THE STATE OF ENTERPRISE SOFTWARE
J E R RY C H E N

Valuations took a hit in
Q1 but are coming back. BessemerCloudIndex Source: Bessemer 2016

We are seeing a“new normal”in
valuations. Source: Morgan Stanley, Capital IQ, Thomson Avg. Aggregate Value / Next 12 Month Revenue 15.5x 2013-2014 7.4x 2/12/2016

Recent Enterprise IPOs: 1 Year
Performance Source: Google Finance

2015 VC investments reached dotcom
levels Source: Greylock, PwC/NVCA Data: Thomson Reuters

U.S. Early Stage VC: Q4
2015 - Q1 2016 Decrease in # Deals Increase in Round Sizes Source: Pitchbook

U.S. Late Stage VC: Q1
2016 Decrease in # Deals y/y Smaller Deal Sizes y/y Source: Pitchbook

Expect M&A to return to
historic levels. Source: Morgan Stanley, Capital IQ, Dealogic

Market Summary Public Markets Valuations
are down. We’re stabilizing at a new normal. VC Deal volume is decreasing, but still an appetite for great companies. M&A Expect strategic M&A to pick up over the next four quarters.

Startup Climate for 2016 Focus
on cash positions Build for the long haul Pick a wave bigger than you You.

MARKET SPOTLIGHT
Areas of Interest

INFRASTRUCTURE “Caught between OSS and
a Cloud Place”

How do you get out
between OSS and a Cloud Place?

Infrastructure Amazon is the biggest
threat to infrastructure companies. Azure and Google will make progress in 2016 with enterprise buyers. Incumbent and private cloud vendors will act irrationally. You need a large footprint and direct connection to developers (DDI).

SECURITY “Separating signal from the
noise”

Security Thousands of companies all
sound the same. (And many are the same.) Customers don’t want to buy snake oil. Your job is to help them be smart buyers. Security is an evergreen market. There will always be bad guys, so build a business model that“works for you.”

APPS
“Not your father’s Oldsmobile”

Evolution of Apps Cloud/SaaS Cloud/MobileClient/Server
What’s Next? ?

The basic building blocks of
apps are changing. Bots and conversational UIs IoT extends reach of apps everywhere Big Data/AI will power apps

Cloud-enabled car recognizes when you’re
in an accident. Sends data to your insurance company and sends quote to your phone. Calls Uber to pick you up. Not your father’s Oldsmobile.

DATA & IoT “Machine intelligence
and other oxymorons”

Iron Man Terminator
vs.

Data and IoT Vision, speech,
and text are real and ready for apps today. Find the data. Accumulate more data and proprietary data. More data trumps better math.