6 Predictions On Enterprise Software From Scale Venture Partners

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6 Predictions On Enterprise Software From Scale Venture Partners

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1) Markets Prove, it's Time to Trim the Burn in 2016

Rory O’Driscoll, Partner, Scale Venture Partners, @rodriscoll

Two major market shifts that have emerged over the past year that taken together suggest that we need to rethink the bullish approach to burn and valuation. First, a significant rise in the cost of burn required to generate a dollar of revenue growth. Second, a decline in the value attributed to that growth by the capital markets.

The facts have changed, not just in capital markets, but in the markets where businesses buy and sell, and a change in strategy is required. Trimming the burn and having a high bar for spending the marginal dollar is the right choice for many in 2016.

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2) Business Apps Will Get Smarter with Machine Learning

Stacey Bishop, Partner, Scale Venture Partners, @staceycurry

 2016 will see the prevalence of machine learning horizontally applied across enterprise applications. Machine learning isn’t a new concept. Finance, government and pharmaceuticals have long seen the value of using big data to make smarter business decisions. We now see it gaining traction in marketing, sales and HR.

 Why now? Because of a proliferation of data being created, the amount of power able to process that data, and open access through API’s.

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3) Software Moves to Autopilot, the Automation of DevOps

Andy Vitus, Partner, Scale Venture Partners, @avitus

The increasing complexity of software will ultimately require expansive automation. Software has evolved from linear design to much more complex systems driven by: moving from one server to multi-server to multi-datacenter; expanding from single programming language to multiple programming languages; moving from a simple 3 tier stack to a distributed micro-services architecture; deploying servers to deploying servers, mobile and IOT.

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4) APIs – Not Just for Developers Anymore

Cack Wilhelm, Principal, Scale Venture Partners, @cackf

 APIs are at the core of most Web 2.0 and tech-forward businesses today, enabling transparent, always-on, real-time, multi-device communication. APIs are even moving offline with the rise of the Internet of Things. As APIs become a) more prominent, and b) more prolific, the landscape will evolve in 2016. Business-side attention will emerge as stake-holders realize that APIs can enable broader adoption, data-driven partnerships, additional revenue streams, or enrichments to product.

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5) An Uptick In Post-Breach Technology Investment

Ariel Tseitlin, Partner, Scale Venture Partners, @atseitlin

In 2016, expect to see more investments that minimize exposure after a data breach. Post-breach detection has already attracted significant investor funding and high valuations. And the market is consolidating: Microsoft bought Addallom; Splunk’s acquired Caspida and Blue Coat Systems’ took up with Elastica. The market is still ripe for innovation though.

We need better tools that provide guidance on what do instantly after a breach has taken place. Everything from the physical response to process to how and when to notify customers depending on regulatory compliance.

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6) Continued Success of SaaS Sales to SMB

Alexander Niehenke, Principal, Scale Venture Partners, @aniehenke

Square, Shopify, Mindbody, and AppFolio all went public in 2015 with an average deal size less than $10K. This new wave of leaders selling into the SMB is a recent trend with only a few other companies such as ZenDesk (class of 2014) and RingCentral (class of 2013) having success. The enterprise continues to be an incredibly exciting place to build businesses, but new selling techniques and a large universe of software buyers is opening up markets like never before. 2016 will see a number of additional break-out success stories (and hopefully IPOs if the markets hold) in the SMB category.
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