![]() Taking a long-term perspective, cloud markets have consistently outperformed other broader market indices. The record high multiples of prior years inflated by hyper low interest rates and stimulatory environment have not just regressed to the mean-they are currently reset below normalized, historical long-term averages.Īdditionally, this macro instability had a double squeeze on cloud companies since recession fears led to headwinds such as lengthening sales cycles and tighter customer budgets, which impacted core business fundamentals such as growth.ĭespite the challenges in the cloud economy, there are many silver linings. Within the year, we moved out of a near zero interest environment at record breaking speed, leading to multiple compression and a significant amount of macro uncertainty. The major story of 2022 was around the external shock of hiking interest rates. Since then, cloud markets tumbled in 2022’s SaaSacre and declined disproportionately compared to other broad market indices. November 2021 marked the height of the bull market as public cloud market capitalization reached its peak of $2.7 trillion. But normalization came quickly in the form of mean regression. Over the past two years, the pandemic served as a tailwind to pull forward cloud adoption, and a low interest rate environment fueled an investment frenzy in both public and private cloud markets. Four steps to AI adoption for SaaS leadersĪs venture investors, we learn from historical cycles and the laws of the universe-what goes up must eventually come down.We also explore Bessemer’s view on the cloud economy and the AI imperatives that SaaS leaders must enact today or else be left behind. In The State of the Cloud, Bessemer provides a founder’s guide on navigating the financing ecosystem for what will likely be the next 18-24 months. We believe artificial intelligence will not only multiply software and human capabilities, but also completely transform and expand the cloud economy in the process. The Large Language Model revolution is one of the most significant developments in computing history. But amidst the anxiety and turmoil, the tech ecosystem has witnessed something potentially as world-changing as electricity: a string of AI advancements that may prove to define technology and society for generations to come. The Silicon Valley Bank crisis drove even more uncertainty into an already fragile environment. Rising interest rates have evaporated the cheap equity of recent years forcing startups to reduce burn and drive towards efficient growth. On one side of the cloud economy, founders and CEOs are weathering some of the most challenging storms since 2000 and the ‘08 Recession. ![]() ![]() 2023 is the year of the “multiverse,” where technological and macro changes continue accelerating at stunning rates leaving SaaS builders, founders, and investors breathless. If we thought the pandemic years were an era of dramatic cultural and digital transformation, think again. ![]()
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