Ignition Lane’s Wrap: State of the Cloud, VC Tips, Tiger Bands, Bovine-Class Crypto, M&A Wraps
welcome to Ignition way’s Tech Wrap, where they cut through the noise to bring you their favorite insights from the world of tech and startups.
Ignition Lane works with ambitious business leaders to apply the Startup Mindset to their technology, product, and go-to-market challenges.
This wrap comes out Free for subscribers Saturdays. Don’t forget you can catch Gavin Appel fortnightly on Startup Daily on ausbiz Mondays at 2pm (because of Anzac Day it is this Tuesday). If you miss it, you can find the shows of the week here.
Here’s their review of all the big tech news.
State of the Cloud: don’t be afraid of “SaaSacre”
Bessemer Venture Partners (BVP – a VC that has been investing in private cloud companies for 20 years) released its annual report Cloud State report for 2022.
The essential? Although the value of publicly traded cloud companies fell 40% or US$1.1 billion in the five months to April, aka the “SaaSacre”, there are a lot of potential in the global cloud economy.
Trends and opportunities on BVP’s radar:
To differentiate themselves, startups think about indirect monetization from day oneeg card issuing, banking, insurance. Every company will be a fintech.
Cloud software is essential in improve global productivityfor example supply chain issues, the big quit and the future of work.
Cloud adoption is on the rise: Early adopters moving more sensitive data to the cloud, e.g. security logs; Deploying SaaS products in a customer’s virtual private cloud (VPC) is now much easier; and middleware platforms now bring the power of the cloud to data anywhere, for example fintech infrastructure and legacy banking systems.
Squared cloud: Cloud marketplaces are becoming increasingly essential as a sales and fulfillment channel for enterprise software.
Count centaurs (income), not unicorns (assessment): Finally, BVP establishes a new criterion to measure exceptional SaaS companies: the Centaur – a company that reaches $100 million in annual recurring revenue (ARR).
The unicorn or bust mentality has unfortunately caused many startups and investors to focus on valuation as their primary goal, instead of building a great business… Centaur growth tracking provides a more accurate boost on overall health of the cloud ecosystem.
OK. But for those of you just starting out (or not looking for VC money), don’t let that goal overwhelm you. $1 million, $5 million, or $10 million ARR is nothing to sneeze at.
Anywhere in the world (in fact, just in the United States)
VCs give advice for a falling market: Reassess your assessment (Offers Andreessen Horowitz a methodology), understand your combustion multiples and build scenario plans (Meritech recommends prepare for reduced growth and opex).
Perhaps the best summary of this VC advice (h/t Benedict Evans):
Related: Andreessen Horowitz has launched a new $600 million fund for gaming investments.
Has Tiger lost his stripes? The Financial Times reported that Tiger Global’s hedge fund lost about $17 billion, representing one of the largest dollar declines for a hedge fund in history. Uh. Tiger recently sold its entire stake in public consumer technology companies Bumble, Airbnb and Didi, and significantly reduced its exposure to Robinhood and Peloton. Meanwhile, Tiger continues to write big checks in Australia in recent weeks, investing in Stake’s $50m Series A add-on, Shippit’s $65m Series B expansion and Series A of $75 million from Carma.
The future of streaming is… television! Netflix subscribers plummeted for the first time. Worse still, he expects lose more this quarter. Stocks have fallen, jobs and costs are being cut, and in a bid to increase revenue, Netflix is now exploring an advertising model and getting strict on password sharing.
Not so stablecoin. The algorithmic stablecoin TerraUSD (also known as UST) and the crypto token that backs it, LUNA, collapsed last week – losing more than US$40 billion in combined value. The UST was designed to be pegged to the US dollar, but it was under-collateralized. So there was nothing to support the price and a death spiral ensued.
—Ryanair (@Ryanair) May 13, 2022
The next Blockhead. Jack Dorsey, co-founder of Twitter and The CEO of Block (Square), has changed his title to “Head of Block and President”.
Local festivals and commiserations
Billions of Xero. Xero reported a 29% increase revenue at NZ$1.1 billion and a 28% jump in annualized monthly recurring revenue (AMRR) to NZ$1.2 billion. Total subscribers increased in all markets to 3.3 million. However, EBITDA only increased by 11% to $212.7 million. The market wasn’t too impressed – shares fell 12% after the earnings release.
Loot in Delivery Wars. Less than 12 months after its launch, the Send 10-minute grocery delivery service has been placed in voluntary administration. With 300 employees, 13 grocery stores and dark bases, the Send network covered more than 50 suburbs across Sydney and Melbourne, representing an expensive consumption rate of up to $1.5 million per month. Another two-hour delivery startup, Quicko, also shut down operations. That leaves Tiger Global-backed Milkrun, as well as Sequoia Capital-backed Voly, still in the race for instant groceries. But will unit economics ever stack up?
Goober Uber. Uber has agreed to a $26 million fine for misleading Australians. According to Uber policies, you have five minutes from the time a driver accepts a ride to cancel it free of charge. But the app warned “you may be charged a small fee since your driver is already on the way”. TTT…TTT. The ACCC is also suing Uber over its Uber taxi ride option, saying it overstated the estimated cost.
Hooray! You can finally afford* an $8 chai. Square integrated with Afterpay. This opens up Afterpay to a whole new world of small merchants, for example cafes. Meanwhile, pressure to regulate BNPL continues to mount around the world.
*we do not provide any guarantees that you can actually afford the refunds
Acceleration of philanthropy. Daniel Petre, founding partner of AirTree, launches StartUpGiving – a “concierge service” to allow founders and managers of startups to easily donate their unrealized heritage. Philanthropy bigwigs Bill Gates and Peter Singer (a famous ethicist) will join the advisory board.
Venture Capital News
- New Zealand-based VC Global from Day 1 (GD1) has launched the country’s first dedicated fund in the crypto, blockchain and web3 space – a $5 million fund.
- Elaine Stead (former Blue Sky MD) joins Alan Jones and Emily Rich as General Partner of M8 Ventures. The team raises a $5 million pre-seed fund.
- Archangel Ventures is raising a new pre-seed and seed fund, with $12 million already committed.
Local mergers and acquisitions galore
Woolworth offered to acquire 80% of the household goods market My offer for $218 million, or $1.05/share or a 62.8% premium to the previous day’s closing price. This is a very attractive offer in today’s environment.
myDNA acquired the Batchelor star by Sam Wood online diet and fitness program for $71 million.
Airtasker is considering acquiring a task outsourcing competitor oneflare in a $10 million deal, subject to ACCC approval. That’s a massive drop in value – in 2016, Domain Group bought a 35% stake in Oneflare for $15 million.
Accounting, business and bookkeeping software firm Count accountants group is being acquired by the British company The access group in a $100 million deal. This will be AsiaPac’s 10th acquisition for Access in the past three years.
Start ordering restaurants Mr Yum made its first major acquisition – a marketing automation and event management tool My guest list.
eCommerce gift and flower startup LVLY was acquired by a Malaysian technology company Unlimited Technologyfor $35 million.
I say goodbye to you all
The new CNN+ streaming subscription service has been canned, just a month after its launch.
Amazon has shut down one of the internet’s oldest staples, Alexa.com (not the voice assistant). Alexa provided web traffic analysis, but its most popular feature was Global Rank, which listed the most popular websites in the world based on their traffic statistics.
21 years after the launch of the very first iPod, Apple has discontinued the last remaining iPod model. It was once 40% of Apple’s revenue!
It’s a wrap! We hope you enjoyed it.
Bex, Gavin and the team of Ignition way