OpenAI debuted at the No. 1 spot on the Cloud 100 Benchmarks Report 2023, a ranking of the top 100 private cloud companies conducted every year by Bessemer Venture Partners. OpenAI’s rise to the top of the ranking underscores artificial intelligence’s shockingly fast ascendency in the tech world. Besides the ChatGPT owner, four other native AI companies joined the index this year: Anthropic (No. 73), Midjourney ( No. 85), Hugging Face (No. 98) and DeepL (No. 100).
Bessemer, one of the most active venture investors in the cloud sector, taps a panel of judges each year to evaluate companies on four criteria for inclusion on the Cloud 100: market leadership, financial metrics, valuation and team.
“It was the hardest year ever to make the cloud 100 list,” Mary D’Onofrio, a partner and co-founder of the growth practice at Bessemer, told Crunchbase News. “The minimum valuation required to make the list was close to $1.5 billion.”
And in contrast to prior years, only one company — Figma — exited from last year’s leading 100 cloud company list, even though Adobe‘s $20 billion acquisition of the design collaboration startup has not yet closed. (Figma is one of the highest acquisition multiples of all time at 50x revenue.)
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AI is clearly a leading theme for this year’s index. Of the 100 companies on this year’s index, 55 have launched a generative AI product or feature in the last eight months, and 70 use AI or machine learning in their product.
However, design, collaboration and productivity — a sector impacted by AI — led with the highest collective value, at $110 billion. That displaced last year’s most-valuable sector, fintech, after some companies saw their valuations decline. That includes Stripe, which raised a down round, and Checkout.com, which reportedly cut its internal valuation by 70%.
The report predicts the IPO market will also open up soon — D’Onofrio predicts it will do so in the first half of next year — with the top 10 companies on the index most likely to go public first.
The cloud 100 companies were valued collectively at $654 billion, down 11% from last year’s list. That marks the first annual decline on the index since 2016.
The average value of the companies on this year’s list also fell, from $7.4 billion in 2022 to $6.6 billion this year.
Average growth has slowed from 100% to 55% on average year over year. The top quartile also slowed from 120% to 70%. Revenue multiples were calculated from companies that raised in the past year, which include 17 companies valued at 26x revenue. That’s still high compared to public cloud companies, at around 8x revenue. The public cloud index is growing at a slower rate, on average 22%.
“On a growth adjusted basis, it’s actually a lot more rational and more in line with the public markets than one would think,” said D’Onofrio. “You’re paying for the outsize revenue growth in this environment, combined with your view of what a company can become.”
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Correction: An earlier version of this article incorrectly said that Checkout.com had raised a down round. It’s been corrected to reflect that the company reportedly cut its internal valuation.
Illustration: Dom Guzman
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