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Internet penetration has benefited B2C but has 2nd order impact on B2B. For every Dropbox or
Facetime, there’s also a Box or Zoom using digital tools to build, test, & launch at breakneck
speeds & then in “consumer-ish ways” brands, sell, & monetize enterprises. There are two
massive waves that have been going on (and accelerating) in the world of SaaS and where we,
as Lightspeed, are paying more attention:
1. Open-source software (OSS): More and more developers are preferring the
customizability, portability and flexibility of no vendor-lockin that comes with OSS tooling.
Large companies such as RedHat, Cloudera, Hortonworks, Grafana, MongoDB,
Mulesoft etc all are built around previously OSS codebase.
2. Devtools: It is now clear that “developer is the new buyer” -- think fewer site-wide MSDN
or Red Hat licenses, more personal/team-wide Github/Slack/digitalOcean accounts.
Corporate IT spend will disaggregate and many top-down decisions will turn (and have
already turned) bottoms-up where individual “consumer-developer” needs to be
influenced.
Founders with a developer-first mindset will win big globally & Indian founders have a unique
advantage here: our developer ecosystem is one of the most vibrant in the world and finding
PMF in this ecosystem is translating well to finding PMF globally (hasura, postman,
browserstack). We at Lightspeed need to be in the best playbooks coming out of these two
categories.
OSS Capital Flow
● Data management companies saw a large inflow in 2019 followed by moderate inflow in
2020. This was further driven up in 2021 due to Databricks financing.
○ Databricks: Valued at $28B; Raised $1B in 2021; Total funding: $1.9B
○ Dremio: Valued at $1B; Raised $135M in 2021; Total Funding: $245M)
○ Others have raised $10-$30M in this space
● Open source security space is fast growing (~capital flow CAGR is ~100% since 2017).
○ Snyk is the largest player in this space. Valuation: $6.5B; Total funding: ~$800M;
$200M+ rounds each in 2018, ‘19 and ‘20
○ followed by Sysdig. Valuation: $1.2B; Total funding: ~$400M
● While the database segment is one of the largest segments of this space, the capital
flow has stagnated at the ~$200M mark (capital flow per year).
○ Cockroach is the fastest growing startup here. Valuation: $2B; Total funding:
~$350M
○ Interestingly, there are 3-4 companies that have raised in the range of $100M -
$200M of funding but couldn't attract capital in the last 2 years
○ Public Player: MongoDB valued at $22B
● One off spike: Multiple companies in the infrastructure space raised capital in 2019
causing a spike in capital flow. Similarly automation saw a spike in 2020 primarily due to
~$100M round by Camunda
● Declining: Funding in spaces like IDE and AI/ML platforms is seeing a decline.
Observability has stagnated at a small base too
Top funded business models in last one year in Application Developer tools