Some Predictions for 2023

90% of these are likely wrong, or too early, but it why not?

Best-of-Breed in the $2-10B range continues to consolidate in PE land.

Contrary to last cycle when these companies ended up with the Oracle, SAP, Salesforce, I believe the only home for majority of best of breed is now private equity. Reason is simple, these companies rely on their neutrality to thrive and have gotten to a size where you cannot build a clear investment case within a strategic.

A few come to mind, focus on having platform potential and high stickiness:

• BlackLine

• Vertex

• Avid Exchange

• Informatica

• New Relic

• Splunk

• Q2

• MeridianLink

Video has to consolidate to survive. Brightcove, Kaltura, Vimeo, On24, Q4 are collectively sitting on ~$1.1B on revenue with an aggregate enterprise value of $850M. None of them are profitable, all chasing similar dollars. None of these guys can credibility create a durable company. For the brave soul who can roll up this space and create some economics of scale, standardize on a go-forward product platform, I think there could be a handsome payoff on the other side of the rainbow.

Public markets realized some categories have been mis-priced on the downside. CPaaS and CCaaS standout to me. But a few others include Telemedicine (I think it scales much better than public markets believe and prove to be more resilient).

The entire sales tools market is fucked. Clari, Gong, Salesloft, People.ai and the gang are never going to grow into their valuation from 2021.

Investors find a better valuation framework to value tech-enabled services. Take a high growth business like Palantir or Elligo (private) that monetize primarily on LT services contracts, is this software? no. is this an accenture? also no. We currently do not have a good framework for valuing high growth services businesses where software is intertwined with delivery. I do believe we will come up with a better short hand for valuing these.

Bonus: China outperforms the US markets in 2023.