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How many checks does it take to payback $175M? The VC treadmill is concerning for many tech companies.

toomuchtodo 7y ago
Fortune 500 companies represent two-thirds of the U.S. GDP with $13.7 trillion in revenues, $1.1 trillion in profits, $22.6 trillion in market value, so there's money to be had in helping them accommodate cloud agnostic best practices through tooling. There are lots of companies that aren't tech companies, but who still need tech (insert the caveat "software eating the world", "all companies are tech companies", and so on).
- adventured 7y ago
  They are a giant part of the US economy, however they don't represent 2/3 of US GDP, their sales are equivalent to that figure. These are global corporations that in many cases do business in nearly every country. Many of the largest S&P 500 companies have 2/3, 3/4 or more of their business overseas. They're typically under-represented in the US domestic economy, as the US is ~22% of global GDP, and these are typically among the largest corporations in their segments.
  - toomuchtodo 7y ago
    Point taken! I still put forth that Hashicorp’s valuation is sound based on the market size and their lack of competitors. I would invest my own funds into Hashicorp if I could at this valuation.
- scarface74 7y ago
  So instead of being “locked in to the cloud”, you’re “locked in to Hashicorp”. Meet the new boss.... But the idea that you’re not de facto locked into your cloud provider once you are at any type of scale is a fantasy. To paraphrase Cory Quinn (?) “Infrastructure has weight”. Its a major undertaking fraught with regressions and unexpected costs to migrate from one provider to another and the benefits are usually not worth it.
- ksec 7y ago
  >There are lots of companies that aren't tech companies, I would like to expand on it even more, MOST companies aren't even tech.
nl 7y ago
Public market valuations for tech companies are generally 10x-100x forward earnings or higher (often much much higher. Zoom is over 1000 at the moment). So a $550M annual run rate would mean the VCs make money at a 10x valuation in a normal market. At 100x it is $55M. Microsoft trades at 27, Atlassian at 127, Zoom at 1100 (!) (I assume you realise that VC money isn't a loan and you don't "payback" the money you take. They expect a return when the company has a liquidity event, ie floats or is bought)
- manigandham 7y ago
  $175 is round E, not the valuation nor the total money raised. 10x forward earnings would mean a $500M run rate to just equal this valuation and breakeven to these latest investors. EDIT: Since you've changed your comment, I'll re-ask my original question: How many checks will it take to get to $500M run rate? It's a high goal for infrastructure companies.
  - nl 7y ago
    Yes, sorry about the edits - I was adding examples. It's a private company, so revenue has to be guessed. Puppet (Hashicorp competitor, and I think most would agree smaller competitor) announced "approaching" $100M revenue in early 2017[1]. Given Hashicorp's tempo in raising money it looks like they are hitting goals, so their growth rate must be ok. Based on that it's not difficult to imagine Hashicorp is at $300M+ now? [1] https://www.oregonlive.com/silicon-forest/2017/04/puppets_ceo_on_his_new_job_all.html https://www.oregonlive.com/silicon-forest/2017/04/puppets_ce...

Fortune 500 companies represent two-thirds of the U.S. GDP with $13.7 trillion in revenues, $1.1 trillion in profits, $22.6 trillion in market value, so there's money to be had in helping them accommodate cloud agnostic best practices through tooling. There are lots of companies that aren't tech companies, but who still need tech (insert the caveat "software eating the world", "all companies are tech companies", and so on).

adventured 7y ago
They are a giant part of the US economy, however they don't represent 2/3 of US GDP, their sales are equivalent to that figure. These are global corporations that in many cases do business in nearly every country. Many of the largest S&P 500 companies have 2/3, 3/4 or more of their business overseas. They're typically under-represented in the US domestic economy, as the US is ~22% of global GDP, and these are typically among the largest corporations in their segments.
- toomuchtodo 7y ago
  Point taken! I still put forth that Hashicorp’s valuation is sound based on the market size and their lack of competitors. I would invest my own funds into Hashicorp if I could at this valuation.
scarface74 7y ago
So instead of being “locked in to the cloud”, you’re “locked in to Hashicorp”. Meet the new boss.... But the idea that you’re not de facto locked into your cloud provider once you are at any type of scale is a fantasy. To paraphrase Cory Quinn (?) “Infrastructure has weight”. Its a major undertaking fraught with regressions and unexpected costs to migrate from one provider to another and the benefits are usually not worth it.
ksec 7y ago
>There are lots of companies that aren't tech companies, I would like to expand on it even more, MOST companies aren't even tech.

nl 7y ago

Public market valuations for tech companies are generally 10x-100x forward earnings or higher (often much much higher. Zoom is over 1000 at the moment). So a $550M annual run rate would mean the VCs make money at a 10x valuation in a normal market. At 100x it is $55M. Microsoft trades at 27, Atlassian at 127, Zoom at 1100 (!) (I assume you realise that VC money isn't a loan and you don't "payback" the money you take. They expect a return when the company has a liquidity event, ie floats or is bought)

manigandham 7y ago
$175 is round E, not the valuation nor the total money raised. 10x forward earnings would mean a $500M run rate to just equal this valuation and breakeven to these latest investors. EDIT: Since you've changed your comment, I'll re-ask my original question: How many checks will it take to get to $500M run rate? It's a high goal for infrastructure companies.
- nl 7y ago
  Yes, sorry about the edits - I was adding examples. It's a private company, so revenue has to be guessed. Puppet (Hashicorp competitor, and I think most would agree smaller competitor) announced "approaching" $100M revenue in early 2017[1]. Given Hashicorp's tempo in raising money it looks like they are hitting goals, so their growth rate must be ok. Based on that it's not difficult to imagine Hashicorp is at $300M+ now? [1] https://www.oregonlive.com/silicon-forest/2017/04/puppets_ceo_on_his_new_job_all.html https://www.oregonlive.com/silicon-forest/2017/04/puppets_ce...