Most VCs are saying publicly that they are "open for business," but the truth on the ground is more complicated. It appears that no one wants to try to catch a falling knife, and so many early and mid-stage investors are slowing down if not taking the summer off. We have written a piece, recently highlighted by Momentum Cyber, about why Lytical believes this is a great time to be an early-stage investor. You can find the full article here.
While some may debate the exact definition of a recession and whether we are entering one, it seems clear that people are worried about a slowdown in the US economy. We've been keeping a close eye on sales for our companies, and thus far, we haven't seen any softening in demand for Cybersecurity tools or services. Possibly because cybersecurity is existential to most companies now, but whatever the reason, it continues to allow companies in the sector to meet their growth plans.
We are also gearing up for our annual trip to Las Vegas for the twin conferences of BlackHat and Defcon. While BlackHat is a more standard industry conference focusing on cyber-attackers rather than defenders, DefCon is a bit like Coachella for hackers. Lucas will be judging the BlackHat Innovation Spotlight Competition. KeyCaliber, one of our portfolio companies, made the final four, despite Lucas having to recuse himself from that vote. If you're going to be in town, reach out since we have multiple events you can participate in.
Below are a few of the articles that caught our attention this month. Moreover, we’ve inserted one or two sentences in italics, summarizing each article’s importance. We hope you enjoy and appreciate the material.
Here's a curated list of things we found interesting.
Cybersecurity Market Review from Momentum Cyber
Momentum Cyber has great market data and also featured a report penned by Steve and the Lytical team on why current market conditions are excellent for early-stage investment.
We are pleased to provide you with Momentum's Cybersecurity Market Review for 1H 2022. Strategic activity in the first half of the year included 679 transactions completed totaling $115.1B in deal value across M&A ( 148 transactions, $102.6B) and Financing ( 531 transactions, $12.5B).
Andrew Ng: Farewell, Big Data
While large data sets have led the AI revolution, one of the giants in the space is evangelizing a new way to train models.
Google Brain co-founder and Landing AI founder Andrew Ng has become an evangelist for what he calls the data-centric AI movement. "Collecting more data often helps," he says. "But if you try to collect more data for everything, that can be a very expensive activity."
Cloud Revenue Multiples
We are starting to get good data on the revenue multiples being reset. EV/NMT Rev multiples = 5.7x median. 14.9x average for 24% and 43%, respectively for NTM growth.
Every week I'll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Highlight of the Week - Top 10 EV / NTM Revenue Multiples Top 10 Weekly Share Price Movement Update on Multiples SaaS businesses are valued on a multiple of their revenue - in most cases the projected revenue for the next 12 months.
Deals that caught our eye.
Kaseya closes $6.2 billion Datto deal
Kaseya, a maker of IT service and security management software, announced Thursday that it had finalized its $6.2 billion acquisition of cybersecurity company Datto, promising tight integration between the two companies' products and lower pricing for customers.
Lytical Ventures is a New York City-based venture firm investing in Corporate Intelligence, comprising cybersecurity, data analytics, and artificial intelligence. Lytical’s professionals have decades of experience in direct investing generally and in Corporate Intelligence specifically.