The Great Migration and the next 10-year cycle in cloud

Over the next 24 months, we believe that we will witness a profound migration of senior cloud talent from public and late-stage private SaaS companies to healthy early- to mid-stage companies that offer a more rewarding professional growth opportunity and higher financial return potential.

Here is why:

The party is over

And what a party it was! For well over a decade since the 2008/2009 Great Recession, the cloud market has known only one direction: up and to the right.

Almost without interruption, the market grew, public investors got the hang of SaaS economics, and IPOs became more frequent and more lucrative. That swelled private-market investment activity, valuations and the list of cloud unicorns. The pandemic-induced rush to digital transformation of business, paired with stimulus money and cheap capital, acted as a massive catalyst, causing conditions to become unsustainably frothy in 2020 and 2021.

But since late 2021, public cloud stocks have given up 50% of their combined market capitalization, and the IPO window has all but closed down. Private late-stage companies that took big rounds at high valuations face valuation resets, most of which are only beginning to materialize in their annual 409A FMV assessment cycles.