So a lot of good stuff has happened in SaaS recently. Many some of the first good news in a stretch. OneStream had an epic SaaS IPO at $500m ARR, growing 34%. Microsoft has epic growth across its Cloud products, and even LinkedIn saw growth accelerate to 10%+.
Overall Cloud spending has bounced back off lows for sure:
AWS at a $105B run rate growing 19%
Quarterly YoY growth trends below. $AMZN pic.twitter.com/APuBHanjQv
— Jamin Ball (@jaminball) August 1, 2024
And many VCs on X and otherwise are pushing a narrative venture has rebounded and implicit in that, things are improving. That is clearly true in some aspect. VCs are minting AI unicorns at a strong clip, and investing in AI at as fast a clip as they can.
But the reality is a bit more nuanced for enterprise software. Yes, AI has fueled Nvidia and Google Cloud and Microsoft and AWS to massive growth, and growth that has accelerated the past few quarters. But — the first half of the year didn’t really get that much easier in enterprise software at least. Not yet at the classic application level, overall. Not overall.
Sapphire Ventures, a leading growth-stage VC fund, has some good data.
#1. Overall, Enterprise Software Growth Slowed to 13% Year-Over-Year
Looking at 133 public and late-stage enterprise sofrware leaders, Sapphire hasn’t seen growth pick up at all in the aggregate:
#2. But, Yes Enterprise Software Unicorn Production Did Bounce Back — Fueled By AI Deals
We minted as many unicorns in the first half of 2024 as all of 2023. Are some of these AI deals done at extremely high ARR multiples? Yes. But unicorn production is back, if still at a fraction of the peak. For “traditional” SaaS like Clio’s $3B round, you need to be growing at outlier rates at $100m+ to be a unicorn. $200m for Clio.
#3. Unicorns Aside, Overall VC for Enterprise Software Hasn’t Really Bounced Back in 2024 (So Far )
While unicorn production scaled up in 2024, overall Enterprise Software VC funding actually didn’t, and in fact is down just a smidge.
Overall VC enterprise software funding didn’t increase in 1H’24. Hence what you see from a lot of VCs and founders on social media — funding overall didn’t get any easier in 1H’24, except for the outlier AI unicorns. They hovered up all the capital.
All this data confirms what we all sort of know: for those fueled by gen-AI, it’s the Best of Times. At least in terms of VC funding and growth. For the rest of us in enterprise software? It’s a lot like the slog of last year.
Keep calm and carry on. Just build.
More from Sapphire here:
Assessing the State of the SaaS Capital Markets and Our Predictions for 2024
The post Sapphire Ventures: Public SaaS Companies Are Growing the Slowest Ever, But Unicorn Production Has Ramped Back Up appeared first on SaaStr.
via https://www.aiupnow.com
Jason Lemkin, Khareem Sudlow
