Morning Report: The Bad News Is That Public Cloud Companies Look A Little Bubbly

Morning Report: Akin to bitcoin, cloud stocks have shot higher and currently trade near record-highs. Let’s check the chart.

Public cloud companies have been on a tear for years now. The rally has helped private companies go public and likely provided some confidence among public investors that not all tech is a gamble.

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Bessemer, a venture group with over $3 billion raised, runs a tool called the Bessemer Venture Partners Cloud Index that tracks the performance of 56 cloud companies. From Box to Castlight Health to Cloudera, the index’s movement is a good way to keep tabs on how the cloud cohort is doing at any given time.

(The Cloud Index also provides a wealth of statistics, including gross retention, enterprise value divided by next year’s revenue, and so forth; if you are a SaaS dork that has yet to dive in, you are welcome.)

I check it a few times a week to make sure I don’t miss any directional shifts in public sentiment regarding the cloud-niche of tech, which, as you can imagine, is not a minor swath. But this morning, amidst the chaos of intrigue of the latest crypto rally, I want to highlight the following chart, which may surprise you.

The blue, in case you couldn’t guess, are the cloud stocks:

Cloud stocks are just a nibble off all-time highs.

For reference, as the chart on Bessemer’s website has no listed dates without mouse-hover, the most recent steep dive that took the cloud index back down to nearly the Nasdaq’s level occurred in February 2016. The most recent rally broke out at roughly the turn of the year. So that key bump from just over 200 percent up to around 350 percent up is 2017.

That’s some damn impressive value appreciation. Whether it is valid and sustainable is up to you. But it does go to show how warm the waters are today. If you are a cloud company or even a cloud-adjacent shop, this is the time to go public.

But don’t worry, if you miss the market timing, you can always ICO, as that market is equally as sustainable over the long-haul.

From the Crunchbase Daily:

Rovio said to plan $2B IPO

  • Angry Birds may be going public. Rovio Entertainment, maker of the Angry Birds mobile games, is planning an IPO that could value the Finnish company at about $2 billion, according to a Bloomberg report citing unnamed sources.

Cryptocurrency space heats up

  • The cryptocurrency space is heating up further. Bitcoin recently topped $4,000 for the first time, and startup Protocol Labs launched a massive initial coin offering for its Filecoin Network, raising close to $200 million from accredited investors, following a previous raise of $52 million from venture firms including Andreessen Horowitz, Sequoia Capital and other high profile investors.

Smart toy sector heats up

  • VCs aren’t playing around when it comes to connected toys, Crunchbase News reports. Investors have pumped hundreds of millions into smart toy developers like Anki and Sphero, betting that a generation of kids raised in the iPad era will appreciate AI- and app-controlled versions of cars, balls and other playthings. In other news, we look at investment trends for sensor tech startups.
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