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BVP Cloud Computing Index

July 30, 2013

cloudsCloud computing allows users to use computing resources through the Internet using web-based tools and applications.  This is the way most of us access our e-mail, interact on social media and increasingly, work with word processing and spreadsheet software. 

Cloud computing has been growing and its sharp ascent will continue.  Cisco projects that global Internet Protocol traffic from cloud computing will increase by six times, at a compound annual growth rate of 44 percent, from 2011-2016 and account for nearly 67 percent of total data center traffic.  The U.S. Government is projected to increase its usage by 16 percent per year from this year through 2018.  Businesses have also been adopting cloud computing the past few years and research indicates that this trend will continue.  Bain, for example, projects that business spending for cloud computing will increase from $30 billion in 2011 to $150 billion in 2020. 

A number of the companies that create and sell the software we access over the cloud are now publicly held.  Bessemer Venture Partners (BVP), a venture capital firm that traces its history to nineteenth century business tycoons Henry Phipps and Andrew Carnegie, has released a very nice set of financial data from thirty cloud computing companies.  

BVP has created the BVP Cloud Computing Index, which tracks the stock price, for these thirty companies.   The BVP Cloud Computing Index increased 68% from January 2012, outpacing the growth in the NASDAQ and S&P, which grew 38% and 35%, respectively.  The market capitalization for these companies is now over $100 billion.  Salesforce ($25 billion) and LinkedIn ($22 billion) top the list.

Bessemer Venture Partners Cloud Computing Index

Bessemer Venture Partners Cloud Computing Index

BVP has done a beautiful job compiling this data.  It is easy to read and includes price multiples, profitability measures and some nice operating metrics.  For example, Workday’s enterprise value is 25 times greater than revenue, while Vocus, the oldest of the companies (1988), is valued at 1.4 times its $188 million in revenue.  The average (and median) founding of the companies is mid-1999.  Marin Software and Marketo are the newest companies; they were founded in 2006.  Sales and marketing expense consumes a large part (45%) of the revenue, as would be expected for this business model.

I encourage any of you who are interested in software or enjoy reading this type of data to take a look.   

From → Technology

  1. Bruce
    Who do you consider the companies that are not overvalued too much but still up and coming and in the game for the long haul? I agree with you this market is poised to keep moving up.
    Its been my choice for certain processing and storage needs and its advantages are hard to dispute .
    I’m impressed and glad to see your blog activity . Putting it out there in a thoughtful and informed way . Kudos!
    John Kelly


    • Thank you for the kind words, John. It is always great to hear from you.

      I don’t know that I can weigh in on your question exactly. However, it seems that a few have really created strong positions for themselves – Workday, NS, LinkedIn and of course, Salesforce. I think many envy and respect these companies.


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