As we head toward the exits of 2020, we have one more name to add to our roll call of private companies that have reached the $100 million annual recurring revenue (ARR) milestone. Well, one and a half.
But before we get into Nexthink and give Coalition a honorable mention, let’s talk about the startups we’re looking for in 2021.
The $100 million ARR list came together by accident, a quirk of a news cycle that happened to have a few companies reach the threshold when I was in transition back to working at TechCrunch. So, when I got back into our WordPress install, the group of companies that had each recently reached nine-figure revenues was top of mind.
But looking at $100 million ARR companies proved less useful than we might have hoped. Mostly what we managed was to collect a bucket of companies that were about to go public.
That was always a risk. As we wrote at the time:
Perhaps the startup market would do well to celebrate the $50 million ARR mark even more loudly. At $50 million ARR, a startup is scaling to IPO size. That’s the goal, after all.
This is our aim for 2021.
If your startup is approaching the $50 million ARR mark, or the $50 million annual run rate threshold, I want to hear from you. Drop a line if your startup has an annualized run rate between $35 million and $60 million, is privately held, and you are willing to chat about how quickly it is growing. (The Exchange first raised this idea in November.)
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But that’s next year. Today, let’s chat about Nexthink, what the hell “digital employee experience” is and what’s good with cyber insurance and why it’s helping Coalition grow rapidly.
Nexthink gets IPO ready
Nexthink is a venture-backed software company with headquarters in Lausanne, Switzerland and Boston. Nexthink raised external capital in modest amounts from 2006 until 2014, when the startup picked up a $28.6 million round that Crunchbase marks as a corporate investment.
That round was the company’s first worth more than $10 million. (Update: This section has been updated to better reflect Nexthink’s fundraising history, which a prior data source had laid out differently.)
From there, Nexthink was a venture capital success story, presumably scaling quickly as it raised two larger rounds in 2016 and 2018 worth an estimated $40 million (Series B), and $85 million (Series C), respectively. Nexthink was valued at a little over $558 million (post-money) following its 2018 round according to PitchBook data.
How did the company attract so much external funding? By building digital experience management software. Which, after doing a bit of research this morning, appears to be software aimed at tracking what corporate end users are doing with devices and how well software running on those devices perform.
Digital experience monitoring appears aimed at improving device performance more than tracking behavior, but it appears rather intrusive. In Nexthink’s model, employees download a piece of software to company hardware, which collects data concerning the device’s performance. It gathers quite a lot of information that is later viewable on an individual-device basis or aggregated into company-wide trends.
Who wants this? Big firms, we presume, who spend lots of money on hardware and employee time and want to make sure that no time is being wasted thanks to underperforming devices.
And it’s worth noting that Nexthink has tools in place to support remote workers, a key 2020 category. So it’s perhaps not surprising that the company announced that it crossed the $100 million ARR mark earlier this quarter.
For its backers, including VI Partners, Auriga Partners, Highland Europe and Index Ventures, the revenue milestone and the implied potential IPO must feel like a win. Especially as even at today’s mean SaaS multiple, Nexthink is worth a multiple of its last private valuation.
Whether Nexthink would debut in Europe or the United States is a fun question. Perhaps we’ll find out next year.
And now, to wrap us off, one last insurtech company.
Coalition
Early in the $100 million ARR cycle we inducted Lemonade and MetroMile into the club. Given what we’ve learned about insurance since early 2020 — thank you insurtech for having a bonkers year and making us all learn how loss adjustment expenses figure into loss ratios — we probably would not include them again if we started from the beginning knowing what we know now.
But, that’s not really fair to other players in the space. So, let’s add Coalition to the mix. The startup sells cybersecurity insurance and has “reached $100 million in annualized premium revenue [this fall], up from $50 million a year ago,” according to Forbes.
TechCrunch covered Coalition’s $90 million Series C earlier this year, during which we reported that the “startup told [this publication] that [it] had grown its customer base to 25,000, a figure that was up 600% from ‘the prior year.'”
You can imagine why cyber insurance is having a good year. Cybersecurity is having a great run in 2020, from which we can easily infer a demand for cybersecurity liability protection. In fact I am almost surprised that Coalition didn’t grow its gross written premium run rate by more than 100% in the last year, given what we know about its customer growth.
Regardless, if we are going to add Coalition to the list, Hippo also meets the criteria. So Hippo as well. (You can see why this series never really ends.)
But that’s that. A year and a nearly two weeks after the start. Let’s see what companies we meet next year.