In the few short months since the launch of large language models by ChatGPT in November, artificial intelligence is set to revolutionize the tech sector according to the latest Bessemer Cloud report.
“Every single category of SaaS software is going to be changed in a meaningful way by this technology,” said Kent Bennett, a partner at Bessemer Venture Partners, in a conversation with Crunchbase News.
“In a survey of our entire Bessemer investment team, 96% of our investors see portfolio companies with AI-driven features on the roadmap,” according to the report. The team ranked tools for sales, HR, legal and infrastructure as areas impacted by AI as well as supply chain software.
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The competition between centralized platforms like OpenAI and Anthropic, alongside decentralized or open-source models from the likes of Stability AI, make these technology models accessible and cheaper to deploy.
In the meantime, public cloud companies have not recovered from the downturn. “We’ve sort of bumped along,” said Bennett.
A year ago the Bessemer Cloud report valued public cloud companies at $1.6 trillion, down 40% from the prior year. Public cloud companies are valued at $1.3 trillion as of this month, shaving a further $300 billion in market value in the past 12 months.
It has not helped that zero cloud companies went public in 2022, according to the report.
However, the number of private cloud companies with $100 million in revenue is expanding.
In 2019 that count was 35. It grew to 60 in 2021. For 2022, around 50 new companies reached $100 million in revenue, below the 70 projected a year earlier, but still the second-highest count in the past four years.
“The SaaS companies themselves have actually not stumbled in a huge way,” said Bennett on “Centaur” businesses that are scaling $100 million and beyond in ARR.
The firm’s guidance on startups fundraising is not to wait. Raise before it’s needed and test the waters. “As we often say, the best time to fundraise is when you do not need the money,” said BVP in the report.
A final note
And a final prediction from the report. Companies leading in AI will reach a billion in revenue 50% faster than cloud companies did.
Illustration: Dom Guzman
Charts: BVP’s State of the Cloud 2023.
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