US SaaS multiples blast previous high out of the water

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • US SaaS median revenue multiples have continued to rise, surpassing their previous quarter end, 8.2x, by 7%; whilst also reaching an all time high of 9.4x during the quarter
  • UK Small & Mid median revenue multiples were recovering, closing 6.7% higher than the previous quarter; however, they are still 10% lower than the same quarter last year (3.9x)
  • European companies continue to have the lowest valuations, with no sign of this trend changing any time soon

Silverpeak Benchmark Report Q2_2019_Final

Autonomy software client Oxbotica raises an additional investment round

Silverpeak’s universal autonomy software client Oxbotica has raised an additional significant undisclosed investment round from existing investors IP Group plc, Parkwalk Advisors and AXA XL.

We also advised Oxbotica on their successful £14m funding in their first institutional investment round in 2018. The additional investment coincides with the appointment of Ozgur Tohumcu as CEO joining from Tantalum and previously Ericsson, who will lead the business on its next chapter of development.

Oxbotica, whose mantra is “any vehicle, any environment, any time” customers include: driverless shuttle trials at Gatwick airport; driverless cargo pods at Heathrow airport; partnering with Addison Lee to bring self-driving taxis to London; and other sectors in every hemisphere.

Paddy MccGwire, Managing Partner at Silverpeak said, “ This is our sixth transaction announced in eight weeks. It is great to see this iconic British HQ deep technology global business demonstrating the confidence of its investors so quickly. And I’d like to congratulate Co-Founder CTO Paul Newman, who also is the Director of the Oxford Robotics Institute, on being awarded the prestigious Royal Academy of Engineering Silver Medal.

Winners announced at Silverpeak sponsored Enterprise Awards

Silverpeak were delighted to attend the 9th WCIT Enterprise Awards dinner last night to celebrate some of the most successful technology entrepreneurs in the UK & Ireland

Congratulations to all the winners.

Young Entrepreneur – Jack Tang – URBAN

Female Entrepreneur – Pamela Cook – INFOSHARE

Social Enterprise Entrepreneur – Alex Stephany – BEAM

Start Up Award – Niall Barton – WRISK

Public Sector Award – Jonathon Desmond, Max Smith and Michael Van De Weg – IMMJ

Deep Tech Award – Ricky Thomas – AVORA

Emerging Business Award – Priya Lakhani – CENTURY TECH

Developing Business Award – Peter Baumann – ACTIVE NAVIGATION and Emma Bowkett – CONVERTR

Scale Up Entrepreneur Award – Vishal Marria – QUANTEXA

Enterprise Award – Mark Richer – STARLEAF

Entrepreneurial Team of the Year – Neal Gandhi and Oliver Rigby – THE PANOPLY

Judges Award – Simon Hay – FIREFLY LEARNING and Bernhard Niesner – BUSUU

Mentor of Year – Stephen Kelly

Listed Company of the Year Award – Alastair Bathgate – BLUE PRISM

Silverpeak advises Thoughtonomy on agreed acquisition by Blue Prism (AIM:PRSM)

Leading the market in delivering intelligent automation capabilities from the cloud, Blue Prism, today announced its agreement to acquire Thoughtonomy for up to £80m. The acquisition will see Blue Prism’s connected-RPA platform distributed and supported as a turnkey SaaS offering, helping accelerate the deployment of digital workers across market verticals and into mid-tier enterprises worldwide. Silverpeak acted as exclusive Lead Adviser to Thoughtonomy.

Thoughtonomy’s secure, award-winning enterprise grade SaaS solution, leveraging Microsoft Azure, enables an on-demand Virtual Workforce and full Intelligent Automation platform. This acquisition joins the power of Blue Prism’s connected-RPA platform with Thoughtonomy’s software, allowing customers to quickly and more easily drive improved productivity and customer experiences, without needing to set up a dedicated infrastructure to support their program.

It gives enterprises a way to access and leverage embedded and fully integrated AI technologies such as computer vision, Natural Language Processing (NLP) and machine learning to address a complete range of use cases from back office to front office. Additional features, including ready-to-use channel interfaces such as chatbots and web-forms coupled with Thoughtonomy’s integrated AI-enabled digital workforce manager, IADA®, helps companies scale their automation strategy at speed.

“The acquisition of Thoughtonomy will support a broader strategy to strengthen our portfolio with cloud offerings that deliver value and enhance customer experience,” says Alastair Bathgate, Co-founder and CEO, Blue Prism. “Thoughtonomy brings valuable knowledge and experience in the development and implementation of cloud-based intelligent digital workers, with a successful track record of delivering its solutions to mid-tier enterprises in a number of industry verticals complementary to the areas of the market Blue Prism has served.”

Thoughtonomy’s intellectual property and embedded Marketplace will also extend Blue Prism’s Digital Exchange DX capabilities – an intelligent automation marketplace comprising customers, technology and channel partners – while enhancing the company’s overall push to deliver RPA services with leading cloud services providers such as AWS, Microsoft Azure, Google and IBM.

“We’ve been working with Blue Prism since our foundation in 2013, and we’ve built out our unique SaaS and intelligent automation capabilities to leverage their best in class RPA software,” says Terry Walby, CEO & Founder of Thoughtonomy. “Together as leaders, we plan to broaden and simplify access to the most advanced digital workforce capabilities on the planet.”

This combination of capabilities will provide enterprises with even greater flexibility for their automation projects offering them the ability to choose between SaaS or dedicated infrastructure. Together both companies will continue to build out the strongest partner network in the industry aimed at driving up customer adoption in key market verticals including financial services, telecoms, insurance, retail, healthcare and pharmaceuticals, professional services, energy, utilities, public sector and outsourcing providers. This also includes commitments to support partner enablement, sales, pre-sales and implementation on a global scale.

Thoughtonomy has delivered year on year growth of over more than 250 per cent over the past three years and has customers spread across four continents. In 2018, the company was ranked fourth in the Sunday Times Tech Track 100 and 11th in the Deloitte 2018 UK Technology Fast 50, cementing its position as one of the fastest growing UK-headquartered technology companies and one of the brightest stars in global AI.

Silverpeak worked with Thoughtonomy as lead adviser examining both private equity investment and strategic acquirers globally culminating in the agreed acquisition of Thoughtonomy by Blue Prism.

Paddy MccGwire, the Managing Partner at Silverpeak leading the process added, “Terry and the team at Thoughtonomy have developed a great business in the six years since founding, developing the market leading intelligent automation SaaS RPA platform. Blue Prism will provide a great strategic and cultural fit to continue to exploit the market opportunity.”

 

For more information please contact Paddy MccGwire: pm@silverpeakib.com

Other advisers to Thoughtonomy were: Taylor Wessing, lawyers; Smith & Williamson, tax.

Silverpeak advises Choice Hotels on sale of Maxxton to Fortino Capital

Silverpeak, the technology investment bank, acted as the exclusive financial advisor to Choice Hotels in the sale of Maxxton, an all-in-one enterprise planning and inventory management software solution developed for vacation & short-term rental managers.

Maxxton is a software as a service (SaaS) solution to simplify the operational and reservation processes for hospitality managers. Its enterprise resource planning (ERP) platform caters specifically to the needs of the short & medium-term accommodation rental sector. Maxxton automates time-consuming manual work, improves efficiency, increases bookings and reduces staffing costs for hospitality organisations.

Silverpeak worked as lead adviser to map the marketplace, identify and contact potential buyers and negotiate a transaction through to final completion. We approached both strategic & financial buyers globally and closed the transaction with Fortino to continue building the business with the CEO.

Justin Stebbins, Director, added “This transaction represents the most logical next step for all parties involved and Fortino will strategically assist management during its next stage of growth.”

Paddy MccGwire, the Managing Partner at Silverpeak leading the process added “We are delighted to have advised on this transaction – further strengthening our position in hospitality software.”

Leadership Dinner – data-rich businesses – 30 April 2019

On the evening of 30th April, Silverpeak, Spectrum, the retained executive search and HR consulting firm for the technology sector and Wiggin, the technology and media law firm, co-hosted a Data Leadership Dinner.

We brought together 16 senior executives and board members for a ‘Chatham House rule’ discussion on building competitive advantage in data-rich businesses, during a private dinner in Central London.

The key points of debate and discussion were:
• Are all businesses becoming data businesses?
• Can legacy businesses successfully re-engineer and transform, to become data businesses?
• Are businesses sufficiently architected – in order to utilise all the data insight tools available?
• Are companies ready for deep data insight?
• How much value does AI add to data?
• Key differences between businesses that use data to enable their business, and those that sell data (i.e. data is their core business)
• What do customers really value, and how do you use data to deliver that need?
• Reaching nirvana – when customers can’t do business without the data you provide
• Certain data-sets are more valuable in conjunction with other data-sets, i.e. data can be shared profitably and productively via APIs

US SaaS multiples skyrocket while growth forecasts fall

Welcome to the latest edition of the Silverpeak Benchmark report – Application Software Sector, a review of key company valuation metrics in the US, UK and European application software sectors. By reviewing sector median averages, our aim is to provide a set of software industry benchmarks against which individual company performance can be measured.

Report highlights

  • US SaaS median revenue multiple rocketed by 49.5% QOQ to 8.2x, reaching the previous peak. In the meantime, its revenue growth expectation declined by 6.5% QOQ to 18.9%
  • US Horizontal and US Vertical revenue multiples followed the trend of US SaaS TEV/Sales and increased by 23.9% and 18.1% QOQ respectively
  • UK Small & Mid diverged further from US multiples, having closed the gap in 2018.
  • European companies, who continue to have the lowest valuations, were the only category that experienced a drop in TEV/Sales QOQ, from
    2.0x (Q4’18) to 1.9x (Q1’19)

Silverpeak Benchmark Report Q1_2019

Autonomous vehicles, shared mobility, and Mobility as a Service – the future of the urban transport market is already here.

The urban transport sector is on the cusp of great change, thanks to a confluence of new technologies. From self-driving cars, to Mobility-as-a-Service (MaaS), to shared mobility and convenience apps – the potential is truly extraordinary.

“MaaS is the concept of being able to use mobility tools to buy a number of different trips on a variety of transport modes, but in one place,” says Pietro Strada, managing partner at Silverpeak. “You could leave home in a taxi, then jump on a tube, take a train then finish your journey with another taxi. That’s four separate trips, in four different vehicles, which you pay for four different times”.
“But with MaaS, you would simply pay once for the entire journey.”

While this technology is still some way away, there is a very clear need for more investment and innovation in the urban transport market.

The world is becoming increasingly urbanised. In 1970, just 30 per cent of the population lived in urban areas. This figure had risen to 54 per cent by 2014, and the UN estimates that a massive 66 per cent of the world’s population will live in cities and urbanised areas by 2050.

Meanwhile, concerns around air pollution are growing, emphasising the need for clean technology in densely populated areas. According to the World Health Organisation, 90 per cent of people living in cities are not breathing clean air, and we know that transportation emissions are responsible for more than a quarter of all greenhouse gases.

We are also more connected now than ever before, thanks largely to the advent of affordable mobile technology. There are five billion mobile phone users in the world today – that’s 68 per cent of the total population. By 2023, it has been predicted that one billion of these mobile users will have a 5G subscription, which would allow them to connect to the internet anytime, anywhere.

As a result of these developments, the urban transport market is primed for disruption. This could come in many different forms, from MaaS; to the advent of autonomous driving; to the wide adoption of shared mobility services.

Silverpeak has analysed data on financings and acquisitions in this market, and it has concluded that the next few years will see a sustained level of investments and M&A activity.

1. Mobility as a Service (MaaS)

At its core, MaaS is a mobility distribution model which brings together multiple services in one place, allowing the user to streamline their journeys by planning and booking trips via a single platform.

Across Europe, a number of integrated mobility services are being rolled out, from UbiGo in Sweden, to Qixxit in Germany, and whim in Finland. Also, car manufacturer Daimler has gotten in on the act, with its Moovel ride-booking service, which is currently being tested in the U.S. and Europe.

There is still some way to go before MaaS becomes mainstream, but the early signs are promising.

“We’ve done a number of deals in different areas of what we are now calling the mobility sector,” says David Ford, director at Silverpeak. “It’s relatively new right now but we think there’s a lot more activity that’s going to go on.”

Transit information providers have raised hundreds of millions of dollars in investment over the past ten years, underlining the enormous value embedded in these services. Germany’s GoEuro, for instance, has raised $296m since it was founded in 2012. It provides a multi-modal search tool that compares and combines rail, car, bus, train and aeroplane routes and prices.

In some cases, transit information providers have already started to take the first steps towards becoming fully-fledged MaaS providers. Public transport tracking app CityMapper is using the travel data it gathers from millions of user-planned journeys to run an on-demand, shared rides service in city areas that the data has shown to be underserved by existing transport links.

While these developments are still very much in their infancy, there is a clear first-mover advantage to be won, both in the UK and across Europe.

“There is a lot of activity in the MaaS space,” says Matteo Pozzi, director at Silverpeak. “Many companies are raising significant capital to position for the dramatic anticipated growth in revenues. However, it is still early days for this sector – it is still nascent.”

2. Autonomous vehicles

Mass-market self-driving cars have yet to become a reality, but some huge strides have been made in the area of autonomous vehicles.

At Oxbotica – an Oxford University-based firm which is run by professors from the Oxford Robotics Institute – self-driving software is already being used in cars, trucks, forklifts, pods, shuttles, mining and construction vehicles.

“Their technology is amazing – world class,” says Paddy MccGwire, managing partner at Silverpeak. “Last year, they were approached by a huge international car company and another tier one supplier, but they found that these deals would never get to completion. They realised they needed somebody to help them get from A to B, so we started to work with them in March, and five months later we completed a £14m funding round.”

That funding will be used to accelerate Oxbotica’s growth plans in the coming years. And while we are still a few years away from self-driving commutes, MccGwire points out that on private turf such as airports or docks, this technology can be rolled out far more quickly.

“For instance, one airport found that they could cut the number of vehicles air-side by a third if they were autonomous,” says MccGwire. “And that’s everything from the bus to bring people to baggage handling, to the tug that pushes aeroplanes. So, it’s exciting and there are quite a lot of different benefits for what vehicle automation can do.”

3. Shared mobility

Ride-hailing apps already take up plenty of space on the average smartphone, and the shared mobility market is only just getting started.

In the ride-hailing sector alone, more than $45bn (£34.5bn) has been raised through just two companies: the ubiquitous Uber and China’s rival firm Didi. Meanwhile, established brands such as GM and Toyota have begun investing in new car-sharing technologies from the likes of Turo and Getaround, with a view to expanding their business model to become service providers as well as vehicle manufacturers.

According to Silverpeak’s research, in 2018 investments in ride-hailing, car sharing and carpooling services rose to an all-time high of $20.6bn. These figures reflect a demographic shift in how transport is viewed in urban areas.

“Millennials in particular live more in cities and buy fewer vehicles,” explains Strada. “They are more likely to rent a vehicle, use a rideshare scheme or take public transport and that’s threatening the business model of the automotive OEMs.”

In fact, in preparation for the “death of car ownership”, BMW and Daimler have pooled their mobility assets into five new joint ventures to give them additional scale and create vertical mobility powerhouses focused on urban areas.

Scooter sharing and bike sharing schemes have also been gaining traction in the investment community lately. Over the last five years, approximately $7.6bn has been invested into bike and scooter sharing or rental schemes – and 90 per cent of this was raised in 2017 and 2018 alone. China is very much in the lead on this trend, with the top three Chinese players raising 70 per cent of the combined fundraising in the market.

Uber, Didi and Lyft have already acquired some of the most promising bike-sharing and scooter-sharing innovators, in a clear indication that urban transport is going green.

“Car ownership in urban areas is going to die sooner than outside of urban areas where people need their own vehicles,” adds Strada. “We’re still tens of years away, but once the trend becomes mainstream it’s obviously too late to take a position. You want to be prepared and starting much earlier than that.”

“There are a lot of different players who want to get into the mobility sector for a lot of different reasons and hence, there’s likely to be a lot of consolidation and activity in this space.”

Chinese market dynamics and the future of urban transport

China is a market that is experiencing its own dynamics and in some areas is leading. As well as taking the lead on bike-sharing and scooter-sharing innovation, China is poised to become a global leader in the autonomous car market. Since 2015, China has spent $24bn more than the US on 5G technology – an essential component for autonomous vehicle manufacturing. Both Alibaba and Baidu are in the advanced stages of testing self-driving cars, and Alibaba is even looking into the creation of ‘smart roads’ which feed data to cars as they travel.

“China is investing in a lot of AI at the moment,” says Strada. “But there is not a lot of transparency in China. It’s hard to discern what is being done for political purposes and what is being done for economic value.”

Having said this, Strada believes that everyone can learn from China’s commitment to innovation in the urban transport space. And one thing is certain – the urban transport landscape is changing fast.

“We expect that over the next five to ten years, there is going to be sustained activity in investment acquisition in the automotive sector where the traditional players will either have to team up with technology companies that provide a piece of the new infrastructure or they will face competition from new entrants who have completely different business models,” says Strada.

“There is so much change happening in this growing area. Players cannot afford to stand still.”

Silverpeak sponsors the ‘Oscars of the Technology Industry’ hosted by The Information Technologists

Silverpeak is delighted to be sponsoring once again the Enterprise Awards which are the ‘Oscars of the Technology Industry’ hosted by The Information Technologists, the City of London’s 100th Livery company formed to contribute to the growth and development of the ICT industry. The spirit of the awards is all about recognising and celebrating the very best of the UK’s technology entrepreneurial talent.

Uniquely focused on the founder rather than the businesses themselves, the Enterprise Awards boasts previous winners that have achieved prominence on both private and public markets.

Paddy MccGwire, Silverpeak Managing Partner, sits on the judging panel who look for examples of vision, growth, innovation, funding, use of capital, use of resources, strategy, execution, ambition and determination to succeed.

The Award Categories include:

Young Entrepreneur – for entrepreneurs under 30
Start-Up Entrepreneur – trading for two years or less
Emerging Entrepreneur – up to £3 million annual revenue
Developing Entrepreneur – annual revenue between £3 and £10 million
Scaling Up Award – fastest growing companies
Public Sector Award – excellence and achievement in the Public Sector
Enterprise Entrepreneur – annual revenue over £10 million
Social Enterprise Entrepreneur – entrepreneurs with a business model that gives something back
Female Entrepreneur – for outstanding female entrepreneurs
Listed Company Entrepreneur – for entrepreneurs leading a Listed Company
Deep Tech Entrepreneur – game-changing, innovative, unique, core technology

For details of how to enter and to download an entry form, please go to www.enterprise-awards.co.uk.

The closing date for entries is Tuesday 30 April 2019

B2B Software Leadership Dinner: Software leaders call for greater alignment as sector grows – 6 February 2019

There is significant capital for growth-stage business-to-business (B2B) SaaS and software companies, but early-stage fundraising is more challenging; subscription is the preferred revenue model, but perpetual licenses are still used in certain settings; “SaaS businesses” can differ in revenue models, delivery models, payment terms depending on their geographical and vertical reference market.

These were the conclusions drawn from the latest B2B Software Leadership Dinner in London.

The dinner took place on Wednesday 6 February and featured 20 senior executive and board members from the software and Software-as-a-Service (SaaS) sector. It was hosted by Silverpeak, the technology investment bank, Spectrum, the retained executive search and HR consulting firm for the technology sector, and technology law firm Wiggin.

“It was a wonderful dinner with the participation of 20 great executives & directors,” said Pietro Strada, Managing Partner at Silverpeak. “I think it demonstrates the quality and maturity of the software and SaaS sectors in Europe: it is clearly a very healthy and strong market.”

While the evening took place under Chatham House rules, some key points of discussion have been released.

Attendees agreed that while there is significant capital available for growth-stage B2B software companies, it was generally considered to be more difficult to secure early stage fundraising.

Furthermore, there are some major national and sectoral differences with regards to the adoption of SaaS vs. perpetual licenses, and in some cases, SaaS can represent different things to different people.

For some, it is closely affiliated with a company’s revenue model (subscription) or payment terms (annually/quarterly/monthly in advance), while for others it is about delivery (multi-tenant single-instance) and cloud hosting. For companies in certain sectors, e.g. financial services, SaaS may raise concerns about data capture and storage costs connected with these software services.

Given these various points of differentiation, the business leaders present at the dinner agreed that more needs to be done to communicate the characteristics and benefits of SaaS.

Ultimately the key success metric for B2B SaaS companies is customer adoption and utilisation, which requires the key implementation departments in the company to be aligned. It also requires SaaS providers to follow good business disciplines, such as understanding their clients’ needs and having a product that addresses them.

The group also agreed that whilst there are some common key performance indicators (KPIs) of SaaS companies, such as LTV or CAC or churn, the way in which they are calculated can vary. Senior managers should able to calculate them and present them into the context of their own businesses.

Silverpeak director David Bell revealed that some lively discussions took place among attendees, which is further evidence of the dynamic nature of the sector.

“We had a wide ranging-discussion, touching on the commercial, operational and financial insights of and challenges for B2B software businesses in diverse verticals and differing stages of maturity,” said Bell. “And somewhat surprisingly there were even some impromptu contractual negotiations taking place in the room.”