Thursday, 9 March 2023

The sky isn’t falling for cloud software spend

by Berkeley Lovelace

If you read the startup press, you might think that everyone in tech is still nursing a stiff hangover from the zenith of the 2021 boom. While there is much talk of cutting spending, conserving capital, trimming staff and hunkering down, there’s also quite a lot of good news out there.

New data from Battery, for example, details a corporate software spending climate that is far from moribund; for startups that sell software to other companies, this is great news.

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Good news is not in short supply. As TechCrunch recently reported, Salesforce proved that SaaS growth could still come in above expectations, unicorns Instacart and Klarna are posting solid operating results, and software-focused corporate valuations are recovering. So much for a recession, yeah?

The sky isn’t falling for cloud software spendThe latest data dump from Battery Ventures (which raised $3.8 billion to invest last year) buttresses our general impression that while many startups have had to retool their operations for today’s more conservative business climate, the business of selling software is still a good one to be in. The same dataset also tells us that it’s not equally good everywhere for every type of software vendor.

Let’s dig through the good news first and then discuss which software categories are lagging behind their peers. We’ll also touch on the bottoms-up sales approach and SaaS itself. If you are building a software startup, let’s orient you for the present day. To work!

The good

Let’s start with an overview statistic. Battery created a sentiment index for enterprise technology spending, indexed on a 100-point scale. Much like PMI, 50 is a “neutral” outlook measurement on the Battery scale. Despite dipping from its Q3 2022 reading of 55.4 to 50.2, the index remains in bullish (positive) territory.

No crying allowed, in other words.

The sky isn’t falling for cloud software spend by Alex Wilhelm originally published on TechCrunch