A Seemingly Endless Appetite for the Cloud

Today, the shift to the cloud and the adoption of software is not only strategic but absolutely mission-critical.

Alex Kayyal

February 10, 2022

Since 2009, our mission at Salesforce Ventures has been to invest in the most innovative cloud companies and founders around the world and support them in their efforts to reimagine the future of enterprise technology. Each year our team meets with thousands of cloud companies and speaks with hundreds of CxOs and experts in our network. And while we always believed in the impact and potential of the cloud, we’ve never seen growth like we’ve seen in the past twelve months.

Cloud companies are handily blowing through previously-set records across every measure — whether it’s product adoption, growth rates, or large customer deployments. While best-in-class companies would previously target 3x year-on-year growth, we’re now seeing outlier companies that are growing revenue 5x-10x per year. And the timeline from inception to $100M ARR has never been so short. Growth-stage companies that would typically model annual growth declines year after year are now seeing an acceleration in revenue growth — something we had historically rarely seen in SaaS.

In 2021 we invested in a number of next-gen software companies that have exceeded even our most ambitious expectations, including Aiven, BetterUp, Drata, Miro, Monte Carlo, PopMenu, Vercel, and Wiz.

Even still, the potential ahead of us appears to be far greater. According to Morgan Stanley, only 25% of application workloads are running in the public cloud today, representing a significant growth opportunity. In a recent survey of CIOs, Morgan Stanley noted that in the next three years, that figure could rise to 44%.

The public markets may have pulled back from technology in recent weeks, but based on our internal research, we believe enterprises will continue to be big buyers of software and that the long-term holds great promise for the cloud. We are investing accordingly: this past year we invested ~$1.7B in capital and welcomed Slack Fund. In the same period, 22 of our companies were acquired and eight went public.

As we’ve written previously, the global pandemic necessitated a trend toward remote and hybrid work, which continues to drive demand for cloud technology. However, at the same time, there is also a broader and more permanent sentiment shift toward working in the cloud that is rooted in the belief that the cloud enables more efficient, more resilient, smarter ways to do business.

Salesforce Ventures has obviously been bullish on the cloud for more than a decade, but even we are amazed to discover how many of our companies’ addressable markets have rapidly expanded over the past couple of years and are now far larger than anticipated.

As we look back on the companies we partnered with this year, we’ve realized that the fastest-growing cloud companies have a few things in common:

They’re building mission-critical solutions
They’re inventing and mastering new growth strategies, including product-led growth and community-building
They foster more online collaboration between internal and external teams

Here is a little more context on how some of the fastest-growing cloud companies exemplify these trends.

#1: It’s hard to say no to mission-critical software

As enterprises adopt more and more cloud technology and expand their multi-cloud environments, they’re coming up against new challenges such as data management and security. Companies that help CIOs and data teams manage and extract value from their data or help keep CISOs out of the news have become critical.

Wiz, an agentless, API-based company that secures cloud infrastructure, saw a massive acceleration in demand as more workloads shifted to the cloud in 2020 and 2021. By providing a singular platform that security teams could use to monitor vulnerabilities across a company’s entire cloud environment, Wiz has become a mission-critical platform for the world’s leading companies.
As security has become a board-level conversation, companies are demanding that their vendors meet critical requirements, such as achieving SOC2 compliance. This was a key driver behind our investment in Drata, a security and compliance automation platform that makes it easy for companies to automate the process and build trust with their customers.
Like security, as data has become a key differentiator among companies, data management has turned from a nice-to-have to a must-have. Companies continually generate increasing amounts of data, including user data, log files, and time-series metrics. These data sets often reside in different locations; organizations that are able to analyze these distributed data sets efficiently and at scale have a competitive advantage. This is the mission of Starburst Data, which sells a distributed data analytics engine that makes it easy for users to access and query data wherever it lives.

#2: Product-led growth and passionate communities create incredible flywheels

Hyper-targeted marketing and tailored online customer journeys make it easier than ever to attract individual users, who invite others to join them and create the adoption flywheel known as product-led growth. Buying power has shifted from top-down, CxO-driven decisions to sales processes that are driven by the end-user. As individuals and teams try to solve problems to improve their own workflows, they are increasingly relying on communities to help them find the best solutions.

Slack was a pioneer in building a bottoms-up go-to-market strategy, and now companies are increasingly leveraging Slack to build their own communities. Airbyte, an open-source data ingestion company, has fostered a robust Slack community with thousands of members who can connect with other users, ask questions about the product, and update users on new features. Airbyte also announced a participative model, where developers who build on Airbyte can earn a share of revenue when their data connectors are used.
Aiven, a managed open source data technology company, has made giving back to the community part of the company’s mission. In 2021, it launched an official program dedicated to contributing to open source as well as a startup program that offers free credits and access to Aiven’s expertise and support to enable startups to get to market faster.
Strong communities provide product validation. When talking with customers of Salesforce Ventures portfolio companies such as Astronomer, which is building a data orchestration engine on top of the open-source Airflow project, we noticed buyers look at metrics such as Github stars, forks, and contributors to understand how active and successful a project was.

#3: In a fast-moving, remote-first, global economy, cloud-based collaboration is imperative

When all or most of your work is done in the cloud, collaboration software is the new office. It’s no wonder the collaboration software market, valued at $28 billion, is growing 15% annually. Last year, Keybanc published a survey in which 67% of CIOs said collaboration is their #1 budget priority. Salesforce Ventures has been actively investing in tools that increase productivity for teams, whether they’re in person, remote, or hybrid.

This past June we invested in monday.com, which provides an asynchronous, no-code software platform to manage workflows and has created a new category of software it calls “Work OS.” The company makes it easy for employees across an organization to create their own workflows without the help of a team of engineers. Getting started in the product is incredibly easy, and their ability to turn the complex into simple has led to a large array of collaboration and workflow use cases that their users absolutely love.
We also invested in Airtable, a connected apps platform that helps users modernize business processes, and Notion, a platform designed to boost team productivity, with the goal of helping enterprises improve collaboration among the 1.25 billion knowledge workers globally.

Values-driven companies continue to win

Salesforce Ventures invests according to our values, including a focus on social responsibility, sustainability, and diversity. We are proud to partner with companies that lead with their principles. We’ve introduced a DEI clause in all of our deal agreements with founders to ensure alignment upfront. We routinely check a company’s Glassdoor rating before making an investment decision, and we will walk away if we believe the company’s values don’t align with our own.

We also have 190+ companies in our portfolio that have joined the Pledge 1% movement. Modeled after Salesforce’s 1–1–1 model, this program allows companies to donate 1% of their time, equity, product or profit back into their communities.
We’re thrilled to continue our support for Black Venture Institute. Since its launch in Fall 2020, BVI has graduated three cohorts — that’s 160 new Black check writers in venture capital! These graduates have made over 300 individual angel investments and evaluated over 1,000 new investments.
During the pandemic, people all over the world have had to deal with adversity, leading to an unprecedented rise in mental health challenges. This is one reason why we are proud to partner with BetterUp and Lyra, two companies that put values at the core of their business. We also doubled down on our investments in companies such as Unite Us, which is closing gaps in health and social services for historically underserved populations.
Against the backdrop of unprecedented climate events and Salesforce’s own Net Zero achievement, we accelerated our sustainability investments in carbon offsets, where Sylvera plays a critical role in verifying carbon offset data to ensure that funds flow to the highest-quality projects.

Onward

If we’ve learned anything these past two years, it’s that change is the only constant. Cloud technology helps workers learn, respond and iterate faster, giving their companies a competitive edge. The future for the cloud is wide open and we’re here for it. Come talk to us.

Here’s a closer look at 2021:

#1: It’s hard to say no to mission-critical software

#2: Product-led growth and passionate communities create incredible flywheels

#3: In a fast-moving, remote-first, global economy, cloud-based collaboration is imperative

Values-driven companies continue to win

Onward

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