ($2.4B vs $1.7B). Pure Storage’s IPO was a flat valuation to its final round. Square’s IPO price has been determined to be in the $11-$13 range, which is lower than the $15+ per share that the last private investors paid. Eleven dollars is also the price that Square priced its round at in September 2012. Leading venture capitalists such as Mike Moritz and Bill Gurley have been sounding the alarms. We tend to agree. All indications are that private company valuations have gotten ahead of themselves. In addition, the number of potential acquirers decreases substantially once a company reaches a lofty valuation.
What does this mean to early stage investors like Cervin? We think that it is not a healthy situation when later stage investors are quick to increase valuations while providing debt like ratchets and the ability to buy shares at a discount for a future IPO. Such terms reduce their risk at the cost of early investors and common shareholders. It is still to be determined how early investors will ultimately fare. We fundamentally believe that investing at lower valuations, building solid companies that are not guzzling cash, and valuing customer validation over investor validation is a surer path to success.
Viva Las Vegas: Cervin Ventures attended Amazon Web Services (AWS) re:Invent 2015 conference in Las Vegas last month. What started off as a niche service for start-up companies is now over a $6B cloud computing business, and poised to be the dominant player in the space.
Here are our key takeaways from the annual conference:
Financings and Portfolio Updates ArmorText Wins Big at CTIA’s Startup Lab: Cervin-backed ArmorText won 1st place overall in CTIA – The Wireless Association’s Startup Lab. The secure messaging solutions provider also won a Best in Category award for Cybersecurity.
“It was invigorating to share the space with such visionary founders” said Navroop Mitter, CEO of ArmorText. “We feel certain we’re building something the world needs – a truly secure, eminently usable, and effortlessly manageable enterprise messenger.”
ArmorText offers secure messaging solutions for enterprises. The company provides a seamless and secure channel for communication and collaboration.
Replay Technologies: With football in full swing and the start of the NBA’s 2015-2016 season, Replay Technologies, is re-imagining the way we watch sports.
Replay’s revolutionary new video technology, FreeD (free-dimensional video technology) relies on multiple 5K cameras, each capturing a 2D image, and a custom algorithm to process the images into a 3D scene. The operator can freeze the action, then turn the perspective to show any angle in the replay.
Replay is also backed by Dallas Mavericks owner Mark Cuban. The Mavericks have signed a 7-year deal with Replay. Cuban also recently donated $5M to Indiana University for a state-of-the-art technology center that includes FreeD technology.
Company Spotlight: LaunchDarkly
Software development is going through a massive change. Organizations are actively moving to agile development and creating micro-services (rather than monolithic code), enabling them to launch products and features at a much faster pace. Facebook exemplifies this trend. Using an internal tool called Gatekeeper, their engineers can release new features, target the additions for certain users, get feedback and roll back the feature if needed seamlessly. Facebook smartly uses micro-services and small changes in functionality, wrapped in feature flags that can quickly be toggled on and off using Gatekeeper.
LaunchDarkly is developing a market-leading tool on similar lines to what Facebook has developed for its internal software and product teams. This is a critical capability that enables software development teams to decouple feature launches from deployment. The company is building the first platform that allows product managers and developers to launch, measure, control and manage their features. The product called “Flags-as-a-Service” allows developers and managers to offer functionality to who they want, when they want.
LaunchDarkly, is a necessary tool in a developer and product managers repertoire. Amongst the themes that Cervin Ventures focuses on, DevOps and Dev Tools for the Always-On economy are core to enterprise technology transformation
We want to hear from you! Email Preetish or Neeraj and let us know what interests you in the early-stage enterprise technology space. And don’t forget, follow Cervin Ventures on Twitter and like us on Facebook!