1. State of the
Cloud 2022
Kent Bennett
Partner
Mike Droesch
Partner
Sisi Song
Vice President
Caty Rea
Investor
Aleeza Hashmi
Investor
Adam Fisher
Partner

2. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Q1
TOTAL PUBLIC CLOUD MARKET CAP
Feb 2020
Mar 2021
Nov 2021
$1T
$2.4T
+140%
+19%
$0T
$1.5T
$3T
$2.7T
April 2022
-41%
$1.6T
EMCLOUD AVERAGES
Average growth rate of 41.5%
Average gross margin of 71.1%
Average efficiency score of 45.4%

3. Proceeds from U.S. IPOs have
reached a record $142.4 billion in
2021 but pace has slowed in 2022
2021 was a blockbuster
year for tech IPOs
42.7
54.9
85.3
30
18.8
35.5
54.2
46.4
78.2
142.4
$0B
$25B
$50B
$75B
$100B
$125B
$150B
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Source: Renaissance Capital

4. Proceeds from Global M&A
reached $1240 billion in 2021
In 2021, global tech M&A made
history
2021
2022
Source: SP Global
192
248
393
594
470
349
590
476
630
1240
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Proceeds
($B)
Deals

5. VC funding dropped 20%
quarter-over-quarter in Q1 of 2022
Source: CB Insights
69.3 65.9 65.8
58 60.5 58.5
81.5
94
134.2
153.8
162.1
177.98
143.9
7265 7125 7257
6796
6381 6191
6966 7119
7933
8280
9723
9256
8835
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
$0B
$20B
$40B
$60B
$80B
$100B
$120B
$140B
$160B
$180B
$200B
Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22
Funding ($B) # of Deals
Funding ($B) # of Deals

6. VC industry eclipses $100 billion
in fundraising
45
74 71
87
$0B
$20B
$40B
$60B
$80B
$100B
$120B
$140B
2017 2018 2019 2020 2021
Capital raised ($B)
128.3
Enormous amount of
capital ear-marked for
SaaS-based investing
$128.3B
+47%
YOY
Source: Pitchbook

7. VC realizations for the record books
743+ $5.8T
$1.2T
Global tech M&A
Companies went public
on Nasdaq in 2021
Global M&A topped
to a new high in 2021
Source: Pitchbook

8. Cloud stocks reset below FAANG,
nearing S&P
MT SAAS, EMCLOUD,
FAANG, and Major Indexes
Performance since 2020
-50%
0%
50%
100%
150%
Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22
Percent Change
EMCLOUD MT SAAS FAANG SPX
EMCLOUD Performance:
Approx. +40%
MT SAAS Performance:
Approx. +34%
FAANG Performance:
Approx. +50%
S&P Performance:
Approx. +35%

9. The fundamentals of the
cloud are strengthening
The recurring revenue SaaS model
remains an incredibly strong
business model…

10. …perhaps the greatest model
in the history of the world?

11. Let’s go back to basics
of the cloud model
Best-in-class cloud
companies turn $1 of
investment into $18 of
enterprise value in 12
months
$1
of S&M
$18
of EV
$1
of S&M
Recurring Gross Profit pays
back S&M in 12 months
S&M PAY BACK
$0
$5
$10
$15
$20
1 2 3 4 5 6 7 8 9 10 11 12
$1.2
of ARR
$18
of Enterprise
Value
15×ARR
ENTERPRISE VALUE

12. Just how powerful is this model?
Notes: Based on Capital IQ data
and BVP Analysis. Comparing net
new gross profit added in 2021 to
average S&M expense across 2020
and 2021. IRR calculated assuming
S&M investment generates a
recurring gross profit stream that
retains at a 95% rate annually over
4 years and is valued at a 10X
terminal value in year 5.
GROSS PROFIT RETURN ON S&M SPEND ACROSS BVP CLOUD INDEX
0%
25%
50%
75%
100%
125%
150%
175%
IRR
Avg 68%
The best SaaS
companies turn a
$1 of sales and
marketing spend into
recurring gross profit
at an incredible rate.
0%
25%
50%
75%
100%
125%
150%
175%
IRR
Avg 68%
0%
25%
50%
75%
100%
125%
150%
175%
IRR
Avg 68%

13. SaaS
Payments and Lending as a “Second Act”
Indirect monetization models
Cheap or free software as an acquisition
hook, with new levers to monetize
SaaS products and
business models are
getting even better…
⎻ Card issuing
⎻ Payroll
⎻ Banking
⎻ Group Purchasing
⎻ Insurance
⎻ Logistics
⎻ Data and advertising
⎻ Payments & Factoring
NEW CHAPTER IN THE CLOUD PLAYBOOK

14. SaaS
Lead with financial services, and follow
with software
Payments and Lending as a “Second Act”
All indirect monetization models
Cheap or free software as an acquisition
hook, with new levers to monetize
SaaS products and
business models are
getting even better…
⎻ Financial Services
⎻ Group Purchasing
⎻ Data and advertising
⎻ Insurance
⎻ Logistics
⎻ Usage-based pricing
⎻ V1.0 - Payments & Factoring
⎻ V2.0 - Card issuing, Payroll, Banking…
NEW CHAPTER IN THE CLOUD PLAYBOOK

15. SaaS
Lead with financial services, and follow
with software
Payments and Lending as a “Second Act”
All indirect monetization models
Cheap or free software as an acquisition
hook, with new levers to monetize
SaaS products and
business models are
getting even better…
⎻ Payments & Factoring
NEW CHAPTER IN THE CLOUD PLAYBOOK
⎻ Card issuing
⎻ Payroll
⎻ Banking
⎻ Group Purchasing
⎻ Insurance
⎻ Logistics
⎻ Data and advertising

16. Powered by a wave of APIs offering easy building blocks:
PREDICTION
Indirect monetization becomes the new “First Act”
PAYMENTS CARD ISSUING PAYROLL INSURANCE BANKING LENDING

17. PAYMENTS CARD ISSUING PAYROLL INSURANCE BANKING
Powered by a wave of APIs offering easy building blocks:
PREDICTION
Indirect monetization becomes the new “First Act”
COMPANIES LEANING
INTO INDIRECT
MONETIZATION
LENDING

18. Cloud onramp improving for
even late adopters
Early + Late Majority
Trust the public cloud with
sensitive data and workloads
Bring the cloud
to the data
Containerize and deploy
apps to private clouds
Cloud-Native On-Prem
VPCs and Hybrid Clouds
Early Adopters

19. PREDICTION
Cloud goes to market
CLOUD
MARKETPLACES
NOTABLE
MARKETPLACE
SELLERS
CLOUD
MARKETPLACE
MIDDLEWARE

20. The cloud…is selling the cloud
2
4
8
14
27
50
$0B
$10B
$20B
$30B
$40B
$50B
2020 2021 2022 2023 2024 2025
CLOUD MARKET GMV FORECAST ($B)
We predict cloud
marketplace procecurement
goes mainstream
PREDICTION
By 2024, 80% of Cloud 100
Companies will be actively selling
through cloud marketplaces.
88%
CAGR

21. Enterprise spend on
IT continues to climb
of CIOs expect to spend
the same or more
92%
of CIOs plan to
increase spend
49%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2020 Q4 2021
Increase Remain stable
44
44
CIO EXPECTATIONS ON SPENDING IN THE NEXT THREE YEARS
43
49 Stronger SaaS products, business
models, and delivery methods
drive increasingly strong
enterprise demand for cloud
products

22. COVID drove unprecedented turnover
in the global labor markets
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
2017 2018 2019 2020 2021 2022
%
U.S. QUIT RATE NEARED A 20-YEAR HIGH
Since May 2021,
there are more job
openings than
unemployment.
2.9%
Quits rate
3.6%
Unemployment
rate
Unemployment is at its
lowest since 1969

23. Population decline is a global crisis
0
0.5
1
1.5
2
2.5
1980 1990 2000 2010 2020
United States China India
Source: worlddata.info
China, India, U.S. are the top three most
populous countries and contribute to
40% of world’s population.
POPULATION GROWTH RATE
Talent shortage is not just
caused by COVID-19; around the
world, there are declining birth
rates and aging populations.
0.23%
China
0.99%
India
0.35%
United States

24. Cloud software will help close the gap in global productivity
LABOR SHORTAGE
& WELLNESS
PRODUCTIVITY &
COLLABORATION
FREELANCERS/
CREATORS ECONOMY
WORK AUTOMATION SUPPLY CHAIN
PREDICTION

25. PREDICTION
LABOR SHORTAGE
& WELLNESS
LABOR SHORTAGE
& WELLNESS
PRODUCTIVITY &
COLLABORATION
FREELANCERS/
CREATORS ECONOMY
WORK AUTOMATION SUPPLY CHAIN
Cloud software will help close the gap in global productivity

26. Low cloud penetration
across the verticals
Market leaders across select industries
illustrate the potential for cloud adoption
860K
Restaurants
RESTAURANTS
of US restaurants
6%
TRANSPORTATION
$60B
TAM
HOME SERVICES
of the home
services market
1%
900K
Businesses
AUTO REPAIR
260K
Auto repair
shops
of the auto
repair market
2%
LAUNDROMATS
of the laundry
services market
2%
80K
Laundry
services
of the transit technology
market
1%

27. Global maturity
varies widely
Public cloud spend is only
~10% of total IT spend ($4T)
across the globe
10%
% of Global GDP 27 27 6 36 4
% of Global Public Cloud Spending 55 26 2.6 15 1.2
% of IT spending on cloud 15 10 7.5 4.7 2.8
LATAM
Europe APAC
North America MENA
In 2021, end users spent $396
billion on public cloud services

28. Major cloud players born across the globe
MARKET MAP OF SELECT
REGIONAL CLOUD LEADERS
THAT HAVE SURPASSED
$100M IN ARR
* Public company
Source: Based on founding location or primary office listed in Pitchbook, CapIQ, Crunchbase
*
*
*
*
*
*
*
*
*
*
*
*
*
*

29. PREDICTION
Cloud gets local to go fully global
HORIZONTAL LEADERS THAT
FOCUS ON LOCALIZATION
LATAM
APAC
EMEA

31. ~520
unicorns were
minted last year alone
1.5x
unicorns minted
every day
120%
increase in unicorns
last year alone
1,000+
unicorns now exist

32. Being a unicorn
is overhyped
123
226
330
438
958
2017 2018 2019 2020 2021 Q1 2022
+1,000
unicorns
+120%
increase
Source: CB Insights
~520
unicorns were
minted last year alone
120%
increase in unicorns
last year alone
1,000+
unicorns now exist
1.5x
unicorns minted
every day

34. A rare breed
$100M ARR
with ARR defined as annual
recurring or subscription revenue
Introducing
the Centaur
We estimate that while 520 new
‘unicorns’ were minted last year, ~60
new private companies achieved
Centaur status, including:

35. Unicorns require magical thinking.
Centaurs do not.
~150
Private Centaurs
in the world
~7x
more rare
than unicorns
Centaurs by the numbers
Centaurs are an elite subset of the
growing unicorn herd. At $100M
ARR, these businesses have
product market-fit, scalable GTM,
and a growing customer base.

36. 104 108
520
464
2019 2020 2021 Annualized Q1'22
Explosion of new unicorns
tracks with the rise (and
fall) of public valuations
NEW UNICORNS
$1T
$2.4T
$2.7T
$1.6T

37. Centaurs offer a more accurate
pulse on overall cloud health
NEW CENTAURS
~35
~40
~60
~70
2019 2020 2021 Annualized Q1'22
Steady growth in
Centaurs shows
enduring strength
of the cloud

38. 40 / Confidential and Not for Distribution
$0M
$10M
$20M
$30M
$40M
$50M
$60M
$70M
$80M
$90M
$100M
1 2 3 4 5 6 7 8 9 10 11 12 13
$ ARR in
Millions
Years from
$1M to $100M
Bessemer has a long history of helping cloud companies
achieve Centaur status

39. Go to bvp.com/cloud
Introducing The Centaur
bvp.com/centaur
Scaling to 100M
bvp.com/scale
State of the Cloud 2022
bvp.com/atlas/state-of-the-cloud-2022

40. 2022 is the year of the Centaur
PREDICTION

41. Geography deep dives
Vishal Gupta
Partner
Anant Vidur Puri
Partner
Alex Ferrara
Partner
Cloud economy insights from our global teams in China, Europe, India, and Israel.
Amit Karp
Partner
Adam Fisher
Partner
Naama Schlamm
Vice President
Ariel Sterman
Vice President
Dhruv Jain
Investor
Talia Goldberg
Partner
Sisi Song
Vice President
Bryan Wu
Partner

42. Home to 300+ unicorns and half of the world’s most valuable Internet companies, China looks to
the potential of cloud and SaaS to fuel the economy.
0
10
20
30
40
50
2014 2016 2018 2020
42
17
1
The number of public and private
cloud companies in China with
>$15M ARR is accelerating.
Today
China SaaS ecosystem update
42+
SAAS COMPANIES
EXCEEDING $15M ARR
45%
CLOUD SPEND GROWTH, THE
HIGHEST RATE IN THE WORLD
$1.6T+
GOVERNMENT FUNDING
THROUHG 2025 TO DEVELOP
CLOUD, AI, 5G ETC.
Source: Bessemer research

43. Leading Chinese SaaS companies are innovators not imitators
CAPITALIZES ON SUPPLY CHAIN ADVANTAGE
2. INNOVATIVE GTM
1. INNOVATIVE PRODUCT
LEVERAGES EFFICIENT B2B2C DISTRIBUTION CHANNELS BUILT BY
INTERNET CONGLOMERATES
1.2B MAU
220M MAU
98M MAU
*Bessemer portfolios
*
*

44. European tech ecosystem update
$133.4B
BILLION IN VC-BACKED
EUROPEAN EXIT VALUE
1,247
COMPANIES EXITED
IN 2021
186
ESTIMATED PUBLIC
LISTINGS IN 202!
Source: Pitchbook
$4.9
$4.2
$10.9
$22.9
$21.7
$16.0
$19.4
$43.8
$18.1
$25.8
$133.4
340
378
420
575
644
564
654
590
704 682
1,247
0
200
400
600
800
1,000
1,200
1,400
$0
$20
$40
$60
$80
$100
$120
$140
$160
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Exit value ($) Exit count
In 2021, VC-backed European technology exit values increased +400% year-over-year.
Notable 2021 IPOs

45. Capital efficiency of European B2B startups
2.8 2.3 1.1 1 0.8 0.7
0
0.5
1
1.5
2
2.5
3
Eastern EU Southern EU Western EU Nordic EU Germany France
Median revenue per total equity funding, B2B startups, ratio
5.6x
4.6x
2.3x 2.1x
1.6x 1.4x
U.S. B2B
startups .5
Source: Crunchbase, McKinsey

46. Europe SaaS: Good, Better, Best framework
ARR Growth 40% 60% 80%+
Technology
leadership
Net Retention 105% 120% 135%+ GTM maturity
Gross Retention 85% 90% 95%+
Gross Margin 60% 65% 80%+
Regulatory
barriers
FCF Margin -50% -25% 0%+
Management
team
Good Better Best Other factors
GTM Focus Local Regional/Pan EU Global
Source: Bessemer research
Cloud benchmarks for $50M-$100M ARR

47. India SaaS ecosystem update
$50B
MARKET SIZE OF
INDIA SAAS BY 2030
$4.8B
VC DOLLARS INVEST
IN ECOSYSTEM IN 2021
42%
69%
165%
125%
85%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
Global SaaS (Cloud
Index)
Global SaaS ~10-30 M
ARR (BVP Portfolio)
India SaaS (~10M ARR) India SaaS (~25M ARR) India SaaS (50-100M
ARR)
Median efficiency score
Data (N = 30) for Indian companies growing >70% yoy.
Source: BVP research
Cloud companies in India demonstrate faster payback cycles and the ability to get to $100M+ ARR
with less than $100M in equity capital
165%
MEDIAN EFFICIENCY
FOR EARLY STAGE

48. India SaaS: Good, Better, Best Framework
Potential TAM <$1B $1-5B $5B+
Technology
leadership
Growth (YoY) <100% 100-150% >150% GTM maturity
Net dollar
retention
90-120% 120-140% >140% Global expansion
Efficiency <100% 100-150% >150%
Category
competition
Gross margin 50-65% 65-80% >80%
Management
team
Good Better Best Other factors
CAC payback >24 months 12-24 months <12 months
Note: Almost no company will fall in all green in our experience.

49. Israel venture ecosystem update
773
VC DEALS IN THE
ISRAEL MARKET IN 2021
$25B
VC DOLLARS INVEST
IN ECOSYSTEM IN 2021
2021 was a record year in terms of startup funding in Israel with $25B deployed
146%
YOY INCREASE IN
FUNDING TO
STARTUPS IN ISRAEL
3321 4305 4505
5865
7859
10397
25601
405
432
428
509
503
604
773
0
5000
10000
15000
20000
25000
30000
2015 2016 2017 2018 2019 2020 2021
Israel High-Tech Investments
Total $m # of Deals Source: IVC-Meitar Israeli
Tech Review 2021
+146%

50. Israel cultivates cloud ecosystem that spans diverse categories
HORIZONTAL &
VERTICAL SAAS
CYBER
FINTECH
Bessemer identifies ~25 cloud companies in the region that have crossed the $100M+ ARR milestone.
Drivers of success
ENTREPRENEURS ARE BUILDING
SCALABLE BUSINESSES VS.
ONLY TECHNOLOGIES
ABUNDANCE OF CAPITAL
LEADS TO INVESTMENT IN
PRODUCT AND PEOPLE
GROWTH IN REGIONAL
STARTUPS CREATES MARKET
OF NEW CUSTOMERS