Weekly Wrap #20: Cloud Club, Chips and Chainsmokers

Welcome to our Weekly Wrap, where we cut through the noise to bring you our favourite insights from the technology and startup world.

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The Private Cloud Club

One of our favourite annual lists is out. The annual Forbes Cloud 100 list ranks the biggest private cloud companies based on criteria including revenue growth, valuation and culture.

Bumping Stripe off the #1 spot this year is Snowflake, which went public with an insane IPO just hours after the Forbes list was released. Poor Stripe.

Doing Australia proud, Airwallex and Culture Amp debuted. Canva made the top 10 for the first time and at #7 also holds the highest ranking for a woman-led company.

Sadly we counted only six women CEOs on the list. That doesn’t come as a huge surprise though - the majority of these businesses have raised $100+ million and the proportion of total VC funding that went to women founders in 2019 was just 2.7%. It’s also slightly better than the ASX200, which dropped from 12 to 10 (5%) women CEOs this year.

Collaboration, Productivity and Design as a broad category saw a big increase this year, with tools like AirTable, Figma, Notion, Miro, Canva, Lucid, Monday.com, Asana (due to go public soon) and Front in the ranks. This group grew from eight last year to twelve in 2020.

The forced work-from-home experiment has shifted our working behaviours, likely for the long-term. Tools that enable people to do their best work remotely are high in demand and we’re seeing some amazing tools coming to the fore as a result.

In June we wrote that productivity and collaboration companies were some of the most sought after investments in Silicon Valley. At the time, Figma and Notion had both raised at $2 billion valuations.

The VC dollars continue to fly into this space. This week Airtable raised $185 million at a $2.6 billion valuation and web-based note-taking tool Roam Research closed a $9 million Seed round at a $200 million valuation. While not on the Forbes 100, Roam deserves a little shout out here - it’s bi-directional page architecture lets you seamlessly connect different notes and ideas together in a network like no other note taking product.

Of the Forbes 100 Cloud, only four companies are bootstrapped - Cloudinary, MailChimp, BambooHR and Yardi. Arguably Zapier should be on this list too as it has only raised $1.2 million (from Bessemer in 2012). The rest have raised north of $100 million each, with Snowflake topping the chart at $1.4 billion pre-IPO.

The value of the Forbes Cloud 100 list has been steadily rising since it started in 2016. This year saw the biggest valuation jump yet, thanks to the current cloud frenzy. The list was worth $99 billion in 2016, $116 billion in 2017, $138 billion in 2018 and $166 billion in 2019.

This year’s list has 87 unicorns with a total value of $267 billion. That’s a lot of private wealth being created.

China’s got a chip on its shoulder

Softbank continues to sell down assets in an attempt to recover from its infamous Vision Fund losses. This week it announced plans to divest its ownership of Arm and Brightstar.

The Arm deal is the juicier deal of the two - Nvidia has agreed to acquire the company for $40 billion, making it the UK’s biggest tech deal and the largest chip-making deal in history.

Softbank originally purchased Cambridge-based Arm in 2016 for $31.4 billion with the intention of it being the centre of its 300 year strategy.

Telepathic dogs also featured as a part of the 300 year vision

Arm’s tech is in the CPU in almost every mobile device, along with some consumer electronics, servers, cars and IoT devices. In June, Apple announced that future Macs would be switching from Intel chips to Arm-based chips.

Nvidia makes GPUs - expensive chips for gaming, data centres and AI. The deal is a smart move by Nvidia as Arm’s CPU technology will enable it to expand its data centre offering (a huge and growing market).

Nvidia’s explanation of the difference of CPUs and GPUs, featuring Mythbusters:

Anyway, like all good deals these days there is a smattering of political controversy. It requires regulatory approvals in the U.S., the U.K., the E.U. and China. Fun.

The sale to Nvidia would place Arm under American control, making it subject to U.S. export control regulations. China probably won’t be happy about that.

In fact, when Qualcomm tried to acquire Dutch chip maker NXP Semiconductors, China was the only country that did not approve the merger. And that was before the Trump administration’s sanctions over Huawei and TikTok escalated.

Many of Nvidia’s chip competitors currently use Arm’s technology. So even without this political complexity, regulators should question whether Nvidia would play fair.

To help fuel the fire, one of Arm’s co-founders has started a campaign to get the U.K. government to stop the deal, suggesting it force the company to go public again.

Get some popcorn and watch this unfold.

Rapid fire: News that caught our eye this week 🧐

Australia and NZ (mostly):

  • Following in the footsteps of Salesforce, Slack, Stripe and others, Australia’s biggest tech companies are investing millions into venture to fuel their ecosystems - another great sign of maturity.

    Atlassian created a $50 million venture fund.

    Afterpay-backed AP Ventures also raised $50 million to move into BNPL in China.

    SafetyCulture is acquiring ‘micro-learning’ startup EdApp, valuing it at AU$40 million. At first glance that might seem like an odd acquisition, but CEO Luke Anear explains it’s a natural next step thanks to the pandemic:

    We’re experiencing the biggest workplace shake-up since economies were rebuilt after World War II. This is not survival of the fittest, this is survival of those that can adapt. The pandemic has made it clear there’s a huge appetite for training as companies look to get safely back to business. EdApp will strengthen our ability to support businesses to do their best work.

  • InsideSherpa announced it raised AU$13 million led by Lightspeed Venture Partners and is rebranding as Forage. Forage hosts free virtual work experience programs for uni students around the world, giving them an idea of what a grad job would be like at companies such as Deloitte, BCG, Microsoft and GE. 

  • NZ anti-money laundering startup First AML raised NZ$8 million Series A. Its platform automates the identity verification of customers. AML compliance (aka KYC - know your customer) is a necessary evil for lots of businesses - financial institutions, law firms and real estate agents in particular. It makes for a really poor customer signup experience. First AML is solving a big, boring pain point. Remember, it’s the boring ones that are often the most lucrative.

  • Cyber attacks continue to intensify in 2020. According to Crowdstrike there were more attacks in the past six months than all of 2019. NAB is being hit by nearly 3 million cyber threats per day! AMP and Pepperstone are the latest of many to be targeted in Australia.

  • Kogan released some new team fashun. Does anyone miss wearing real clothes yet?

    Ruslan Kogan @ruslankogan
    How the world has changed. Our team used to wear
    Kogan.com hoodies and baseball caps around the office - now we're delivering Kogan.com pyjamas to our team to rock during WFH :)

Around the world (all in USD):

Before we go… Yesterday was the first United Nations International Equal Pay Day. Far from being a day of celebration, the day is intended to highlight the importance of achieving equal pay.

On average, women earn less than 80 cents for every dollar men do. This figure doesn’t account for women who have dropped out of the workforce temporarily (usually to care for family). It is estimated to take 257 years to close this gap. What’s more, women have been disproportionately affected by the pandemic. In Australia, tax cuts and policies proposed to help alleviate the pains of the recession will compound the problem.

Part of the solution lies in helping women return to the workforce sooner after a break, reducing bias against part-time workers and normalising the fact that men are parents too.

This is a fantastic HBR piece demonstrating how ingrained our gender biases are.

That’s a wrap! We hope you enjoyed it.

Gavin, Bex and the team at Ignition Lane


p.s. We love feedback - if you have any or want to continue the conversation, please reach out.

p.p.s. Watch Gavin live on AusBiz at 2.05pm on Mondays, when he opens the Startup Hour of Power.