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What’s driving the never-ending cloud startup boom

In the News / By Silicon Angle / Jun 15, 2021

Why is the market so hot — and why now? Interviews with more than a dozen executives at cloud startups and venture capital firms identified several factors.

Summary

For anyone starting an information technology-focused company right now, the cloud is unquestionably the place to be. Investment database Crunchbase lists nearly 13,000 companies that describe themselves as delivering cloud infrastructure, software or services. Bessemer Venture Partners’ State of the Cloud 2021 report said cloud companies’ valuation multiples, growth rates and access to capital are at an all-time high. It estimates investors poured a record $186 billion into private cloud companies in 2020 alone.

“Cloud companies have not just reset in the new normal but have thrived with a record-breaking market capitalization of more than $2 trillion,” Bessemer wrote. Among its other eye-popping findings were that the five top applications companies — Paypal Holdings Inc., Adobe Systems Inc., Salesforce.com Inc., Shopify Inc. and Zoom Video Communications Inc. — were collectively worth more than $1 trillion at the end of last year.

Meanwhile, the total market capitalization of all cloud firms more than doubled from $1 trillion in February 2020 to $2.2 trillion a year later. Initial public offerings in the market doubled last year from 2019 while the number of companies that saw their market value double in value immediately post-IPO was higher than in any year since the dot-com boom days of 1999.

Why is the market so hot — and why now? Interviews with more than a dozen executives at cloud startups and venture capital firms identified several factors.

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