Bessemer Venture Partners Releases “State of the Cloud” Report with Bold Predictions for 2018

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Feb 12, 2018
by Josh Anderson

MENLO PARK, CA — Silicon Valley venture capital firm Bessemer Venture Partners has released their State of the Cloud Report for 2018, based on thousands of interactions with  and a wealth of research on 78 publicly traded cloud companies. The report — which is the 4th edition is as many years — includes eight bold predictions for cloud computing in 2018, by investors Byron Deeter, Kristina Shen and Anna Khan. These predictions include:

  • APIs Will Drive Innovation: Bessemer says that APIs, which let programmers from any vertical or portfolio integrate their software and services with each other, will continue to foster innovation.
  • Payment Processing To Become Signature Offering: More Software firms will offer payment processing services to businesses, according to Bessemer, whether they are specific to verticals (aka payment apps for restaurants, gyms, etc) or more non-specific “blanket” payment processing applications.
  • Blockchain On the Rise:  Blockchain is set to become a corner stone of enterprise cloud computing in 2018, specifically in sectors such as food, retail, and aviation. Large notable firms such as IBM and Oracle are already testing out new blockchain applications, as are Lufthansa, Airbus, AirFrance, Walmart, Alibaba, and more.
  • Financial values will mirror cultural values in the workplace: Bessemer predicts that company culture will be impacted by the recent cultural shifts stemming from the #meToo movement — look for more overt efforts to create work environments that promote diversity and equality.
  • So Long Screen, Hello Voice: Watch out for more software that relied on vocal or audio clues, rather than visual or manual input. Interactions between humans and their devices will become more and more hands-free.
  • So Long Servers, Too: Look for the national computing industry to follow Silicon Valley’s latest “serverless” attitude — trying out more and more applications that only utilize “momentary” servers that are created the moment they are needed and then destroyed immediately after. Docker making containers more developer-friendly, more, scalable APIs, and open source becoming more available and accepted are three macro factors driving this trend.
  • Software Will Do Much More with Information: Expect software to be a lot more proactive than in the past — applications that previously only stored and/or repeated information will provide customers with more recommendations as well as critiques for their data usage to improve their work.
  • It’s Not Just About California Anymore: More and more areas outside of California, and specifically Silicon Valley, will compete for the cloud trophy, predicts Bessemer.

The cloud computing revolution has changed the way we value companies and approach investment opportunities,” said Deeter in a LinkedIn post. Bessmer Partners expects healthy companies to grow from $1 million USD to $10 Million USD in annual recurring revenue (ARR) in four years, while exceptional firms could pull off the same feat in half of the time.

The report also included some key observations and tips for investors. For example, Okta, Cloudera and MongoDB were some of the most notable companies who filed for IPOs, helping the IPO market in 2017 recover from a slumpy 2016. In fact, the cloud industry now has almost as many private cloud unicorns – defined as companies valued at more than $1 billion – as public. Some of the private unicorns include Slack, DocuSign and Stripe.

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