20 red-hot, pre-ipo companies in 2016 b2b tech

20 RED-HOT, PRE-IPO
COMPANIES IN 2016
B2B TECH
From Adaptive Insights to YellowPepper, IDG Connect Editorial Director
Martin Veitch gives his pick of companies yet to float
20 Pre-IPO Tech Companies 2016
IDG Connect
Introduction
The third annual IDG Connect report comes at an interesting time. Companies that floated in 2015 are
mostly significantly down from their asking prices on IPO. People are rightly sceptical of the ‘unicorn’
phenomenon where over 150 tech companies have been funded at valuations of over $1bn.
The unicorns have even created their own lexicon and a related debate. Should companies valued at over
$10bn be called ‘decahorns’? Or do we need a new descriptor? (My colleague Dan Swinhoe suggests a
breed that is rare but not that rare, like the red squirrel.) CB Insights recommends we talk of RABBITs (Real
Interesting Businesses Building Interesting Tech).
More seriously, students of the IPO market have become familiar with ‘downrounds’: funding raised at
a lower valuation than previously. And many companies that might have been expected to float are
holding off.
What’s more important though is that we continue to see interesting companies with great prospects of
long-term growth and developing products and services that help people work smarter. The public view
given by CEOs has always been that if you take care of business the rest will sort itself out. Many of the
companies on this list will never make it to IPO but they are companies worth watching nonetheless.
The usual caveats apply: this list is alphabetical and made up of companies I deemed interesting and with
good scope for growth; it’s not a tip-sheet for investors, nor an attempt at an empirical forecast or survey.
It’s more of a collection of pen portraits of remarkable companies and people that have the chance to do
even more remarkable things. Many other companies could have appeared and I look forward to meeting
some of them over the course of the year.
Numbers given were correct in late January 2016 and any errors will be corrected. You can see previous
surveys here for 2014 and here for 2015.
20 Pre-IPO Tech Companies 2016
IDG Connect
Adaptive Insights
Adyen
For:
For:
Against:
Against:
Interview: Founder and chairman,
Rob Hull
Interview: LatAm sales VP
Jean Christian Mies
M
A
Huge and pregnant market opportunity
Excel addiction and inertia
icrosoft Excel might be the most
overstretched software application ever.
For decades now this has been noted and various
tools have been suggested as replacements for
tasks where Excel is deemed not to scale or have
sufficient features. However, business intelligence
tools have often been too difficult to use or too
expensive so many users end up B2E – Back to
Excel.
Adaptive Insights is one of a new wave of
companies that is attempting to fill the void but
not so much in BI as in business planning or what
is sometimes known as corporate performance
management (CPM). Its offering is cloud-based and
Chairman Rob Hull’s plan is to do to Hyperion what
Salesforce.com did to Siebel.
Unlike some peers, such as Anaplan, Adaptive
Insights sees its role as working in cahoots with
the finance department. Finance leaders can get a
lens on where they have been and where they are
today by answering questions such as: ‘what’s my
real cost per employee?’ Then they can use those
metrics to project next steps.
Palo Alto, California-headquartered Adaptive is far
from alone in the sector and competitors include
the aforementioned Anaplan, Tidemark and Host
Analytics. But, founded in 2003, it is no longer a
raw startup and in an interview last year, founder
Rob Hull said he saw the opportunity to lead a
$20bn market and grow annual revenues at over
50% “for years”.
Having raised over $176m in funding, Adaptive
Insights strengthened its management muscle in
2016 with the addition of former Citrix CEO Mark
Templeton to its board. Citrix chairman Tom Bogan
is Adaptive Insights CEO.
Scale, reputation breadth of payments coverage
Crowded, fast-changing market
dyen is among the hottest companies in
payments processing today, giving it a
skyrocketing valuation – the company is reportedly
‘worth’ $2.3bn, bolstered by an exceptional amount
of declared funding by European standards
($266m).
The Amsterdam, Netherlands-headquartered
company’s remit is broad and extends to handling
payments online, in store and via mobile devices.
In this it fits the bill of the modern demand for
omnichannel commerce.
Adyen’s goal is to be the payments infrastructure
provider behind today’s and tomorrow’s waves
of transaction types and it has invested to deliver
a reputation for strong and secure infrastructure
and maintenance. That’s backed up by a successful
partnering and plug-in programme.
The company has big ambitions. A 2015 service
launch called RevenueProtect has a dual purpose,
for example, providing merchants with a realtime display of the shopper’s recent activity and
protecting against fraud.
The scale is big – Adyen processed over $50bn
in 2015 – and its appeal covers a vast array of
payment types and a big geographic span too. For
example, transactions in Brazil have boomed.
Despite being backed by Mark Zuckerberg and
powering many of the internet’s biggest names,
Adyen might not yet have the name of a Square or
PayPal but revenues doubled last year to $350m
and the company has been profitable for years.
That open disclosure, and the performance of
Worldpay since listing last year, suggests a float is a
strong possibility. Adyen is valued at $2.3bn.
20 Pre-IPO Tech Companies 2016
IDG Connect
Alteryx
Avere Systems
For:
For:
Against:
Against:
Interview: CEO, Dean Stoecker
Interview: CEO, Ron Bianchini
A
Y
Well-funded, clear market need
Could be taken out by a predator
lteryx CEO Dean Stoecker told me when I
interviewed him last year, “Nobody does data
blending for the sake of it.”
Ain’t that the truth? The work that his company
does is not the most glamorous: it’s the heavy
lifting and the picking and sorting that makes data
available for inspection and hence - if moon and
stars show up in the right place - insight.
That work figuring out what’s inside the torrents of
new data and how best to categorise and match
patterns is a tough challenge but invaluable.
Companies that make the picks and shovels have
a long and honourable tradition in enterprise
software if you think of middleware veterans like
Tibco or, closer to Alteryx, the data integration
champion Informatica.
Alteryx is making the digging equipment for the
new generation of business intelligence-cumvisualisation tools like Qlik, Tableau and Birst.
With $163m in funding, Alteryx has the backing
to be (excuse the mixed many metaphors) the
threshing mill that makes data ready for the BI and
visualisation tools to exploit.
CEO Stoecker does a good job hyping his Silicon
Valley company as providing “rocket fuel” or the
“elixir of life” but really what Alteryx does is prime
the pump and there’s no shame in that. Customers
include Ford, Experian, BSkyB, Unilever, Starbucks,
McDonald’s, Verizon Wireless and Dunkin’ Donuts.
Clear need for smarter file handling in storage
networking
Lots of competitors
ou might think of the underlying technology of
Avere Systems as a sort of bidirectional version
of Akamai, the company that made its name by
caching network data closer to where users needed
it.
Avere’s NAS filer appliance provides read and write
caching too, mopping up latency for faster overall
performance wherever core storage systems are
located. That gives companies more flexibility and
speed and it means that the age-old tradition of
adding more and more capacity and sweeping data
under an expensive carpet can be put to rest. Avere’s
technology will be even more relevant as more
companies use cloud in more sophisticated ways,
for example bursting out for extra capacity at peak
times.
This is a company run by file storage and
management experts who have been there before.
The technology has a strong reputation already
and if Avere can capitalise on that with OEM
opportunities too it could have another arrow in its
quiver.
The proudly Pittsburgh-headquartered company
has raised $92m on its promise and looks a fair bet
to succeed among the many companies toiling in
the enterprise network/storage convergence space.
(See Avere and 11 more companies disrupting the
datacentre in this special report.)
CEO Ron Bianchini isn’t holding back. “We can take
this to IPO,” he says.
20 Pre-IPO Tech Companies 2016
Aviso
IDG Connect
Basho Technologies
For:
For:
Against:
Against:
Company is still young
Plenty of rivals
Interview: Founder, KV Rao
Interview: CEO, Adam Wray
F
C
Accurate sales forecasting is valuable and meets
corporate governance needs
or decades, sales training has been more about
the school of hard knocks and learning at the
knee of the office master. Optimistic projections
would be aired at meetings and forecasts met
reality about as often as a total eclipse of the
moon. But today firms are looking to accountbased marketing and more sophisticated
approaches that let sales execs get under the
skin of target accounts and sales forecasting
automation could offer a new dimension.
Three-year-old California-headquartered Aviso
is one of a crop of companies working on how
to apply the achingly trendy field of predictive
analytics to the sales cycle. Aviso’s cloud-based
service monitors micro- and macro-economic
signals, sucks in data generated by internal systems
and pattern-matches these against which sales
tactics have (and haven’t) worked in the past to let
companies better allocate resources and prioritise
deals.
The idea is that selling becomes a bit less about
emotion and a lot more about precedent. And
as data gets added the ability to predict what
happens next becomes more accurate.
Founder KV Rao likens Aviso to the logical advice of
the world’s most famous Vulcan, Mr Spock of Star
Trek fame. He says that if applied correctly, sellers
will have greater visibility into currently foggy
scenarios such as the likelihood of deals closing
and when.
Several of today’s customers are in tech – Splunk,
Talend, RingCentral, Marketo and HubSpot – but
if Aviso has built a better mousetrap than the old
Glengarry Glen Ross means of leads and hunches
then the appeal should spread widely.
NoSQL pioneer as data needs change
razy name, not so crazy company. Basho might
be named after a 17th-centry Japanese poet
but it’s a very 21st-century company, a NoSQL
database player for a world where relational
database management systems aren’t always a
good fit.
Basho’s Riak database can hold scads of
unstructured data and the vast majority of
today’s data is unstructured, making it a poor
match for the rows and columns of classic RDBMS
approaches. The likes of Oracle, SQL Server and
DB2 won’t go away but IT shops are having
to change their data management strategies
to accommodate web pages, rich media and
more. The Internet of Things and some Big Data
approaches also seem a logical fit for the NoSQL
camp.
That’s why Washington-headquartered Basho
and peers have a decent chances of surviving and
prospering. Basho has raised over $64m in funding
and says its growth remains rapid - over 50% in
2015 by revenues.
There are many rivals and lots of big companies
in the old database regime that could make a
play for them, making staying independent a
tough challenge. An IPO might be an outside bet
for a while yet but Basho remains an attractive
proposition.
20 Pre-IPO Tech Companies 2016
Bluewolf
IDG Connect
Code42
For:
For:
Against:
Against:
Interview: CEO, Eric Berridge
Interview: CEO, Joe Payne
S
C
Deep Salesforce domain knowledge, strong culture
Scope could be broader
alesforce has become the Pied Piper of
business cloud computing and Bluewolf
has followed in its steps, providing consulting
advice on how to deploy and get the most out
of the CRM giant’s services and those of its
ecosystem.
A smart, energetic company with a strong
culture, New York-headquartered Bluewolf is
admired as an innovator and for having people
unafraid to speak out about the weaknesses as
well as the strengths of the Salesforce flagship.
It was an early proponent of gamification and
it is highly progressive in terms of people
management techniques. There will be no
Death By PowerPoint here but plenty of leader
boards, rich media content and showing, not
telling.
The question for 15-year-old Bluewolf today
might be how far it steps out of the Salesforce
shadow and applies its nous to other platforms.
There are clear rivals like Appirio and the big
system integrators are, maybe reluctantly,
turning their attention more to cloud work –
Accenture bought Cloud Sherpas in 2015, for
example.
But with Salesforce still growing that might be
a question for another day and Bluewolf has
grown its business to $100m a year on the back
of a proven formula.
Admired product, strong revenue stream
Plenty of bigger rivals
ode42 takes its name from The Hitchhiker’s
Guide to the Galaxy, a Douglas Adams
science fiction novel where the number 42
is intended to be the answer to “life, the
universe and everything”. The Minneapolisheadquartered company isn’t quite that, but
it has become a compelling answer to the
security needs of many organisations.
Code42 is synonymous with CrashPlan, its
software for backing up data. So far a lot of
sales have come from the freemium model
but CEO Joe Payne wants the firm to be even
more of an enterprise play to bolster revenues
already north of $80m.
If Payne, the former CEO of Eloqua and the
man who sold the firm to Oracle, can make
that transition then Code42 has outstanding
prospects of joining the ranks of publicly
quoted tech firms. Based on rumours, late
next year or at some point in 2018 might be
timely, depending, as always, on the state of
the markets. Certainly there’s no end in sight for
data protection needs and in CrashPlan Code42
has a much-admired franchise.
Payne might be a hard taskmaster. On the back
of snaffling an $85m VC round he laid off 30
staff; current headcount is almost 400. In total,
Code42 has raised over $137m in funding.
20 Pre-IPO Tech Companies 2016
Darktrace
IDG Connect
Dropbox
For:
For:
Against:
Against:
Interview: CEO Nicole Eagan
Interview: UK, Ireland and Benelux
manager, Mark van der Linden
Autonomy pedigree and relationships
The ever-changing security landscape
Funding, scale, UXP, speed
Panoply of rivals, need to convert users to paying
subscribers
I
f Darktrace’s bullish messaging looks familiar
that might be because a part of its funding
and staff come from Autonomy, the fellow-UK
business software organisation that flew high
and was acquired by HP before a messy and
protracted (and still ongoing) legal case.
H
Darktrace is a security company that has
emerged at a time when protecting the
assets of organisations has never been a
hotter concern. Headquartered in London,
England, Darktrace was founded and is led by
former Autonomy CMO Nicole Eagan. Eagan
is also a partner at Invoke Capital Partners,
an investment group founded by Autonomy
founder and former CEO Mike Lynch. Both firms
came out of work conducted at the University
of Cambridge.
The attention that Dropbox has fetched is
in some ways understandable, however. The
company has raised a total of $607m from, count
them, 25 investors in order to lead the race in
platform-neutral file synchronisation/sharing/
collaboration.
Darktrace bills itself as the provider of the
‘Enterprise Immune System’ and its trump card
is an ability to identify unknown threats. That
anticipates an emerging world where attackers
don’t just rely on brute force and blended
vectors of known threats but seek new ways to
infiltrate themselves.
Unusually for a modern startup, Eagan is
confident of being able to turn a profit
very quickly at Darktrace and the company
already has enlisted BT to help it sell its wares.
A relationship with David Cameron’s UK
Government that sees Darktrace executives
accompany the Prime Minister on tech/securityrelated trips won’t hurt either.
as Dropbox mistimed its run to an IPO? What
does it do with that vast reservoir of cash?
Does it have the game to outfox Box? These and
many other questions obsess Sand Hill Road and
other venues where venture capital and a subset
of the technology media congregate.
Will it win? It’s too early to say because the
competitive situation is as crowded as a bigcity marathon. First, there is Box with a strong
security position as well as funding from already
having gone public. Then there are the software
giants like Microsoft and Google circling the
space and a host of others from Citrix to EMC
and Egnyte.
Dropbox has terrific scale, fast software, strong
usability and a strong brand, however. The
question is how well it can convert non-paying
users to become paying users. If it can pull off
that trick and become the de facto standard
across industries then all the hype and attention
might be deemed well merited.
20 Pre-IPO Tech Companies 2016
Egnyte
IDG Connect
FinancialForce.com
For:
For:
Against:
Against:
Interview: CEO, Vineet Jain
Interview: CEO, Jeremy Roche
Multiplatform and a huge market opportunity
Competition is everywhere
E
gnyte might appear to be stuck between
a rock (Box), a hard place (Dropbox) and
several more rocks for good luck (Microsoft,
Google, Citrix, EMC etc.) but CEO Vineet
Jain has a cunning plan to compete in the
densely populated race to lead in storage, file
synchronisation/sharing and collaboration.
California-based Egnyte offers its service
both on premises and in the cloud so those
companies nervous about putting their data
online can be reassured. That was an interesting
move given the cloud mania apparent when
Egnyte was founded in 2007 but it now seems
smart, given the Edward Snowden revelations
and possibility of lurching Safe Harbor rule
changes. Jain also thinks there are weaknesses
in Box’s permissions model despite that
company trading on its enterprise-grade
security.
But what about those rivals? Box is a public
company these days and Dropbox has huge
funding while the periphery is filled with
giants. Against this, Egnyte might seem like a
younger, lesser funded operation although it
has raised over $62m. But Jain sees Dropbox
as being largely focused on user experience
and he also spies a growing secondary
market for predictive analytics and content
inspection matching or exceeding the sync/
share opportunity. Becoming a platform is
the name of the game and if you can make it
easy for people to figure out what to do with
content quicker then you have a great chance,
he contends.
If Egnyte can execute on its plan then an IPO
could come inside 24 months and there’ll be no
shortage of alternative routes.
Integration with Salesforce platform, modernity
Being wedded to one platform might not suit
some buyers
I
mitation being the sincerest form of flattery,
Salesforce.com has many followers, from the
Salesforce Ventures-backed startups to those
incorporated by Salesforce alumni from Okta to
Zuora. But its clearest pure-blood descendant is
FinancialForce.com.
“We committed early and everything is built
around Salesforce.com. It was the back-end of
2007 and all the analysts thought we were mad,”
FinancialForce’s CEO Jeremy Roche told me
when I met him in the summer of 2015.
That decision doesn’t seem to be so crazy today
with Salesforce acting almost as the operating
system of cloud applications. Not only was the
FinancialForce service built on the Salesforce
development platform but Salesforce CEO Marc
Benioff also supplied the name for the company
and some funding. The result today is a financial
management system that dovetails with
Salesforce’s CRM, marketing and other services.
FinancialForce is interesting in other ways too
with its twin major bases in the US and England.
But what’s most interesting is the momentum
the company appears to be enjoying with
subscriptions up 91% annually based on the
most recently disclosed numbers. Annual
revenue run rate is over $50m and the company
has 650 staff on top of $186m in funding.
Since then the company has had its best ever
quarter to close calendar 2015 and passed 1,000
customers.
That’s impressive progress for a young company
and, especially if Salesforce continues with its
remarkable cadence, there should be more
opportunities to grow.
20 Pre-IPO Tech Companies 2016
InsideSales.com
IDG Connect
JAMF Software
For:
For:
Against:
Against:
Interview: SVP international strategy, Lindsey Armstrong
Interview: Founder and former CEO, Chip Pearson
M
T
Combines predictive analytics with sales nous
An early-stage technology
any companies say they want to be the
“Salesforce.com for x”. InsideSales.com
is different in that it wants to go beyond
Salesforce with automated assistance for
sales executives rather than merely providing
a record of transactions and an associated
platform.
The idea is this: sales executives have
traditionally learned at the knee of veterans
or via internal training schemes. Training
schemes today are few and far between and
the nature of sales has changed in many ways
– for example, the switch in software itself
from products plus maintenance charges and
a hard sell to subscription billing and accountbased marketing. That means learning from
the grizzled sales leaders might not be the way
forward.
Enter InsideSales, a company with Salesforce
connections and venture backing from the
same source, and a desire to change the way
sellers sell. InsideSales looks at a massive data
set of precedents to give sales advice on what
to do next, rather than have them relying on
hunches or word-of-mouth.
Utah-headquartered and 11 years old,
InsideSales has pulled in over $200m in
funding for its “sales acceleration” story and
promises that within a few months buyers of its
service will see a double-digit rise in revenue.
InsideSales does not disclose revenues but
with about 1,000 staff it is entering maturity
and with a unicorn valuation of about $1.5bn
it might enjoy a range of options for its next
stage. Investors also include Microsoft, another
key partner.
Strong niche, deep domain knowledge
Operates in a niche market
he JAMF Software story has something of the
feel-good Hollywood narrative arc about it
with the chances of a happy ending almost as
high.
Headquartered in Minneapolis, the company
came into being in 2002 after founders had a
pressing need to create systems management
software for a university network of Macs.
Word spread and as Apple started to become
a significant force once again in organisations,
JAMF enjoyed a nice tailwind to propel it to its
current eminence. And from rags came riches…
“We started before anyone saw the success of
Apple coming,” said Chip Pearson, CEO when I
spoke to him. “If you were going to put money
into tech you’d have put it into Windows first,
Linux second and Apple only third.”
Even JAMF’s leaders don’t pretend they were
remarkably prescient. But what they have done
is create a company with products, the Casper
suite, which is of huge value to firms that have
bet on Apple.
The recent start of a relationship with IBM, which
is pushing hard to get Apple into the enterprise,
could well be fruitful and the launch of the iPad
Pro won’t hurt.
Today JAMF doesn’t disclose revenues but says
it is growing at about 45% annually and has
about 500 staff. This is a tight-knit operation and
perhaps an unlikely IPO candidate but, thanks
to that bold Apple bet, it has a world of options
available to it.
20 Pre-IPO Tech Companies 2016
Move Guides
IDG Connect
Nutmeg
For:
For:
Against:
Against:
Interview: CEO, Brynne Herbert
Interview: CEO, Nick Hungerford
M
“It’s really not rocket science,” said Nutmeg
founder and CEO Nick Hungerford when I spoke
to him in early 2015.
Unique, focused offering in an underserved market
Barrier to market entry might be low
ove Guides is a company that embodies
globalisation. This London, Englandheadquartered startup that’s led by an American
wants to be the go-to solution for companies
moving employees and contractors around the
world, helping them to settle into their new
homes.
In many sectors today staff can expect to
perform a tour of duty all over the world as
organisations tap into their knowledge and seek
to grow their experience. But moving home isn’t
easy. There will be travel plans, new banking
systems to figure out, schooling for kids,
neighbourhoods that are desirable or better
to avoid, and cities, languages and cultures to
navigate.
Move Guides provides a cloud-based space to
keep tabs on moves in progress and information
about new locations, complementing that with
a personal contact who has knowledge of the
location and can act as an expert guide able to
answer questions and work through snags.
The company is the brainchild of former
investment banker Brynne Herbert who has seen
the challenges to upping sticks at first hand.
Today, companies like Adobe, SurveyMonkey,
Société Générale and Tesco use Move Guides’
services. The company now has 100 staff, has
banked over $25m in funding and set up offices
in New York, San Francisco, Hong Kong and
London. Revenue numbers aren’t disclosed but
they are in millions of dollars and growth is
289% year on year.
How big is the opportunity? Herbert is bullish:
$50bn, she says, and the competition today is
stuck in old ways of doing things with Excel and
email.
Bright, standout offering that’s easy to use
Rivals have huge pockets and bigger brands
Hungerford’s mission is to take the opacity out
of financial services and the former Barclays
banker seethes at the current setup with its
obscure jargon and ‘where-did-that-come-from?’
add-on costs. In effect, he wants to create an
Amazon for financial planning.
In 2015, London, England-headquartered
Nutmeg worked on getting its pension planner
product to market and improving the mobile
experience for Nutmeg users but the company
is still a young startup, having been founded in
2010. Still, it has raised £35m ($50m) in funding
and has doubled its headcount to 80 in the last
year as well as nearly quadrupling its customer
base.
Gaining acceptance and trust in the riskaverse world of financial affairs is tough but
Nutmeg has an excellent word-of-mouth
reputation. Its success will attract the attention
of rivals, naturally, and at the end of 2015
Moneysupermarket.com co-founder Duncan
Cameron announced plans to take on Nutmeg
and others with a forthcoming service called
Evestor.
It’s too early to hype up Nutmeg as an IPO
candidate. For now its task should be pursuing
growth, investing in research and development
and letting the rest take care of itself.
20 Pre-IPO Tech Companies 2016
ShopKeep
IDG Connect
Uphold
For:
For:
Against:
Against:
Interview: CEO, Jason Richelson
Interview: Founder and chairman, Halsey Minor
Booming market among entrepreneurs
May need to see buyers scale for revenue to grow
at pace
C
ity dwellers have enjoyed the boom in
artisan goods over the last 10 or 20 years.
From specialist coffee shops to authentic ethnic
food merchants, we no longer bow to the
power and predictability of chains. ShopKeep is
a company that’s attempting to be the point-ofsale (POS) and business management frontend/back-end combination that powers these
small operations.
ShopKeep has raised about $95m in funding
and claims to have 18,000 customers. Founder
and CEO Jason Richelson has built the company
on his own retail and technology experience
having run his own outlets in Brooklyn, New
York. The joy of rebooting servers remotely
while on holiday led him to create a cloudbased, subscription-model alternative where
the POS device is an iPad.
Effectively, ShopKeep is in the business of
taking IT pain away from small business leaders
who just want to focus on product and service.
The company has about 250 staff in North
America and the UK and Richelson says he’s still
building out. As with many cloud businesses
the losses will roll in for some time yet, but he’s
confident that he’s on track and has the funding
and customer roster to back him up.
There are obvious growth opportunities too,
beyond just adding more customers. Offering
more business dashboard capabilities could
help customers and adding upsell counsel
(based on what has worked across other
subscribers) might be a boon.
Opportunity to disrupt the global banking sector
Colourful background to founder
U
phold, formerly Bitreserve, has an interesting
heritage. It was founded by Halsey Minor,
the co-founder of tech website empire CNET and
a serial investor in successful startups. Its CEO
is Anthony Watson, a former CIO at Nike and
Barclays.
The 2015 name change was to alter perceptions
that the company is bitcoin-focused. Instead, its
leaders say it is offering a new, transparent and
ethical way to provide financial transactions and
investments.
Uphold is lauded by some as a brilliant
newcomer with dynamic leadership that is
rewiring what it calls “the internet of money”
and creating opportunities for the billions of
people around the world currently considered
“unbankable” – that is, not meriting the
attention of traditional banks.
The startup is somewhat overshadowed by
Minor’s colourful past: he filed for bankruptcy in
2013 after burning through his fortune, blaming
a combination of a debilitating depression and
the intransigence of financial lenders. That latter
personal experience forms part of the impetus
for Uphold.
The unusual backdrop might be a challenge
for Uphold but there’s little doubt that Minor
is a sharp operator with a strong CV and that
personal finance is a field that is long overdue
an overhaul. This is a company that is still very
young, having been founded in 2013, but in the
interests of transparency it has disclosed that
it expects over $15m revenue for 2016, having
raised about $20m in finding. Uphold is well
worth watching.
20 Pre-IPO Tech Companies 2016
xMatters
IDG Connect
YellowPepper
For:
For:
Against:
Against:
Interview: CEO Troy McAlpin
Interview: CEO, Serge Elkiner
T
M
A strong Internet of Things play linking sensors to
people
Giants are bound to double-down on market
opportunity
here’s no shortage of technology companies
with an Internet of Things pitch. In fact it
might be easier to see who’s not claiming to
have a stake in the ground. But California’s
xMatters is one of the more interesting and
credible players.
Rooted in mass notification and business
continuity, this company’s messaging software
is the bridge between sensors and people. It
sends valuable status information and alerts
in close to real time and, most importantly,
it’s instrumenting a lot of things were not
originally digital in order to turn ‘dumb’ to
‘smart’.
So xMatters can tell a retailer when its
refrigeration unit has failed, can inform a
hospital that the shelf life of blood supplies is
coming to an end and, just as importantly, not
just send context-free data that becomes more
line noise.
Founded in 2000 and with over 250 staff and
about $50m in annual revenues, xMatters might
appear a slow burn but CEO Troy McAlpin can
see an IPO possibly coming in the next two or
three years as the IoT market moves from paper
talk to real money. Even if it doesn’t, the core
notification communications business should
be robust. Revenue growth rate is over 45%
year on year.
Strong focus on LatAm payments
Growth options eventually might be limited, given
the scale of competitors
ost tech companies pay lip service to
globalisation but grow their businesses
in a traditional way, targeting North America
and then cascading to other large economies.
YellowPepper is an interesting exception: while
based in Miami, Florida, its revenues mostly
come from payment processing solutions sold to
Latin America.
This is a trend that is something of a sleeper
but there are many entrepreneurs that now see
advantages of turning to the relatively new turf
of markets located outside the well-trodden
path.
Belgian-born founder Serge Elkiner sees two
advantages: the chance to change LatAm’s
payments culture but also a fast track to address
several large markets.
“Ten years ago it was clear to me that it was an
underserved market,” he says. “Also, there only
tend to be one or two processors per country and they also handle merchant services - versus
the thousands in the US.”
Having banked $34m in funding, YellowPepper
has a chance to one day be bracketed alongside
MercadoLibre, Globant and other LatAm tech
success stories, even if it is doing the job from
the other side of the border.
20 Pre-IPO Tech Companies 2016
IDG Connect
Conclusion
Looking back over this third report into pre-IPO business-to-business tech companies, a couple of themes
emerge.
One of them is that despite the talk about globalisation, North American companies are still hugely
powerful. This is not just in terms of their ability to harness a large local market, recruit well and source
funding. It’s also, I’m convinced, because they market and communicate so well. Despite being based
in London, England, I often know about smart new American startups before I do about their European
counterparts. The Americans tell a good story and can point you quickly to supporting materials.
Another notable theme is that the action is not dominated by a few trendy areas. The national media
obsess over social media and messaging firms and cybersecurity but a lot of the companies I see doing
well are the ‘picks and shovels’ makers and the bridge and platform builders – the under-the-hood
companies making payments processing work, or financial management in the cloud, or making sense of
what the Internet of Things means for the rest of us.
At the peak of the dotcom boom, lots of companies were given huge valuations despite not being able
to articulate why they were deemed so important. Today that’s not so often the case and we are more
analytical when it comes to the latest media sensation startups. The frothiness that saw watchers salivate
over the Alibaba IPO ended up with flatter waters and a murky outlook for tech shares and IPOs – in the
long term that many be no bad thing.
About IDG Connect
IDG Connect is the demand generation division of International Data Group (IDG), the world’s largest
technology media company. Established in 2005, it utilises access to 38 million business decision makers’
details to unite technology marketers with relevant targets from any country in the world. Committed
to engaging a disparate global IT audience with truly localised messaging, IDG Connect also publishes
market specific thought leadership papers on behalf of its clients, and produces research for B2B
marketers worldwide. www.idgconnect.com