2019 hasn’t been the best year for startup IPOs. Uber, Lyft, and Slack are all tradings below their IPO prices - and let’s not even talk about WeWork.

Startups use a lot of cloud technology providers - including some of the services that have gone public this year. How have startups changed their spending with some of the cloud companies that have gone public in 2019? Let’s cut the data, using this CNBC list of “cloud” companies that have gone public this year - Datadog, Zoom, Slack and Crowdstrike. It’s a somewhat arbitrary list of companies to analyze, but hey, why not?!?

Of the four companies, the startups in our sample set did not use Crowdstrike. This may make sense, and Crowdstrike is more of an enterprise cloud security company and isn’t something many small, early-stage companies might use. Datadog, Zoom, and Slack were all used by the companies that we analyzed, and again this does make sense since all of these have robust SMB product offerings that make sense for the early-stage clients that Kruze has.

 

Our first take away is that all of these IPO’d companies are growing the dollars they earn from early-stage startups. Collectively, our sample of close to 200 funded startups spent over $225,000 in Q3 2019 on cloud software from these 3 companies.  That’s over 4x what was spent in Q3 2017, although the companies in the sample were generally ramping their software spend, so this growth metric needs to be taken with a bit of that context.

More interestingly, the number of companies within the sample set using these software vendors is increasing. You can see that the penetration had gone up significantly for each IPO’d company since 2017 (number of companies paying for the solution / total number of companies in the data set). 

 

Slack, the company with the most penetration, has grown to be paid for by about 60% of startups, a rate that has been relatively steady since 2018. Zoom is clearly the fastest growing of the lot - both in terms of overall revenue and penetration.

We hope this analysis was fun and interesting to you! Let us know what else you’d like us to analyze.

A note on our data

We looked at anonymized spending from approximately 200 VC funded startups. This analysis is not intended to provide any deep insight into how these four public companies are doing; it’s more of a fun exercise. Anyone at our firm may hold a position in this public company stocks.