Battery Ventures Software 2021 Report

Software 2021
Neeraj Agrawal
Brandon Gleklen
Disclaimers
This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with such verbal or written comments, is referred
to herein as the “presentation.” This presentation is being provided for informational purposes only. Nothing herein is or should be construed as investment, legal or tax advice, a
recommendation of any kind or an offer to sell or a solicitation of an offer to buy any security. This presentation does not purport to be complete on any topic addressed. The
information in this presentation is provided to you as of February 24 th, 2021 unless otherwise noted and Battery Ventures does not intend to update the information after its distribution,
even in the event the presentation becomes materially inaccurate. Certain information in this presentation has been obtained from third party sources and, although believed to be
reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Certain logos, tradenam es, trademarks and copyrights included in the
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with Battery Ventures and no claim is made that any such company or person has sponsored or endorsed the use of such logos, trade names, trademarks and copyrights in this
presentation. This presentation includes various examples of companies in which Battery Ventures has invested. These examples are included as illustrations of various investment
strategies. For a complete list of all companies in which Battery Ventures has invested, please visit here. Past performance is not evidence of future results and there can be no
assurance that a particular Battery portfolio company investment will achieve comparable results to any other investment. There can be no assurance that the investment objectives or
the investment strategies described in this presentation will be successful.
The information contained herein is based solely on the opinions of Neeraj Agrawal and Brandon Gleklen and nothing should be construed as investment advice. The anecdotal
examples throughout are intended for an audience of entrepreneurs in their attempt to build cloud-focused businesses and not recommendations or endorsements of any particular
business.
1
This presentation includes proprietary information of Battery Ventures
A decade in software
$2,500,000 6.0%
5.7%
$2T
5.0%
$2,000,000
4.0%
$1,500,000
3.0%
$1,000,000
2.0%
$500,000
1.0%
$- 0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cumulative TEV Software as % of S&P 500
• 2020 is the decade where independent software vendors came into their own. Cumulative TEV grew 2,700% and forward revenue
multiples grew 260%.
Source: Capital IQ
Data as of 12/31/2020 2
The software category grows due to Five Forces
1. Software markets grow over time 2. Software is infiltrating what were once niche markets 3. Software is displacing hardware
4. Software is displacing labor & service 5. Every company is becoming a software company
• Software as a sector has grown due to the Five Forces we’ve described in years past. These were true in the past decade, and we
don’t see them slowing down any time soon.
3
A decade of higher valuations
SaaS Median NTM Revenue Multiple
13.74x
3.17
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• The decade has seen a 10x rise in NTM multiples for SaaS Companies. We exited 2020 at an all-time high.
Source: Capital IQ
Data as of 12/31/2020 4
SaaS valuations grew for five main reasons
1 SaaS was the growth sector of the decade
2 SaaS companies have proven they can drive significant leverage at scale
3 Multiple categories within SaaS support large independent outcomes
4 SaaS companies perform through market cycles
5 Better understanding of the SaaS model
5
1 SaaS was the growth sector of the decade
50%
44%
41%
39% 40%
40%
33% 34% 33% 33%
32%
29%
30%
20%
16%
11% 10%
9% 9% 9%
10%
6% 6%
2%
0%
-2%
-10%
-20%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
S&P 500 S&P Healthcare S&P Energy S&P Consumer Staples S&P Utilities S&P Communication Services Software
• Software was a top growth industry in the past decade. In 2020, software companies grew 30% while the overall S&P 500
struggled.
Source: Capital IQ
Data as of 12/31/2020 6
2 SaaS companies have proven they can drive significant leverage at scale
$30,000 16.0x
$24B in FCF 14.0x

$25,000 2011: $253M FCF
2020: $4.84B FCF
12.0x
$20,000
10.0x
$15,000 8.0x
2011: $1.2B FCF
2020: $5.0B FCF
6.0x
$10,000
4.0x
$5,000
2.0x 2013: $49M FCF
2020: $800M FCF
$- 0.0x
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Cumulative FCF NTM Multiple
• There are several ready examples of software companies driving significant leverage at scale, with 11 SaaS companies producing
greater than $500M in free cash flow.
Source: Capital IQ
Data as of 12/31/2020
7
Note: Acquired companies are held at constant value of acquisition price
3 Multiple categories within SaaS support large independent outcomes
Revenue at IPO Revenue Today Revenue at IPO Revenue Today
$244M $73M
$4,477M $730M
(2012) (2011)
$274M $106M
$4,302M (2012)
$1,044M
(2012)
$205M $127M
$2,853M (2014)
$1,024M
(2015)
$80M $116M
$976M (2014)
$868M
(2013)
* $199M $161M
(2012)
$2,163M (2013) $1,166M
• Software has proven to be a diverse category that can support many large companies, and historically most revenue growth has
happened post-IPO. The decade has seen an 11x rise in software companies valued over $1B, and a 10x rise in companies valued
over $5B.
Source: Capital IQ
Data as of 12/31/2020 8
* Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns.
This presentation includes proprietary information of Battery Ventures For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
4 SaaS companies perform though market cycles
100% 20%
91%
89% 89%
90% 85% 18% 18%
83% 82% 82%
81%
80% 16% Q2 2020 Average Beat/Miss
15% 74% 15%
72%
14% 69%
70% 14%
Software S&P 500
12%
60% 12%
11%
12%
5.2% 1.6%
11% 11%
50% 10% 10% 10%
40% 8% 8% Q3 2020 Average Beat/Miss

31%
28%
30% 26% 6%
5% 5% 5% Software S&P 500
4% 19% 18% 18%
20%
3% 15%
17%
4% 4% 4% 4%
4% 8.2% 2.6%
11% 11% 3%
9%
10% 2%
0% 0%
Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020
Beat Estimates Missed Estimates Average Beat/Miss Top Decile Beat/Miss
• The number of SaaS companies to miss estimates nearly doubled year-over-year in Q2 2020. Still, the average beat/miss
outpaced the S&P 500 more than threefold that quarter.
• In Q3 2020, the S&P 500 reported an average 2.6% beat/miss, well above the 5-year average of 0.7%. This marked the largest
revenue surprise percentage reported by the index since 2008. Still, Software outpaced the index more than threefold that quarter.
Source: Capital IQ, FactSet

Data as of 12/31/2020 9
5 Better understanding of the SaaS model
Traditional GAAP Metrics
• Revenue
• Gross Profit
• Billings
• Bookings
• EBITDA
SaaS Metrics
• ARR
• Net Add
• Gross Add
• ACV and TCV Bookings
• ARPU
• Annualized Net Dollar Retention
• Annualized Gross Dollar Retention
• Annualized Gross Logo Retention
• Lifetime Value (LTV)
• CAC
• Magic Number
• The SaaS business model required a new language for understanding these businesses. Thankfully for CEOs and investors alike,
there is now less confusion on the difference between ARR, Bookings, Billings, and Revenue.
10
The Metric Monolith…
Net Retention = 120%+
Gross Margin = 70%+ Gross Retention = 90%+
ASP = $30K+ Recurring Revenue = 90%+
ARR Add / Burn = 1+ Magic Number = 1.0x+
• Our better understanding of SaaS metrics created a general market consensus for what a great SaaS business should look like.
We think of this internally as the “Metric Monolith.”
11
… is falling apart
ARR Add / Burn = 1+
• But this monolith is breaking apart piece by piece due to two of the most impactful drivers of new value creation today: machine
learning and product-led growth.
12
The Metric Monolith is falling apart
ML / data-centric Churn may be higher for certain product-led
businesses have high businesses, but break-even on these
COGS early on but gain customers also happens sooner.
operating leverage with
scale.
Consumption-based
pricing, payments, and
Product-led growth SaaS-enabled
unlocks lower price marketplaces break this
points. model, as do ML
companies where upfront
services may be high.
The right burn level is
company specific and
should factor in dynamics
like competitive
S&M expense as a
landscape and cost of measure of efficiency
capital. R&D Intensive isn’t comprehensive
products trade off higher for product-led
burn early for greater companies
technical moats later.
• But this monolith is breaking apart piece by piece due to two of the most impactful drivers of new value creation today: machine
learning and product-led growth.
13
There’s an expansion of playbooks, not a new model everyone has to switch to
Metric Monolith Era Multi-Playbook Era
GTM Top-Down Sales Top-Down Sales, Bottoms-Up Adoption, Channel-Centric
Business Model Recurring Revenue Recurring Revenue, Take Rate, Consumption, Payments
Interface Model Preference for “Workflow” “Workflow”, Headless, X-as-code
How to Pay Invoice Invoice, Credit Card Swipe
Geo Start Local Start Local, Start Global
Champion One Economic Buyer One Economic Buyer, Land Anywhere and Expand
Product Find PMF before Act Two Find PMF before Act Two, Product Suite on Day One
Team-Building Office Office, Remote, Hybrid
• Companies that fit the Metric Monolith are still great companies! Big deals, sticky recurring revenue, and great efficiency will never
go out of style, but there are now more ways to achieve multi-billion-dollar outcomes.
Source: Internal Battery research. Examples given are illustrative. 14

Examples of public companies outside the Metric Monolith
Lower Gross Margins Lower ASP
Gross Margin: 60% Gross Margin: 52% Gross Margin: 61% ASP: $5,700 ASP: $2,500 ASP: $2,300
NTM Multiple: 100x NTM Multiple: 25x NTM Multiple: 30x NTM Multiple: 11x NTM Multiple: 20x NTM Multiple: 38x
Not fully recurring Lower Retention
% recurring: 64% % recurring: 79% % recurring: 42% Net Retention: 99% Net Retention: >99% Net Retention: >92%
NTM Multiple: 36x NTM Multiple: 29x NTM Multiple: 21x NTM Multiple: 19x NTM Multiple: 25x NTM Multiple: 17x
• There are public companies that don’t fit into this monolith already, and we see several companies that are “next in line” that break
the traditional SaaS metric mold as well.
Source: Capital IQ, Company 10K, and Company S-1s

Data as of 12/31/2020
* Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. 15
For a complete list of Battery Ventures’ investments, please visit our website: https://www.battery.com/
Where do we go
from here?
16
Transition from averages to cohorts
By Pricing Plan
By Industry
ARR per customer

Lifetime Value By Geo
Average Net Retention

Gross Retention By Product Mix
Customer Acquisition Cost
Etc.
By Go-To-Market Channel
By Number of Users
By Customer Headcount
• Average-based metrics are misleading for modern cloud companies that have access to more diverse GTM strategies and
customer bases than ever before. The best companies strictly define customer segments, track them, and invest into the best
ones.

Cohorts may sound simple but they’re complicated!
Situation Possible Cohorts
Customer starts a free trial in January and converts to paid in

January cohort, February cohort
February
Customer starts a free trial and converts to paid. An AE did a

30-minute demo with them when asked, but otherwise there Self-serve, Sales-touched
was no assistance.
Independent entity of a larger company signs a contract.

100-250 employees, 1000+
Independent entity has 225 employees; larger entity has 1500.
A remote company becomes a customer. They are nominally

USA, EMEA
based in NYC, but your champion is based in Poland.
A company does a free trial with 10 seats; converts to paid with

Initial seat count: 0-10, 10-20, 20-30
15 seats; at 25 seats by the end of the first month.
Sales team at a company adopts a product self-serve, and then

Sales org, HR org, org-wide
the HR team adopts separately; unclear if they know about each
(one customer or two?)
other
• Figuring out which customers fit which cohorts is harder than it might appear (the examples above are based on true stories!).
What is important is not how you define the cohorts, but that you establish rules and are consistent over time. It is much easier to
set this up early than implement in retrospect.

Transition from SaaS Metrics to Cohort Economics
Traditional GAAP Metrics Cohort Economics
• Revenue • Cohorts by Customer Type
• Gross Profit • Cohorted LTV (“Realized LTV”)
• Billings • Cohorted CAC Payback
• Bookings • Annuity Graph
• EBITDA
SaaS Metrics
• ARR
• Net Add
• Gross Add
• ACV and TCV Bookings
• ARPU
• Annualized Net Dollar Retention
• Annualized Gross Dollar Retention
• Annualized Gross Logo Retention
• Lifetime Value
• CAC
• Magic Number
• SaaS Metrics are not going away, much like GAAP hasn’t gone away. But we predict that in the new decade, much more attention
will be paid towards cohort economics.

Cohorts by Customer Type
Retention Cohorts by Customer Type
Overall Annualized Retention
Cohort by Geo
Q1-2020 Q2-2020 Q3-2020 Q4-2020 Cohort Value – Geo X Quarter
Cohort Starting ARR Today 0 1 2 3 4 5 6 7 8 9 10 11
Annualized Gross $ Retention 80% 75% 79% 84% Q1-2018

Q2-2018
$50,000
$700,654
$65,500
$742,693
100%
100%
104%
98%
105%
101%
110%
103%
113%
96%
112%
95%
116%
102%
118%
103%
121%
101%
130%
99%
115%
106%
131%
Q3-2018 $500,036 $595,043 100% 95% 96% 88% 110% 112% 105% 100% 70% 119%
Annualized Net $ Retention 104% 98% 102% 110% Q4-2018

Q1-2019
$400,005
$351,364
$500,006
$372,446
100%
100%
115%
102%
120%
99%
135%
98%
125%
101%
139%
105%
140%
99%
110%
106%
125%
Q2-2019 $115,463 $148,947 100% 109% 112% 116% 148% 126% 129%
Q3-2019 $153,541 $138,187 100% 102% 100% 70% 80% 90%
Q4-2019 $356,496 $213,898 100% 40% 40% 50% 60%
Q1-2020 $1,005,416 $1,065,741 100% 100% 120% 106%
Q2-2020 $162,684 $178,952 100% 94% 110%
Q3-2020 $139,450 $158,973 100% 114%
Q4-2020 $118,948 $118,948 100%
Total $4,054,057 $4,299,334
Avg. 100% 98% 100% 97% 104% 111% 115% 107% 104% 116% 111% 131%
Med. 100% 102% 103% 103% 106% 112% 111% 106% 111% 119% 111% 131%
Weighted Avg. 100% 93% 96% 93% 99% 111% 116% 107% 104% 113% 109% 131%
Cohort by Original Pricing Plan

Cohort Value – Y Pricing Plan Quarter
Cohort Starting ARR Today 0 1 2 3 4 5 6 7 8 9 10 11
Q1-2018 $60,541 $9,081 100% 70% 60% 55% 43% 112% 35% 20% 15% 14% 13% 15%
Retention Cohorts Q2-2018

Q3-2018
Q4-2018
$164,925
$159,489
$300,564
$214,403
$189,792
$375,705
100%
100%
100%
98%
95%
115%
101%
96%
120%
103%
88%
135%
96%
110%
125%
95%
112%
139%
102%
105%
140%
160%
60%
110%
120%
70%
125%
125%
119%
130%
Q1-2019 $13,658 $14,477 100% 102% 99% 98% 101% 85% 99% 106%
Q2-2019 $135,249 $186,644 100% 109% 112% 116% 148% 126% 138%
Cohort Value Quarter Q3-2019 $206,549 $185,894 100% 102% 100% 90% 110% 90%
Q4-2019 $306,548 $613,096 100% 110% 120% 180% 200%
Q1-2020 $406,545 $430,938 100% 100% 160% 106%
Cohort Starting ARR Today 0 1 2 3 4 5 6 7 8 9 10 11 Q2-2020 $196,490 $216,139 100% 90% 110%
Q3-2020 $164,894 $187,979 100% 114%
Q1-2018 $205,106 $254,331 100% 104% 105% 110% 113% 112% 116% 118% 121% 122% 115% 124% Q4-2020 $301,586 $301,586 100%
Q2-2018 $1,896,554 $2,010,347 100% 98% 101% 103% 96% 95% 102% 103% 101% 99% 106% Total $2,417,038 $2,925,734
Q3-2018 $863,245 $448,887 100% 95% 96% 88% 86% 84% 84% 81% 50% 52% Avg. 100% 101% 108% 108% 117% 108% 103% 91% 83% 86% 72% 15%
Med. 100% 102% 106% 103% 110% 112% 104% 106% 95% 119% 72% 15%
Q4-2018 $1,002,669 $1,163,096 100% 103% 114% 109% 108% 109% 110% 107% 116% Weighted Avg. 100% 101% 111% 116% 127% 109% 106% 99% 89% 94% 87% 15%
Q1-2019 $478,652 $507,371 100% 102% 99% 98% 101% 105% 99% 106%
Q2-2019 $802,669 $1,035,443 100% 109% 112% 116% 148% 126% 129%
Q3-2019 $628,123 $716,060 100% 102% 98% 116% 105% 114% Cohort by Customer Industry
Q4-2019 $1,296,365 $1,644,983 100% 105% 111% 96% 120% Cohort Value – Z Industry Quarter
Q1-2020 $1,857,566 $1,969,020 100% 104% 98% 106% Cohort Starting ARR Today 0 1 2 3 4 5 6 7 8 9 10 11
Q1-2018 $106,496 $212,992 100% 120% 115% 116% 118% 150% 135% 136% 137% 140% 180% 200%
Q2-2020 $985,668 $1,084,235 100% 94% 110% Q2-2018 $300,654 $390,850 100% 98% 101% 103% 96% 95% 102% 160% 120% 125% 130%
Q3-2018 $604,185 $718,980 100% 95% 96% 88% 110% 112% 105% 120% 118% 119%
Q3-2020 $935,648 $1,066,639 100% 114% Q4-2018 $126,498 $158,123 100% 115% 120% 135% 125% 139% 140% 110% 125%
Q1-2019 $406,543 $691,123 100% 102% 99% 98% 101% 190% 180% 170%
Q4-2020 $586,552 $586,552 100% Q2-2019 $605,163 $835,125 100% 109% 112% 116% 148% 126% 138%
Q3-2019 $205,468 $184,921 100% 102% 100% 90% 110% 90%
Total $11,538,817 $12,486,965 Q4-2019 $305,135 $335,649 100% 110% 108% 105% 110%
Q1-2020 $606,548 $642,941 100% 100% 100% 106%
Q2-2020 $706,423 $777,065 100% 110% 110%
Avg. 100% 103% 104% 105% 110% 106% 107% 103% 97% 91% 111% 124% Q3-2020 $302,459 $344,803 100% 114%
Q4-2020 $406,547 $406,547 100%
Med. 100% 103% 103% 106% 107% 109% 106% 106% 109% 99% 111% 124% Total $4,682,119 $5,699,119
Weighted Avg. 100% 103% 105% 104% 111% 106% 107% 102% 97% 91% 109% 124% Avg. 100% 107% 106% 106% 115% 129% 133% 139% 125% 128% 155% 200%
Med. 100% 109% 105% 105% 110% 126% 137% 136% 123% 125% 155% 200%
Weighted Avg. 100% 107% 106% 106% 114% 122% 127% 138% 124% 127% 149% 200%
• This past decade saw a shift in understanding of retention from a single point metric to a figure best understood through cohorts.
• Different segments may behave very differently and averaging across segments can be very misleading.
Source: Sample data; not to be taken as representative of any particular company. 20

Cohorted LTV (“Realized LTV”)
Cumulative Gross Margin-Weighted Profit Per Customer

Starting Realized
Cohort Average Customer M0 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21
MRR LTV
May-19 $427 $9,979 $389 $798 $1,206 $1,610 $2,030 $2,456 $2,912 $3,366 $3,847 $4,311 $4,733 $5,210 $5,693 $6,159 $6,630 $7,113 $7,584 $8,056 $8,533 $9,020 $9,502 $9,979
Jun-19 $670 $13,028 $610 $1,214 $1,831 $2,424 $2,984 $3,551 $4,180 $4,802 $5,431 $6,022 $6,633 $7,272 $7,919 $8,544 $9,177 $9,823 $10,456 $11,088 $11,728 $12,382 $13,028 $0
Jul-19 $807 $9,684 $735 $1,440 $2,146 $2,757 $3,361 $3,965 $4,589 $5,177 $5,553 $5,926 $6,287 $6,665 $7,047 $7,417 $7,790 $8,172 $8,546 $8,920 $9,298 $9,684 $0 $0
Aug-19 $631 $12,099 $575 $1,185 $1,840 $2,431 $3,025 $3,637 $4,276 $4,884 $5,565 $6,217 $6,847 $7,506 $8,173 $8,817 $9,469 $10,136 $10,788 $11,440 $12,099 $0 $0 $0
Sep-19 $596 $9,608 $542 $1,090 $1,632 $2,144 $2,663 $3,193 $3,741 $4,277 $4,831 $5,361 $5,873 $6,409 $6,952 $7,476 $8,006 $8,548 $9,078 $9,608 $0 $0 $0 $0
Oct-19 $923 $14,060 $840 $1,688 $2,528 $3,321 $4,124 $4,945 $5,794 $6,624 $7,482 $8,303 $9,097 $9,927 $10,767 $11,578 $12,399 $13,239 $14,060 $0 $0 $0 $0 $0
Nov-19 $941 $13,504 $856 $1,722 $2,579 $3,388 $4,207 $5,044 $5,910 $6,757 $7,632 $8,470 $9,279 $10,126 $10,982 $11,810 $12,648 $13,504 $0 $0 $0 $0 $0 $0
Dec-19 $699 $9,393 $636 $1,279 $1,915 $2,516 $3,124 $3,746 $4,389 $5,018 $5,668 $6,290 $6,891 $7,520 $8,156 $8,771 $9,393 $0 $0 $0 $0 $0 $0 $0
Jan-20 $731 $9,169 $665 $1,337 $2,002 $2,630 $3,266 $3,916 $4,588 $5,245 $5,925 $6,575 $7,203 $7,861 $8,526 $9,169 $0 $0 $0 $0 $0 $0 $0 $0
Feb-20 $750 $8,754 $683 $1,373 $2,055 $2,701 $3,353 $4,021 $4,711 $5,386 $6,084 $6,751 $7,396 $8,072 $8,754 $0 $0 $0 $0 $0 $0 $0 $0 $0
Mar-20 $890 $10,857 $810 $1,662 $2,513 $3,355 $4,231 $5,118 $6,068 $7,014 $8,016 $8,983 $9,863 $10,857 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Apr-20 $864 $8,547 $786 $1,565 $2,359 $3,124 $3,846 $4,576 $5,386 $6,187 $6,999 $7,760 $8,547 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
May-20 $888 $6,517 $808 $1,584 $2,359 $3,031 $3,696 $4,359 $5,046 $5,693 $6,106 $6,517 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Jun-20 $853 $7,515 $776 $1,600 $2,484 $3,283 $4,084 $4,912 $5,774 $6,595 $7,515 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Jul-20 $944 $6,863 $859 $1,745 $2,595 $3,391 $4,221 $5,103 $5,963 $6,863 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Aug-20 $930 $6,833 $847 $1,780 $2,728 $3,608 $4,739 $5,729 $6,833 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Sep-20 $933 $5,375 $849 $1,725 $2,558 $3,575 $4,428 $5,375 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Oct-20 $978 $4,764 $890 $1,834 $2,877 $3,685 $4,764 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Nov-20 $939 $3,446 $854 $1,753 $2,590 $3,446 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Dec-20 $818 $2,272 $745 $1,453 $2,272 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Jan-21 $1,061 $2,079 $966 $2,079 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Feb-21 $969 $882 $882 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
• Instead of thinking about LTV in averages, “Real LTV” drills into the gross profit contributions of each customer by cohort. Since we
know that starting MRR and retention can vary by cohorts, we look at the cumulative gross margin-weighted profit contribution for
each customer by cohort.
• Link to downloadable Google Sheet

Cohorted CAC Payback
Individual Cohort:
May-19 Cohort M0 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12
S&M $119,560
Customers Acquired 40
New ARR $205,106
Net $ Retention in that month 100% 104% 105% 110% 113% 112% 116% 118% 121% 122% 115% 124% 124%
Overall Gross Margin % 91% 92% 91% 86% 87% 89% 92% 90% 93% 89% 86% 90% 92%
% Paid Back 13% 27% 40% 54% 68% 82% 97% 113% 129% 144% 158% 174% 190%
Cohorts over time:

When CAC is being paid back
How speed of payback is evolving
Cohort:
May-19
M0
13%
M1
27%
M2
40%
M3
54%
M4
68%
M5
82%
M6
97%
M7
113%
M8
129%
M9
144%
M10
158%
M11
174%
M12
190%
Each cell calculated as:
Jun-19 14% 27% 41% 55% 67% 80% 94% 108% 122% 135% 149% 164% 178%
Jul-19 18% 36% 54% 69% 84% 99% 115% 130% 139% 149% 158% 167% 177%
Aug-19 15% 30% 46% 61% 76% 92% 108% 123% 141% 157% 173% 190% 206%
Sep-19 13% 27% 40% 53% 66% 79% 92% 106% 119% 132% 145% 158% 172%
Oct-19 16% 32% 48% 63% 78% 94% 110% 126% 142% 157% 172% 188% 204% (Cohort Starting ARR
Nov-19 19% 38% 57% 75% 94% 112% 132% 151% 170% 189% 207% 226% 245%
Dec-19 17% 34% 51% 67% 83% 100% 117% 134% 151% 167% 183% 200% 217% x Cohort Net Retention in that
Jan-20
Feb-20
19%
19%
38%
39%
57%
58%
74%
76%
92%
94%
111%
113%
130%
132%
148%
151%
168%
171%
186%
190%
204%
208%
223%
227%
241%
246%
month
Mar-20
Apr-20
17%
11%
34%
21%
52%
32%
69%
43%
87%
52%
106%
62%
125%
73%
145%
84%
165%
95%
185%
106%
203%
117%
224%
0%
0%
0%
x Gross Margin % in that month)
May-20 9% 18% 26% 34% 41% 49% 57% 64% 68% 73% 0% 0% 0% / S&M attributed to that cohort
Jun-20 7% 15% 23% 30% 37% 45% 53% 60% 69% 0% 0% 0% 0%
Jul-20 8% 17% 25% 32% 40% 49% 57% 66% 0% 0% 0% 0% 0%
Aug-20 10% 22% 33% 44% 58% 70% 83% 0% 0% 0% 0% 0% 0%
Sep-20 13% 25% 38% 53% 65% 79% 0% 0% 0% 0% 0% 0% 0%
Oct-20 9% 19% 29% 38% 49% 0% 0% 0% 0% 0% 0% 0% 0%
Nov-20 10% 20% 29% 39% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Dec-20 5% 10% 15% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Jan-21 18% 38% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Feb-21 12% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
• Instead of thinking about CAC Payback in terms of assumptions or averages, Cohorted CAC Payback drills into a company’s unit
economics at a specific cohort level. This is important when thinking about improving unit efficiency over time via the levers of
acquisition cost, pricing, gross margins, and retention.

Bottoms-Up Sales Model
SaaS Subscriptions as Annuities Quick payback, lower retention
Traditional Sales Model Sample companies:
24+ month payback, stable annuity
Sample companies:
- Cash +
*
Short/Medium payback, fast in-account growth
Sample companies:
*
*
Time
• It has become common to think about subscription contracts as annuities with an upfront cost. A traditional sales model makes the
curve on the left the only attractive model (due to longer payback), but bottoms-up selling creates annuities that may look very
different but have compelling economics nonetheless.
Source: Capital IQ and Company S-1 Filings
Data as of 12/31/2020 23
Annuity Graph
$100,000
$80,000 Potential Insights

(Cumulative Gross Profit – CAC) per customer segment per cohort month
• Enterprise customers have the highest CAC and
longest payback period, but also have the
$60,000
highest LTV.
$40,000 • The European segment has lower CAC than the

Enterprise segment and payback is faster, but
LTV is lower. The slope of their line suggests
$20,000 lower net retention then Enterprise.
• Self-Serve customers have the lowest CAC and

$-
quickest payback, but Realized LTV quickly
M M2 M4 M6 M8 M10 M12 M14 M16 M18 M20 M22 M24 M26 M28 M30 M32 M34 M36
levels off, suggesting high churn.
$(20,000)
$(40,000)
$(60,000) Example Cohorts:

Self-Serve Only European Customers 251-1K Employees (Clearbit) …Etc.
• The Annuity Graph combines Realized LTV (cumulative gross profit) and CAC Payback to give a view of the health of different
cohorts. Each of the cohorts above have different tradeoffs, and it is important to be thoughtful around which ones to invest in.

The Public Market
25
A Decade in Software – top 10 share price performers each year
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
OpenTable 191% HealthStream 220% 8x8 142% Xero 453% Qualys 69% Five9 110% Wix 109% Shopify 158% Twilio 302% Shopify 198% Fastly* 407%
LogMeIn 149% SPS Commerce 102% Medidata 89% Responsys 450% Proofpoint 49% HubSpot 81% Mimecast 93% RingCentral 147% MongoDB 191% Avalara * 160% Zoom 399%
Salesforce 112% NetSuite 66% LinkedIn 88% Medidata 208% LogMeIn 49% RingCentral 64% Stride 89% LogMeIn 142% Okta 160% Coupa* 146% Cloudflare 354%
Ariba 108% 8x8 66% MedAssets 88% Proofpoint 195% Tableau 30% Paylocity 57% Amber 82% 2U 139% Alteryx 147% RingCentral 119% Zscaler 347%
SuccessFactors 99% SuccessFactors 51% NetSuite 84% Demandware 167% ServiceNow 23% Paycom 57% Shopify 79% New Relic 115% Coupa 115% Paycom 116% Appian 344%
ConstantContact 92% NIC 47% salesforce 76% Splunk * 139% ConstantContact 23% 2U 56% Five9 72% Qualys 99% Everbridge 109% Anaplan 112% CrowdStrike 334%
Kenexa 75% Kenexa 46% SPS 69% ConstantContact 134% Intuit 21% MedAssets 56% AppFolio 66% HubSpot 96% Atlassian 104% Ceridian 106% Bill.com 302%
Ultimate 72% Ultimate 45% Cornerstone 67% LiveRamp 122% Adobe 21% Blackbaud 55% IntraLinks 51% Atlassian 92% SendGrid 93% Paylocity 103% Twilio 287%
HealthStream 71% Bottomline 39% athenahealth 60% IntraLinks 108% Blackbaud 16% Q2 Holdings 52% LogMeIn 45% Five9 82% Five9 83% Smartsheet 97% Lightspeed 245%
NetSuite 66% Dealertrack 37% Ultimate 49% LinkedIn 102% Dealertrack 11% Fleetmatics 44% Veeva 43% ServiceNow 82% Zendesk 82% Xero 94% Domo 227%
Companies who have been “top ten performers” this decade at least three times
• On average, SaaS stocks have appreciated by 27% each year this decade.
Source: Capital IQ
Data as of 12/31/2020
26
30%
50%
70%
90%
10%
-70%
-10%
110%
300%
320%
Zoom
Snowflake
Agora
Shopify
Crowdstrike
Datadog *
Lightspeed POS
ZoomInfo
Asana
Twilio
Docusign
Zscaler
nCino
Jfrog*
Elastic
Slack
Bandwidth
Okta
Unity
Smartsheet
MongoDB
Coupa*
2U
Everbridge
Bigcommerce
Bill.com
Veeva
Sumologic *
ServiceNow
RingCentral
Jamf *
Five9
Wix
Sprout Social
Avalara*
Q2 Holdings*
Anaplan
HubSpot
PagerDuty
• On average, software revenue growth was slower in 2019...

Cornerstone
Dynatrace
Xero
Zendesk
Atlassian
LivePerson
NIC
salesforce.com
Tenable
Pluralsight
SurveyMonkey
Duck Creek
AppFolio
Revenue growth was down in 2020 generally…
8x8
Blackline
Domo
Workday
Mimecast
Medallia
Yext
Proofpoint
RealPage *
Workiva
Alteryx
Dropbox
Vertex
Adobe
Talend
New Relic
Appian
Intuit
Year
2020
2019
2018
Paycom
Qualys
Paylocity
Datto
SPS Commerce
Box
ChannelAdvisor
Zuora
Bentley Systems
Guidewire *
29.1%
34.1%
35.9%
Brightcove
Vonage
Bottomline
Ping Identity
YoY Rev. Growth
Blackbaud
Castlight Health
Healthstream
Splunk *
Benefitfocus
Source: Capital IQ
Data as of 12/31/2020
2020
2019
2018
Eventbrite
27
30%
50%
70%
90%
10%
-70%
-10%
110%
300%
320%
Zoom
Snowflake
Agora
Shopify
Crowdstrike
Datadog *
Lightspeed POS
ZoomInfo
Asana
Twilio
Docusign
Zscaler
nCino
Jfrog*
Elastic
Slack
Bandwidth
Okta
Unity
Smartsheet
MongoDB
Coupa*
2U
Everbridge
Bigcommerce
Bill.com
Veeva
Sumologic *
ServiceNow
RingCentral
Jamf *
Five9
Wix
Sprout Social
Avalara*
Q2 Holdings*
Anaplan
HubSpot
PagerDuty
Cornerstone
Dynatrace
Xero
Zendesk
Atlassian
LivePerson
NIC
salesforce.com
Tenable
Pluralsight
SurveyMonkey
Duck Creek
AppFolio
8x8
Blackline
Domo
Workday
• …But when growth rate is weighted by revenue, revenue growth was higher in 2020.
Mimecast
Medallia
Yext
Proofpoint
RealPage *
…But revenue growth was up for the largest companies
Workiva
Alteryx
Dropbox
Vertex
Adobe
Talend
New Relic
Appian
Intuit
Year
2020
2019
2018
Paycom
Qualys
Paylocity
Datto
SPS Commerce
Box
ChannelAdvisor
Zuora
Bentley Systems
Guidewire *
31.5%
29.0%
28.6%
Brightcove
Vonage
Bottomline
Ping Identity
Blackbaud
YoY Rev. Wtd. Growth
Castlight Health
Healthstream
Splunk *
Benefitfocus
Source: Capital IQ
Data as of 12/31/2020
2018
2019
2020
Eventbrite
28
10%
50%
70%
90%
30%
-70%
-10%
110%
300%
320%
Zoom
Snowflake
Agora
Shopify
Crowdstrike
Datadog *
Lightspeed POS
ZoomInfo
Asana
Twilio
Docusign
Zscaler
nCino
Jfrog *
Elastic
Slack
Bandwidth
Okta
Unity
Smartsheet
MongoDB
Coupa *
2U
Everbridge
Bigcommerce
Bill.com
Veeva
Sumologic *
ServiceNow
RingCentral
Jamf *
Five9
Wix
Sprout Social
Avalara *
Q2 Holdings
Anaplan
*
HubSpot
PagerDuty
Cornerstone
Dynatrace
Xero
Zendesk
Atlassian
LivePerson
NIC
salesforce.com
Tenable
Pluralsight
SurveyMonkey
Duck Creek
AppFolio
8x8
Blackline
Domo
Workday
Mimecast
Medallia
Yext
Proofpoint
RealPage *
And a handful of companies saw revenue re-accelerate
Workiva
Alteryx
Dropbox
Vertex
Adobe
Talend
New Relic
Appian
year-over-year. Many of those companies were already among the fastest growing software businesses.
Intuit
Paycom
Qualys
Paylocity
Datto
SPS Commerce
Box
ChannelAdvisor
Zuora
Bentley Systems
Guidewire * *
Brightcove
Vonage
Bottomline
Ping Identity
Blackbaud
Castlight Health
• Typically, growth slows down as a business gets larger and more mature. In 2020, a handful of companies saw revenue accelerate
Healthstream
Splunk *
Benefitfocus
Source: Capital IQ
Data as of 12/31/2020
Eventbrite
29
SaaS companies are well outpacing broad-based indices
Indexed stock price since 2008
800%
700% 676%
600%
500%
486%
400%
300%
256%
200% 231%
100%
0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
SaaS Index S&P 500 Nasdaq Dow Jones
• While the typical market indices are significantly up since 2008, an index of SaaS companies has outperformed all of them by more
than 3x in the same period (up 676% since 2008).
Source: Capital IQ
Data as of 12/31/2020 30
SaaS multiples recently traded up to an all-time high
Median NTM Revenue Multiple
16x
13.74x
14x
12x
10x
8x
6x
4x
2x
0x
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• The decade has seen a 10x rise in NTM multiples for SaaS Companies. We exited 2020 at an all-time high.
Source: Capital IQ
Data as of 12/31/2020 31
Multiples expand across the board
40x
Median NTM Revenue Multiple
35x 2018 2019 2020 YoY Delta
All 6.10x 8.09x 13.74x +5.6x

30x 28.08x
High Growth (>30%) 13.47x 14.71x 28.08x +13.4x
25x Mid Growth (15-30%) 7.53x 8.89x 17.61x +8.7x
Low Growth (<15%) 4.87x 5.61x 6.94x +1.3x

20x
17.72x
15x
13.74x
10x
6.94x
5x
0x
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
All Public Companies High Growth (>30%) Mid Growth (15-30%) Low Growth (<15%)
• Multiples are growing across revenue bands, but high growth companies have seen the most multiple appreciation.
Source: Capital IQ
Data as of 12/31/2020 32
Multiples expand even more for the largest companies
25x
Median NTM Revenue Multiple 23.74x
2018 2019 2020 YoY Delta
20x Equally Weighted 6.10x 8.09x 13.74x +5.6
TEV Weighted 8.65x 11.45x 23.74x +12.3
15x
13.74x
10x
5x
0x
Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
Equally Weighted TEV Weighted
• TEV-weighted multiples are expanding even faster (in other words, multiples are growing faster for larger companies).
Source: Capital IQ
Data as of 12/31/2020 33
Multiples are expanding across the growth spectrum
NTM Revenue Multiple
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
<10% 3.0x 3.1x 4.3x 3.8x 2.9x 2.5x 2.9x 3.3x 4.3x 6.9x
10-20% 3.7x 3.6x 5.0x 3.5x 3.9x 4.2x 5.3x 5.2x 6.0x 12.5x
20-30% 5.4x 5.6x 7.7x 5.1x 5.6x 4.9x 7.9x 7.8x 9.1x 15.8x
30-40% 4.7x 6.2x 9.5x 8.1x 7.1x 6.6x 8.6x 9.1x 11.1x 33.0x
40%+ 6.0x 14.2x 20.5x 11.2x 8.8x 7.1x 8.4x 12.0x 19.0x 39.9x
Number of SaaS companies by band
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
<10% 1 4 3 6 13 12 12 9 10 13
10-20% 9 10 11 11 9 6 12 12 13 22
20-30% 9 13 18 15 15 22 10 21 20 27
30-40% 5 7 8 11 11 13 19 21 16 9
40%+ 8 8 11 16 17 12 11 13 18 20
• SaaS multiples have grown consistently year over year across the same bands of growth. The average revenue
multiple for the <10% band in 2020 surpassed the average revenue multiple for 40%+ growth companies in 2011.
Source: Capital IQ
Data as of 12/31/2020 34
Public markets have shifted back to rewarding growth > growth + profitability
LTM Revenue Growth LTM Growth + Unlevered FCF Margin

120.0x 120.0x
100.0x 100.0x
TEV / LTM Rev

80.0x 80.0x
TEV / LTM Rev
R² = 0.4648
60.0x
60.0x
R² = 0.1565
40.0x
40.0x
20.0x
20.0x
0.0x
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 0.0x
0% 20% 40% 60% 80% 100% 120%
-20.0x
LTM Rev Growth LTM Rev Growth + UFCF
Correlation and Interest Rates

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Growth R^2 0.12 0.03 0.36 0.27 0.63 0.48 0.44 0.39 0.42 0.52 0.51 0.46 0.47
Growth + UFCF R^2 0.10 0.11 0.37 0.29 0.57 0.50 0.47 0.58 0.62 0.60 0.58 0.51 0.16
10-year Treasury 2.3% 3.9% 3.3% 1.9% 1.8% 3.0% 2.2% 2.3% 2.4% 2.4% 2.7% 1.9% 0.9%
• This year saw the reversal of a trend that has held true since 2012: growth + profitability is more valuable than growth alone. Many
factors go into this, but one worth calling out is that borrowing against future earnings has never been cheaper.
Source: Data from Capital IQ. Includes SaaS companies with LTM Growth >0%. Both charts are as of 12/31/2020 35
“The Four Zones” for the Rule of 40
FCF FCF
18.2x
50.0% 50.0%
EV/NTM
Rev
40.0% 27.5x 40.0% Multiple
EV/NTM
30.0% Rev 30.0%
Multiple
20.0% 20.0% 34.3x
EV/NTM
10.0% 10.0% Rev
Multiple
0.0% 0.0%
(10.0)% (10.0)%
(20.0)% (20.0)% 11.6x

EV/NTM
(30.0)% (30.0)% Rev
Multiple 30.6x
13.0x
(40.0)% EV/NTM (40.0)% EV/NTM
Rev Rev
(50.0)% Multiple (50.0)% Multiple
(60.0)% (60.0)%
(20.0)% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% (20.0)% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
• Companies that exceed the “Rule of 40” trade at a higher revenue multiple (left chart: 27.5x NTM revenue vs. 13.0x NTM revenue),
BUT companies that exceed the “Rule of 40” AND are growing NTM revenues 30%+ trade at a premium (right chart: 34.3x NTM
revenue).
Source: Capital IQ
Data as of 12/31/2020 36
Unpacking the Four Zones of the Rule of 40
Yellow Zone Green Zone
Includes some of the largest SaaS companies that are at a mature point in their Many of the cream of the crop companies, which are efficiently growing with
journey strong unit economics
NTM Revenue Multiple NTM Revenue Multiple
High: 29.6x (Atlassian) Low: 11.0x (Intuit) High: 100.2x (Snowflake) Low: 12.2x (Wix)
Median: 34.2x Average: 19.1x Median: 34.2x Average: 37.8x
Red Zone Blue Zone

* *
* *
*
* * *
*
*
Features a full range of businesses from those that are just south of the rule of 40 Number of recent IPOs in this group that are squarely focused on top-line growth
to those that are struggling significantly in the public markets at the moment
High: 55.9x (Bill.com) Low: 0.7x (Stride) High: 45.7x (Cloudflare) Low: 20.0x (Asana)
Source: Wall Street Consensus Estimates from Capital IQ.
Data as of 12/31/2020
37
ARR per employee (APE) as a guiding principle
50%
40%
30%
$452K ARR
/ Employee
20%
NTM FCF % of Revenue
10% • The product-led growth (PLG) philosophy considers R&D

investment as a lever for growth at the same level if not
0%
0% 10% 20% 30% 40% 50% 60% 70%
greater than S&M Expense. Magic Number only considers
(10%)
S&M expense. As more companies embrace PLG, APE
becomes a better framework for comparing efficiency
(20%) across businesses.
$295K ARR
(30%)
/ Employee
(40%)
(50%)
(60%)
NTM Revenue Growth Rate
Over-Investing Phase Investing Phase Breakeven Phase Sustained Profit Phase

<$100K Over-Investing
$100-200Kzone $200-300K $300-500K
ARR / Employee ARR / Employee ARR / Employee ARR / Employee
APE Maturity Curve

Source: Capital IQ
Data as of 12/31/2020 38
APE holds true across the Four Zones
50% $462K ARR

50%
/ Employee
40% 40%
30% 30% $446K ARR

$452K ARR
/ Employee
/ Employee
20% 20%

10% 10%
0% 0%
0% 10% 20% 30% 40% 50% 60% 70% 0% 10% 20% 30% 40% 50% 60% 70%
(10%) (10%)
(20%) (20%)
$289K ARR
(30%) $295K ARR (30%) / Employee
/ Employee $370K ARR
(40%) (40%) / Employee
(50%) (50%)
(60%) (60%)
NTM Revenue Growth Rate NTM Revenue Growth Rate
• Companies that exceed the “Rule of 40” drive over $150K more in revenue per employee than companies that fall short of that
metric.
Source: Capital IQ
Data as of 12/31/2020 39
~Half the companies with $1B in revenue also have $400K+ in APE
$100,000,000,000
$10,000,000,000
$1,000,000,000
$100,000,000
$0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000
• 8/17 companies with $1B+ in LTM Revenue also have APE of $400K+.
Source: Capital IQ
Data as of 12/31/2020 40
Public Markets reward quicker S&M Payback
Public SaaS companies by Payback Period (as of 12/31/2020)
36+ months 30-36 months 24-30 months 18-24 months 12-18 months <12 months
* *
*
*
* *
*
*
*
NTM Rev. Multiple

Median 8.7x 10.0x 15.7x 23.6x 28.8x 29.1x
Average 10.6x 10.0x 18.1x 30.5x 31.7x 28.0x
• The market still rewards faster CAC payback. Companies in each successive payback period bucket trade at higher revenue
multiples.
Source: Capital IQ
Data as of 12/31/2020. Payback is calculated as Prior year S&M / YoY Change in Gross Profit
* Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of
41
Battery Ventures’ investments, please visit our website: https://www.battery.com/
Four quadrant view of Payback Period + revenue Growth
Under 24mo Payback & Less than 20% Growth Under 24mo Payback & More than 20% Growth
* * *
*
* *
*
High: 29.5x (Atlassian) Low: 7.9x (RealPage) High: 100.2x (Snowflake) Low: 0.7x (Stride)
Over 24mo Payback & Less than 20% Growth Over 24mo Payback & More than 20% Growth
* *

High: 38.1x (BigCommerce) Low: 2.9x (ChannelAdvisor)
High: 35.3x (MongoDB) Low: 3.4x (2U)
Median: 9.0x Average: 11.3x
Median: 16.7x Average: 17.x
• Companies with faster payback trade higher than companies with slower payback even if they are growing slower.
Source: Capital IQ
Data as of 12/31/2020. Payback is calculated as Prior year S&M / YoY Change in Gross Profit
* Denotes a current or former Battery Portfolio Company. Past performance is not indicative of future returns. For a complete list of
42
Battery Ventures’ investments, please visit our website: https://www.battery.com/
Snapshot of 2020 software IPOs
Implied Net Months to
YoY Subscriptio New at IPO Payback Equity
LTM Rev Implied Growth % n Revenue Quarter LTM GAAP LTM GAAP Net Average Acquisition Raised Time to APE
($M) ARR ($M) at IPO % ($M) GM % OM % Retention ACV Cost ($M) IPO ($K)
$901.1 $1,007.6 42.9% 100% $90.2 69.6% (51.2%) NA $8,060,448 16.9 $3,352 17 NA
$768.5 $704.3 8.7% 84% $26.3 80.6% 24.6% 110% $22,186 26.9 NA 36 $212.8
$640.3 NA 42.5% NA NA 79.9% (22.3%) 142% NA NA $899 16 $219.6
$492.9 $470.4 13.7% 91% $6.4 68.1% 14.9% 115% $27,671 23.6 NA 13 $309.0
$402.7 $500.8 120.7% 94% $93.6 61.0% (86.8%) 158% $160,667 27.6 $1,402 8 $316.2
$340.9 $404.7 87.2% 99% $44.0 78.2% 17.1% 109% $26,981 7.7 NA 13 $465.4
$336.1 $284.2 19.6% 85% $5.7 63.0% 1.8% 109% $71,050 25.8 NA 42 $306.0
* $220.3 $218.5 36.9% 80% $16.6 73.7% (9.4%) 120% $5,675 17 NA 18 $219.6
$201.3 $75.8 9.2% 37% $8.2 56.4% (4.7%) 113% $505,653 27.8 $350 20 $158.9
$181.4 $195.7 30.8% 99% $8.8 69.6% (50.7%) 120% $91,870 35 $340 10 $262.0
$181.3 $208.1 57.2% 100% $17.3 86.6% (83.3%) 115% $2,538 15.7 $414 12 $357.9
$164.1 $143.4 6.3% 87% $0.6 75.1% 35.5% NA $2,240,875 53.5 $362 12 $342.0
$153.1 $139.3 49.9% 74% $27.5 55.0% (16.9%) 147% $94,728 24.6 $240 7 NA
* $127.9 $145.7 46.3% 100% $14.4 80.8% (3.5%) 139% $25,125 15.5 $162 12 $228.2
$119.7 $137.1 29.7% 100% $8.6 76.1% (31.9%) 106% $2,285 33.2 $229 17 $223.6
$86.6 $141.8 166.1% 99% $66.4 68.4% (2.8%) NA $120,565 10.8 $179 7 $265.8
Overall Median $210.8 $208.1 40% 94% $16.6 72% -7% 115% $71,050.0 24.6 $350.0 13 $198.5
>$250M LTM Rev Median $492.9 $485.6 43% 93% $35.2 70% 2% 113% $49,360.5 24.7 $1,402.0 16 $265.0
<$250M LTM Rev Median $164.1 $143.4 37% 99% $14.4 74% -9% 120% $91,870.0 24.6 $290.0 12 $174.0
• These new public software companies represent a spectrum of scale, growth, profitability, efficiency and go-to-market strategy, but
the median company has an implied ARR of ~$208.1M and has raised ~$350M over a 13-year period.
Source: Company S-1, Pitchbook, Alex Clayton.

Snapshot of 2020 software IPOs (continued)
IPO CY2021 Revenue Multiple Current CY2021 Revenue Multiple
100.00x
89.91x
90.00x
77.73x
80.00x
70.00x
60.00x
50.00x 44.45x
39.29x
40.00x 33.90x
29.99x
26.88x
30.00x 24.70x
21.26x 20.18x
30.06x 30.51x
20.00x 13.91x 15.98x
12.29x 10.50x 12.56x
19.38x 8.46x
10.00x 17.32x
13.81x 14.42x 15.10x
10.99x 11.71x 10.70x 9.89x 10.67x
9.15x 8.30x
0.00x 6.24x 6.84x
* * *
IPO Date 6/3 6/25 7/13 7/21 7/28 8/4 8/13 9/15 9/16 9/16 9/18 9/22 9/30 9/30 10/20 12/8
IPO Size $934.5 $350.0 $249.9 $468.0 $401.9 $216.5 $405.0 $3,360.0 $509.0 $325.6 $1,300.0 $236.5 $2,570.0 $810.8 $594.0 $651.0
IPO Pricing $26.0 $20.0 $31.0 $26.0 $19.0 $24.0 $27.0 $120.0 $44.0 $22.0 $52.0 $22.0 $10.0 $27.0 $27.0 $42.0
Current Share Price $48.23 $39.56 $72.41 $29.92 $34.85 $64.15 $43.30 $281.40 $62.83 $28.58 $153.47 $40.51 $23.55 $29.55 $27.00 $138.75
IPO Market Cap ($B) $15.70 $2.0 $2.8 $3.0 $2.3 $1.58 $3.5 $33.2 $3.90 $2.2 $13.70 $5.7 $16.5 $4.2 $4.2 $4.0
Current Market Cap ($B) $8.13 $4.03 $6.68 $3.49 $5.09 $4.44 $5.67 $79.66 $5.73 $2.92 $41.56 $11.00 $41.03 $4.70 $4.34 $13.30
• All but one of the 2020 software IPOs above have seen revenue multiple expansion since their IPO, and all but one have increased
their market capitalization.
Source: Capital IQ. Prices and Market Cap as of 12/31/2020.

IPO CY2021 Revenue Multiple uses consensus Wall Street estimates from 30 days post-IPO 44
Recent IPOs continue to perform well in the public markets
2018 2019 2020
Current ∆ from Current ∆ from Current ∆ from
IPO Date $ Raised IPO Date $ Raised IPO Date $ Raised
EV Price IPO EV Price IPO EV Price IPO
15-Mar $192M $26.8B $199.71 1148% 17-Apr $751 $96.5 $337.32 837% 26-Apr $935 $8.1 $48.23 86%
22-Mar $756M $9.2B $22.19 6% 18-Jul $326 $5.0 $33.22 58% 25-Jun $350 $4.0 $39.56 98%
11-Apr $154M $1.7B $13.93 -1% 11-Jun $612 $46.9 $211.82 523% 13-Jul $250 $6.7 $72.41 134%
20-Apr $555M $2.7B $15.00 0% * 18-Sep $648 $30.0 $98.44 265% * 21-Jul $468 $3.5 $29.92 15%
26-Apr $462M $15.7B $106.56 384% 10-Apr $218 $3.4 $41.70 74% 28-Jul $402 $5.1 $34.85 83%
26-Apr $629M $41.5B $222.30 667% 26-Apr $4,560 $24.3 $42.24 62% 4-Aug $216 $4.4 $64.15 167%
26-Apr $175M $8.5B $69.29 362% 31-Jul $570 $12.2 $43.27 170% 13-Aug $405 $5.7 $43.30 60%
3-May $152M $2.1B $26.00 37% 24-Oct $694 $5.2 $29.61 65% 15-Sep $3,360 $79.7 $281.40 135%
16-May $311M $2.5B $20.96 40% 11-Dec $216 $11.1 $136.50 520% * 16-Sep $509 $5.7 $62.83 43%
* 14-Jun $180M $13.9B $164.89 587% 19-Sep $188 $2.3 $28.64 91% * 16-Sep $326 $2.9 $28.58 30%
28-Jun $193M $1.9B $63.77 204% 12-Dec $150 $2.4 $45.41 167% 18-Sep $1,300 $41.6 $153.47 195%
26-Jul $115M $1.1B $9.13 -24% 15-Mar $240 $8.3 $70.51 341% 22-Sep $237 $11.0 $40.51 84%
26-Jul $251M $5.4B $52.26 127% * 16-May $180 $9.9 $87.37 446% 30-Sep $2,570 $41.0 $23.55 136%
25-Sep $180M $3.6B $25.55 113% 13-Sep $525 $23.4 $75.99 407% 30-Sep $810 $4.7 $29.55 9%
4-Oct $252M $12.8B $146.13 306% 20-Oct $594 $4.3 $27.00 0%
11-Oct $264M $10.2B $71.85 323% 8-Dec $651 $13.3 $138.75 230%
18-Oct $375M $4.7B $14.95 0%
Avg. $306M $9.7B 252% Avg. $705M $20.1B 288% Avg. $836M $15.1B 94%
Median $251M $5.4B 127% Median $425M $10.5B 218% Median $489M $5.7B 85%
• Recent IPOs continue to perform well, with the average software IPO in 2020 up 94% from its IPO price.
Source: Capital IQ. Prices and Market Cap as of 12/31/2020. Data for Carbon Black, Pivotal, as of acquisition
2020 was the “year of the SPAC”
SPAC IPOs per Year SPACs by Current Lifecycle Stage (IPO 2009-2020)
300 Liquidated, 26, 5%

250
200
150
100 Completed
Acquisition, 173,
50 34% Searching, 249,
50%
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Monthly SPAC listings have overtaken traditional IPOs in the US

50
45
40 SPAC Traditional IPO
35 Announced Target,
30 54, 11%
25
20 Estimated M&A target value
15
10
5
0
5x $300B
Apr-19
Oct-19
Apr-20
Oct-20
Jan-19
Jun-19
Jan-20
Jun-20
Mar-19
Feb-19
Nov-19
Dec-19
Mar-20
Feb-20
Nov-20
Dec-20
Aug-19
Sep-19
Aug-20
Sep-20
May-19
May-20
Jul-19
Jul-20
2020 SPAC equity capital to Est. M&A enterprise value of

target Enterprise Value ratio future targets over next 2 years
• 2020 saw a >10x increase in the number of SPACs currently searching (or soon to be searching) for targets. These
SPACs could potentially represent $300B+ in M&A value in the next 18-24 months.
Charts via Refinitiv and SPACInsider

Estimated SPAC M&A Value via Goldman Sachs, quoted in Bloomberg 12/14/20 46
SPACs are impacting software too
Sample announced / completed software SPAC deals
$2B valuation $2.5B valuation

Apex Technology Acquisition CC Neuberger Principal
Corp. Holdings I
Sample software investors / executives involved with recent SPACs
Leo Apotheker Betsy Cohen Jeff Epstein Kevin Hartz Reid Hoffman Chamath Palihapitiya Vivek Ranadive Steve Singh
SAP Bancorp Oracle Eventbrite LinkedIn Social Capital Tibco Concur, Docker
• Software is a specific target for a number of new SPACs, which have emerged as a consideration for growth stage
companies looking to access the public market.
Source: TechCrunch, LionTree, WSJ 47

The Venture Market
48
Software investing has plateaued at just over 1/3 of venture investing
Dollars by sector
64% 62%
67% 65% 67% 67% 66% 66%
71% 69%
74%
36% 38%
33% 35% 33% 33% 34% 34%
29% 31%
26%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Software Other
• Software continues to grow as an asset class, but its share of venture investing has remained just under 35% since 2015.
Source: Data from Pitchbook. Includes businesses with a headquarters in the United States, Canada, Europe, Australia and New Zealand
Note: Pitchbook data and categorization continues to evolve and, as such, the historical data in Software 2019 is different than data presented above
49
2020 saw fewer deals but a record amount of capital invested
Number of dollars and deals into software businesses
$60.0B 4,500
$53.9B
3,853 3,904
3,724 4,000
3,697
$50.0B 3,508 $47.7B
3,373 3,340 3,500
3,279
$40.0B $38.7B 3,000

2,729
2,500
2,074 $28.3B $29.3B
$30.0B
$26.0B $25.8B
2,000
1,466
$20.0B 1,500
$15.3B
$12.2B 1,000
$10.8B
$10.0B $7.2B
500
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capital Invested Deal Count
• 2020 represented an 8-year low in terms of number of deals, but over $50B was invested in Software — an industry first.
50
US + Europe continued their growth, Canada and Oceania slipped
Dollars invested into different geographies
United States Canada
$42.8B
$1.8B
$37.1B
$32.3B
$23.3B $25.1B $22.5B $23.8B

$880M $934M $825M
$13.7B 11%
$10.0B $11.0B CAGR $458M $416M $493M $500M 11%
$6.4B ‘15-20 CAGR
$117M $178M $188M ‘15-20
% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
yearly
89% 92% 90% 90% 89% 89% 87% 81% 83% 78% 79% 2% 2% 2% 3% 2% 2% 2% 3% 2% 4% 2%
total
Europe Oceania
$631M
$9.7B $559M
$8.2B
$394M $397M
$5.1B $291M
$4.2B $236M
30% $163M 28%
$2.0B $2.6B $2.6B CAGR $103M $95M CAGR
$644M $655M $899M $1.0B ‘15-20 $12M $13M ‘15-20
% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
yearly
9% 6% 7% 7% 8% 9% 10% 14% 13% 17% 18% 0% 0% 1% 1% 1% 1% 1% 1% 1% 1% 1%
total
• After a banner year for both Canada and the Oceania region in 2019, they both saw declines in 2020, likely due to travel
restrictions. The US and Europe continued to grow, finishing with 79% and 18%, respectively, of total investment for core regions.
51
Areas outside of traditional VC investment corridors saw growth paused
Dollars invested into different US geographies
Bay Area Tri-State
$6.5B
$21.4B
$18.4B $5.1B
$16.4B
$3.9B
$12.8B $13.4B
$11.2B $2.9B $3.1B
$9.1B $2.8B
$6.6B 10% $1.9B 19%
$5.3B $5.5B CAGR $1.4B CAGR
‘15-20 $1.2B $902M ‘15-20
$3.1B $673M
% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
yearly
49% 53% 50% 49% 55% 53% 44% 47% 51% 50% 50% 11% 12% 8% 10% 8% 11% 14% 13% 12% 14% 15%
total
New England Los Angeles Area Rest of US
$2.6B
$2.5B $2.5B $9.7B $9.7B
$2.3B $2.2B
$1.8B $1.8B $1.8B $1.7B $7.7B
$6.1B $5.9B $6.4B
$1.1B $1.2B $1.2B $1.4B $1.3B $5.3B
$952M $1.05B $3.9B
$688M $3.3B 13%
$682M 2% $576M 14% $2.6B CAGR
CAGR $329M CAGR $1.7B ‘15-20
‘15-20 $160M$259M ‘15-20
% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
yearly
11% 7% 9% 8% 5% 9% 9% 8% 8% 6% 6% 2% 3% 3% 4% 5% 5% 5% 5% 6% 5% 6% 27% 26% 30% 29% 26% 21% 28% 27% 24% 26% 23%
total
• Despite being hit hard early by Covid-19, the NY and LA metro areas saw the largest relative gains compared to 2019.
• After a big 2019 jump, areas outside of the traditional VC investment corridors had a flat year, likely due to restricted travel.
52
Source: Data from Pitchbook. Includes businesses with a headquarters in the United States
State of software Seed rounds
Investments into software Seed rounds
Number and Dollars
$5B 2,192 $4.5B $4.5B 2,500
1,951 2,036
$4B 1,767 1,828 $3.8B 2,000
2,046 1,700
1,442 $2.9B 1,976
$3B 1,500
$2.3B $2.4B
879 $1.9B
$2B $1.6B 1,000
494 $1.0B
$1B $594M 500
$329M
$0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Deal Dynamics Median Dilution

$8.0M $2.5M 22.2%
Median Pre-money Valuation Median Deal Size $7.0M $7.0M
$6.0M 19.8% 20.0% 20.5%
$2.0M 17.9%
$6.0M $5.2M 16.0%
$4.7M $4.9M $2.0M
$4.0M $1.8M $1.5M 12.6% 12.5% 12.3% 12.5% 13.0%
$4.0M $3.0M $3.5M $3.6M $3.5M $1.5M
$1.3M $1.0M
$1.1M
$2.0M $0.9M
$0.5M
$0.6M
$0.4M $0.5M $0.5M $0.5M
$0.0M $0.0M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• More dollars are being invested into fewer deals at the seed stage. Entrepreneurs are trading off dilution for more runway.
53
State of software Series A rounds
Investments into software Series A rounds
Number and Dollars
$12.0B $10.7B 1,200
960 972 981 984
$10.0B 926 $9.2B 1,000
818 $8.7B 1,059
$8.0B
730 $7.3B 875 800
667
$5.9B $5.7B
$6.0B 494 $5.1B 600
$3.4B $3.8B
$4.0B $2.7B 400
$1.7B
$2.0B 200
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$30M $10.0M 27.3%
Median Pre-money Valuation Median Deal Size $8.3M 27.3%
$25M $7.6M
$6.6M $8.0M 26.2% 26.3%
26.0%
$20M $5.6M 25.7%
$5.0M $6.0M 25.1%
$15M $4.1M
$2.8M $3.1M $3.5M $26M $4.0M 24.8%
$10M $2.5M $2.5M $20M $21M 24.3%
$15M $16M 24.0% 23.9%
$5M $11M $13M $2.0M
$7M $7M $8M $8M
$0M $0.0M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• A six-year low for number of Series A deals. Total dollars invested across all Series As are down, but 2020 continued a ten-year
trend of larger deal sizes and higher valuations at Series A.
54
State of software Series B rounds
Investments into software Series B rounds
Number and Dollars
$12.0B 500
422 $10.4B $10.5B
388
$10.0B 363 367 400
334 335 $7.9B 435
$8.0B 286 295 385
$6.6B 300
226 $5.4B $5.8B
$6.0B $4.7B
$3.8B 200
$4.0B $2.7B $2.7B
$2.0B
$2.0B 100
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$100M $25M
Median Pre-money Valuation Median Deal Size $20M 29.7%
$80M $18M $20M 24.5% 24.7%
$15M 22.0% 20.8%
$60M $12M $12M $13M $15M 23.1%
22.8%
$10M 21.5% 22.2%
20.0% 19.8%
$40M $8M $82M $10M
$7M $7M $7M $70M
$60M
$20M $44M $5M
$29M $35M $40M $37M
$17M $24M $22M
$0M $0M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• Series B deal sizes and valuations have risen drastically over the past 4 years, with pre-money valuations nearly doubling in that
time to ~$82M.
55
State of software Series C rounds
Investments into software Series C rounds
Number and Dollars
$12.0B 250
206 $9.6B
$10.0B 191
171 170 200
161 161 164 $8.4B 170
$8.0B 142 133 141
$6.2B 150
$6.0B $4.8B $4.7B $4.5B $4.6B
100
$4.0B
$2.3B $1.9B $2.3B
$1.6B 50
$2.0B
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$250M $50M 22.5%
Median Pre-money Valuation Median Deal Size $40M 21.1%
$200M $40M 18.5% 17.9% 19.0%
$33M
$27M 19.7%
$150M $23M $23M $30M 16.7% 16.8%
16.2% 16.4% 15.9%
$20M
$100M $15M $212M $20M
$12M $12M $166M
$8M $10M
$50M $99M $80M $116M$115M $10M
$75M
$30M $41M $52M $55M
$0M $0M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• The number of Series C deals has held relatively steady in the last decade, even as total capital invested has risen. Pre-money
valuations increased by nearly $100M in 2 years – the median Series C deal is now valued at $212M pre-money.
56
State of software Series D+ rounds
Investments into software Series D+ rounds
Number and Dollars
$25.0B 220 250
204 211 210
191 $20.2B
$20.0B 183 200
150 159 196
$15.0B 120 124 $13.8B 150
$12.2B
$9.0B $9.7B
$10.0B $8.5B $8.0B 100
$5.0B $3.1B $3.8B 50

$2.6B
$1.5B
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

$800M $57M $60M
Median Pre-money Valuation Median Deal Size
$50M 19.7%
$43M
$600M
$38M $40M 15.2%
13.3% 12.5% 12.2% 12.1% 12.5%
$400M $25M $30M
$24M $20M $700M 14.1%
$17M 12.5% 11.9%
$13M $20M
$12M
$200M $9M $11M $300M 7.5%
$275M $10M
$35M $67M $72M $75M $168M$175M $120M$150M
$0M $0M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• Late-stage rounds took off in 2020, with ~$6.4B more invested than in 2019. The median pre-money valuation jumped to a
whopping $700M.
57
As round and fund sizes have gone up, so too have valuations
Median pre-money valuation growth indexed since 2010
Series D+: 1,900%
Series C: 612%
Series B: 392%
Series A: 288%
Seed: 133%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Seed Series A Series B Series C Series D+
• Though valuations are up across the board, rounds at the Series C level and above have broken away from gains at the earlier
rounds. This continues to be especially true for Series D+, with a huge uptick in large pre-IPO rounds in 2020.
58
Valuation spread is growing at each stage
Pre-Money Valuation by Stage, Quartiles
Series D+ Series C
$5.00B $1.40B
25th Median 75th $1.20B 25th Median 75th

$4.00B
$1.00B
$3.00B $800.00M
$2.00B $600.00M
$400.00M
$1.00B
$200.00M
$0.00M $0.00M
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Series B Series A Seed

$350.00M $100.00M $25.00M
$300.00M
25th Median 75th $80.00M 25th Median 75th $20.00M 25th Median 75th
$250.00M
$200.00M $60.00M $15.00M
$150.00M
$40.00M $10.00M
$100.00M
$50.00M $20.00M $5.00M
$0.00M $0.00M $0.00M
• Over the past decade, the interquartile range for valuations of the middle 50% of deals has expanded for all stages (i.e.
higher variation between deal valuations), in addition to the entire range shifting up (i.e. higher valuations generally).
• Both of these trends were especially visible for later stage deals in 2020.
59
2019 matched the decade’s median for liquidity to capital invested
Liquidity / capital invested
Liquidity Capital Invested $177.1B $175.4B
$145.9B
$118.4B
$90.5B $89.6B
$86.0B
$69.9B $71.0B
$64.2B
$54.9B $53.9B
$47.7B
$38.7B
$26.0B $28.3B $25.8B $29.3B
$12.2B $15.3B
$7.2B $10.8B
Ratio of 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
liquidity/
capital 7.65x 6.46x 5.82x 4.20x 3.30x 3.19x 4.58x 3.06x 4.57x 3.06x 3.26x
invested
• The ratio of liquidity to capital invested per year has come down in recent years. 2020’s 3.26x was up from last year, but well below
the decade’s median of 4.20x.
60
Unicorns aren’t so rare anymore
Number of dollars and deals into new “Unicorn” software businesses
$10.0B 50
46
Aileen Lee coins the
$9.0B 45
“Unicorn” term Nov. 2013
$8.0B 40
$7.0B $6.6B 35
29 30
$6.0B 30
$5.0B $4.6B 25
$4.0B 18 $3.5B 20
$3.0B 13 15
10 $2.1B $2.0B 9 8
$2.0B 10
3 2 $960.2M $1.1B $986.8M
$1.0B 0 5
$515.0M
$289.6M
$0.0M
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capital Invested in new "Unicorn" deals Count of Deals for companies valued >$1B post for first time
• Though 2020 saw fewer deals overall, new unicorn deals were way up. Year over year, 2020 was up ~35% in terms of new
unicorns minted and the dollars invested into these companies.
https://techcrunch.com/2013/11/02/welcome-to-the-unicorn-club/
61
New Software Unicorns are still mostly birthed in the US
Number of new Software Unicorn deals by geography
United States Rest of the World
45 9
42
8
40 8
35 7
30 6
25
25 5
22
4 4 4
20 4
15 14 13 3
10 9 8 8 2
1 1
5 3 1
2
0 0 0 0 0 0
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• US-based companies still account for the lion’s share of new Unicorn deals, and the 2020 Unicorn spike was concentrated in the
US.
62
The Tri-State Area was the big winner for New 2020 Unicorns
Number of Software Unicorn deals in different US geographies
Bay Area Tri-State
25 23 8
7
7
20 19
6
14 5
15
12
11 4
10 3
6
4 4 2
5 1 1 1 1 1
2 1
1 0 0 0 0
0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
New England Los Angeles Area Rest of US

2.5 2.5 9 8
2 2 2 2 2 8
2 2 7 6
6
1.5 1.5
5
1 1 4
1 1 3
3 2 2
0.5 0.5 2 1 1 1 1 1
1
0 0 0 0 0 0 0 0 0 0 0 0 0
0 0 0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• The Bay Area still dominates the production of new Unicorns, but the proportional gains went elsewhere this year.
63
$5B the new unicorn?
Number of dollars and deals into software businesses valuing companies >$5B
$2.5B 9
8
$2.1B 8
$2.0B
7
6
4
$1.5B $1.4B
5
4
$1.0B
3
2
1 2
$500.0M 1
$250.0M 1 $250.0M 1
0 $224.4M 0 $175.0M 1
0 0 $100.0M
$0.0M $0.0M $0.0M $0.0M
$0.0M 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Capital Invested in new $5B+ valuation deals Count of Deals for companies valued >$5B post for first time
• There were nearly as many deals new valuing companies at five billion this past year (8) as there were deals newly
valuing companies at one billion in 2013 when the term “unicorn” was born.
Source: Data from Pitchbook. Includes businesses with a headquarters in the United States 64
M&A
65
Software M&A since 2010
Software acquisitions over time
$154.8B
$148.4B
$119.5B
$98.5B
$82.4B $80.2B
$76.7B
$63.4B
$53.8B $55.3B
$50.2B
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• 2018 set the high-water mark for total software acquisitions, exceeding $100B for the first time. 2020 came close to matching that
figure with nearly $150B in Software M&A.
Source: Data from S&P Capital IQ. Includes targets with a headquarters in the United States, Canada, Europe, Australia and New Zealand 66
Quarterly software M&A since 2010
Software acquisitions over time
10-year high
$70.1B $70.9B
10-year low
$50.8B
$44.9B
$37.3B $36.7B
$34.4B $33.7B
$31.2B
$28.6B $28.3B $28.9B
$27.8B
$25.3B $26.3B
$24.2B
$19.7B $20.3B $19.4B $19.7B

$17.2B $17.2B $16.6B $16.4B $17.4B
$15.9B $16.3B $15.3B
$15.2B
$14.6B $14.3B $14.2B
$13.9B $14.1B
$12.9B
$11.6B
$10.7B $10.8B $11.3B
$8.6B $8.0B
$4.0B $4.5B $3.7B
• The paralyzing effects of Covid-19 can clearly be seen in Q2-20, which had the lowest recorded quarterly M&A transaction value
since before 2010. On the flip side, the final quarter of 2020 set the record for highest quarterly M&A value.
Share of M&A value by private equity vs. non-private equity
Software acquisitions by private equity over time
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Private Equity Non-Private Equity
• PE’s high point of ~40% of M&A transaction value in 2013 has not been repeated, though 2019 and 2020 have recovered to ~30%.
“Traditional” companies want to own software assets
2017 2018 2019 2020
Total Deal Total Deal Total Deal Total Deal

Date Acquirer Target Date Acquirer Target Date Acquirer Target Date Acquirer Target
Amount Amount Amount Amount
8/8 $1.6B 12/9 $18.4B 12/9 $10.7B 4/6 $13.0B
12/26 $1.1B 7/31 $2.0B 4/2 $5.4B 8/6 $11.0B
10/9 $820M 2/15 $1.9B 3/6 $1.7B 8/13 $5.4B
9/5 $712M 6/25 $1.6B 8/23 $1.6B 8/27 $1.6B
10/16 * $510M 4/23 $1.2B 3/22 $1.3B 2/13 $1.4B
5/21 $1.1B 4/1 $1.0B 6/23 $985M
12/19 $1.0B 5/31 $1.0B
1/29 $821M 12/6 $720M
7/2 $775M 6/27 $570M
8/1 * $730M 4/18 $536M Source: 451 Research, Pitchbook, and S&P Capital IQ.
Includes all announced software acquisitions by
historically non-technology buyers with transaction
value over $500M from 1/2017 through 12/2020
3/6 $550M * Denotes a current or former Battery Portfolio
Company. Past performance is not indicative of future
returns. For a complete list of Battery Ventures’ 69
investments, please visit our website:
8/27 $525M https://www.battery.com/
Private Equity Firms’ Role in Vertical Software M&A
48 48
$3.6Bn $11.0Bn Vertical Acquirer

$2.7Bn PE Acquirer
$3.9Bn
$1.4Bn
Other Acquirer
$2.7Bn
Health Services
$1.3Bn
$1.7Bn
$1.1Bn
$1.2Bn
$950MM
$3.6Bn 23
$2.4Bn
21
$2.2Bn
Healthcare $1.8Bn
Business $460MM
$1.3Bn
16
$1.9Bn $650MM
$322MM
$1.2Bn
$1.8Bn
$6.5Bn $475MM 10 10 9 9
$1.2Bn
$1.9Bn Education Business
$1.6Bn $1.8Bn $1.6Bn
Financial Services
$1.8Bn $1.1Bn PBM Business
$1.2Bn
5
$5.8Bn $1.0Bn $5.4Bn $4.7Bn
$1.1Bn $800MM
$4.6Bn
Primedia $2.4Bn
$662MM
$3.6Bn $960MM $1.1Bn $328MM $850MM $634MM
$506MM $2.8Bn
Other Acquirer: 6 5 4 3 0 6 2 4 4 2
Vertical Acquirer: 24 28 4 8 9 1 3 3 4 1
PE Acquirer: 18 15 15 10 7 3 5 2 1 2
Pharma /
Healthcare Financial Education Insurance Real Estate Retail Utilities Construction Telecom
Biotech
• Private equity firms continue to play a crucial role in vertical software M&A,, participating in ~40% of transactions >$100M since January 2009.
Source: Qatalyst
Selected Vertical Software Transactions >100M from January 2009 70
The trend of increased numbers of large exits continues
VC exit activity (#) by size
100%
90%
80%
70%
60%
$1B+
50% $500M - $999M
$100M - $499M
40% $0 - $99M
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• The top end of deals valued $500M+ continues to grow as a proportion of deals where valuation was announced (~12% in 2020,
highest of the decade).
Source: Pitchbook-NVCA Venture Monitor, Q4-2020, Exit x Size (amended to include Software industry only
and expanded to companies headquartered in US, Europe, Canada, and Oceania) 71
2020 outpaced 2019’s banner year for $1B+ SaaS deals
2019 2020
Total deal Total deal Total deal Total deal
Acquirer Target Acquirer Target Acquirer Target Acquirer Target
amount amount amount amount
$17.4B $1.6B $27.7B $1.7B
$11.0B $1.5B $13.0B $1.6B
$10.7B $1.4B $11.0B $1.6B
$5.5B $1.4B * $10.5B $1.5B
$4.6B $1.3B $5.4B $1.5B
$4.0B $1.1B $5.0B * $1.4B
$3.7B * $1.0B $5.0B $1.4B
$3.3B $1.0B $4.7B $1.4B
$2.4B $1.0B $4.3B $1.3B
$2.4B $1.0B $3.4B $1.3B
$2.0B $1.0B $2.9B $1.2B
$2.0B $1.0B $2.8B

* $1.1B
$1.8B $1.0B $2.3B $1.1B
$1.7 $2.3B $1.1B
$2.1B
Source: Pitchbook, Capital IQ. Note: Deals included deals announced per year, regardless of closing date. 72
$5B is the new $1B
7
6 $27.7B
$34.0B $13.0B
$11.0B
$18.9B 4
*
$8.0B $10.5B
3 3 $17.4B
$5.4B
$7.5B $11.0B
2 2 $9.1B
$9.3B
$5.0B
$10.7B
$9.2B $6.0B $6.5B
1 1 $5.5B 1 *
$8.8B $5.0B
$4.7B $5.5B
$4.7B
$4.5B 0 $8.3B $4.8B
$5.8B $11.7B $5.4B
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
• In the first half of the decade, a $5B software acquisition would happen ~once a year; we saw seven such acquisitions in 2020.
Source: Pitchbook, Capital IQ

Note: Incudes $5B+ SaaS M&A’s over time
73
A New Wave of Software M&A to come?
Have Not Yet
Made a $1Bn+
~$1-2T Club Software
Market Capitalization Acquisition
$200B+
Market Capitalization
$150-200B
$100-150B
$50-100B
$20-50B *
* *
• Many large software companies have yet to make a billion dollar acquisition.
Source: Qatalyst
Emergent Themes
75
Tech Companies Stepped Up During Covid-19
Source: Zoom, Square, Twilio, Redox company websites.

Digital Transformation Accelerates
2020 2021E
Global IT 4% Expected Global IT
Spending: Increase Spending:
$3.6T $3.8T
Worldwide IT Spending Forecast ($B)
Communication Services 2.8%
IT Services 4.1%
Devices 4.0%
Enterprise Software 7.2%
Data Center Systems 5.2%
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400
2021E Spending ($B) 2020 Spending ($B)
• The pandemic accelerated digital transformation. Global IT spend is expected to increase by ~$2B in 2021.
Source: Gartner “COVID-19 Accelerates Digital Strategy Initiatives”

Data from Gartner “Worldwide IT spending to grow 4% in 2021” 77
Including for clinical trials themselves!
*
Sample Enabling
Software Vendors
• Most new clinical trials halted at the start of Covid-19, but activity has come back with savvy trial sponsors embracing new
decentralized approaches. The Covid-19 vaccine development process shattered records for fastest vaccine development.
Left source: Medidata

In-person -> Digital
Telemedicine Food/Drink Delivery
Telehealth Visits 2019 vs 2020:
Orders Marketplace GOV
2020 543 2020 $16.5
2019 181 2019 $5.5

millions billions
Data from 9/2020 and 9/2019
Ecommerce Web Traffic

* *
$3.8B Net Revenue 4 hardest hit states

by Covid-19 as of
April 2020
as of Q3 2020
Web traffic increase
Up 66.5% YoY from March to April:
• As the in-person to digital shift accelerated, key areas benefited from the rapid transformation.
Source: CDC, Doordash Company S1, Wayfair, Fastly

In-office -> Remote
Teamflow virtual HQ Gather virtual HQ Branch virtual HQ
Key Considerations for Employers Modern Enablers
Knowledge
1 Exec team location
Virtual
Base
HQs
2 Onboarding new employees virtually
3 *
Messaging
Ongoing employee social engagement *
Project
Mgmt.
4 Creating “serendipity” – sparks of innovation
• Enabled by a continued wave of cloud collaboration tools, many companies are considering permanently adopting distributed
work models as a key differentiator in the war on talent.
Source: TechCrunch; Teamflow, Gather, Branch.
Virtual Events Sample Virtual Event
Vendors
$495M
Raised
789
Employees Added
• As the in-person to digital shift accelerated, virtual event vendors became part of mainstream adoption and headcounts soared.
Source: Niantic (Pokémon Go), Davinci, Hopin, BrooklynVegan, Fortnite.

Data according to Pitchbook and SourceScrub 81
Increased Global penetration
Sample company examples from disparate geographies
* *
* *
*
* *
*
* * *
*
* *
* *
*
* * *
* * *
*
*
*
*
* *
• Software is becoming more global, and there are great software companies founded far flung from traditional tech hubs.
Source: Internal Battery research

Big players want to compete in new layers of the stack
Cloud Software Ecosystem
*
*
Application
Software
? ? ? ?
IT & Infra. *
Software
*
Infra-
structure
• The largest companies are moving to expand their product suite beyond their layer of the stack.
Source: Qatalyst
Automation + AI disrupt longtime Category Kings
Incumbent Automation + AI
Sales *
Spreadsheets
Customer service *
Expenses
*
Document capture
Note taking
Repetitive Processes
Application integration *
* *
Marketing automation
Contract Lifecycle Management
Call center engagement *
Call center automation
CI/CD *
• Companies focused on automation and smart workflows have the opportunity to disrupt large incumbents across product/market
spaces.
Source: Battery research. Examples given are illustrative.

New paradigms of compute lead to new business models + opportunities
Cloud-First Era
Mainframe Era Client Server Era Desktop SaaS Era
Cloud SaaS Cloud Consumption
Golden Years 1970 -1985 1985 - 2000 2000 - 2015 2015 - 2020-
Buyer IT IT Business Units Business Users Operational Users
Customers Gov’t, Manufacturing, Financial Large Businesses Most Businesses All Businesses Most Businesses
Pricing Model Enterprise License Enterprise License Per Seat License Per Seat License Per Call / Compute-Based
Market Size $ $$ $$$ $$$$$ $$$$$
*
*
Example Vendors
*
* *
Net Dollar Retention, Select “Cloud Consumption” Public Comps

183% 158%
200% 139% 132% 130% 120%
0%
Agora Snowflake Jfrog* Twilio Datadog Dynatrace
• Software consumption continues to evolve. In the Cloud-First Era, business units have been primed to expect pay-per-use models
from the large cloud computing providers, and we see this consumption model taking hold in other facets of the business related to
data, computation, and discreet business processes.
Source: Internal Battery research
Chart data via company filings compiled by Public Comps
“Headless SaaS” and API-First Companies
External Data / Process

Application Builders
Aggregators
Modern Web
Client
Your Third Party

Services Services
API
Microservice Centric
CDN
Microservice
DNS
Microservice
• API-First (“Headless SaaS”) companies take advantage of shifting architecture (microservices, cloud hosting, decoupled
infrastructure) and new consumption models. They often either aggregate external data or help build complex internal features.
Source: Internal Battery research. Examples given are illustrative.

Customer engagement market evolves during Covid-19
Contact Center Sample Key Vendors
71%
Of businesses are likely to allow call center agents to work
from home in some capacity post Covid-19
*
Social Media Sample Key Vendors
*
74%
Lift in social media marketing budgets between February
2020 and June 2020
Omni-Channel Engagement Sample Key Vendors
*
Sample Engagement Channels
% change in teams’ use from
-20% -10% 0% 10% 20% 30% 40% 50%

Online Forms
Messenger apps
*
2018-2020
Mobile app
Test / SMS
Customer portal
Phone
In-person
• Covid-19 changed how companies interact with customers, with contact centers moving to the cloud, social media accelerating as
a marketing channel, and “omni-channel engagement ” going from from aspirational strategy to an immediate new reality.
Source: Pew Research Center, Nemertes Research quoted by RingCentral, Salesforce “State of Service, 4th Edition,” The CMO Survey,
Internal Battery research. Examples given are illustrative. 87
SMS/Messaging encroaches on emails as the key engagement format
Adoption of messaging can be measured in billions of MAUs New messaging-focused service providers emerge
1,600 Email-First
1,300
*
*
1,133
*
808
314
200
Telegram Snapchat QQ Mobile WeChat FB Messenger WhatsApp
MAUs (Millions)
Messaging-First
Messaging is the #1 Preferred Channel for Customer Service
*
US 33% 24% 27% 7% 6% 2%
1%
*
UK 25% 38% 18% 6% 8% 3%2%
India 34% 23% 26% 6% 3% 5% 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Messaging Email Telephone Face to Face Web Live Chat Other Mail
• The proliferation of business APIs for messaging applications gives developers the ability to build robust workflows and
applications in the same place that consumers are already spending hours a day.
Source: Internal Battery research, Verto, and Twilio. Examples given are illustrative.
Shopify becomes a platform company on the back of eCommerce Growth
Sample Shopify App Store Merchants
Store Design Reviews & Loyalty
Optimization/Personalization Customer Support
Marketing
eCommerce as a % of total retail sales grew in one Messaging / Push Notification Multi-Channel Marketing
quarter what had taken previously five years
• Unsurprisingly, eCommerce made huge strides in share of retail spend during Covid-19. As an enabler of this trend, Shopify has
revealed itself to be more than an eCommerce backend – their nascent app ecosystem is poised to continue growing.
Chart: US Department of Commerce

Embedded fintech and integrated payments are here
SaaS Only Integrated Software Vendors (ISVs) SaaS as Payment Facilitator Vertical category kings are
2000-2010 2010-2015 2015-Today well-suited to aggregate
End Customers End Customers End Customers

*
Payments Stack Payments Stack SaaS Payments Stack SaaS

Vendor (175 bps) Vendor
(250 bps) (220 bps)
(30 bps) (75+ bps)
SaaS
Vendor
Business
Business Business
*
Subscription revenue only Referral rev share is simple given the Modernizing tech providers allow SaaS
existing customer relationship vendors to take on more of the stack
• Many startups have spent the past few years inserting themselves into the transaction flows of their customers by offering
payments services.
• We’ll see companies expand to be one-stop-shops for their customers next, with payments, banking, and factoring built in.
Community can reinforce product-driven playbooks
1970-2000 2000-2015 2015- 2020-
Sales-driven Marketing-driven Product-driven Community-driven

Era
software purchases software purchases software purchases Software purchases
*
Sample *
companies
*
executing *
strategy *
* * * *
Sample
enablers
• Community is well understood by Open Source and Consumer startups, but B2B SaaS companies are recognizing the power of a
“Product & Community-led” playbook themselves. Product and Community reinforce one another, much like Sales and Marketing.

Rise of SRE
Service Level Objectives (SLOs): the level of service that needs to be achieved
in order to avoid unacceptable levels of risk of displeasing the customer
Site Reliability
Engineering Error Budget: the error rate tolerated for a given set of services because we
expect that error rate will not upset the customers enough to warrant prevention
#5 Why Now? Sample SRE Job Postings
on LinkedIn Emerging 1 Increased customer expectations

Jobs Report *
Need to connect reliability to
2 business success
3 Need to trade off reliability + cost

34% Sample Key Vendors
*
Annual Growth Rate in Don’t need more metrics to monitor,
4 need alignment on the right metrics
Job Title
Need metrics that tie directly to
5 customer SLAs
• Companies across the spectrum from cloud-native startups to long-established enterprises are adopting SRE methodology.
Source: LinkedIn Emerging Jobs Report, TechCrunch.

Culture Wins
NTM Multiple Glassdoor Public List
60.0x
50.0x
40.0x
30.0x
20.0x 20.1x
13.4x
10.0x
*
*
0.0x
*
NTM Multiple Glassdoor Median SaaS Median
• Battery partnered with Glassdoor for our “Best Ranked Cloud Computing Companies” List. On average, companies on the Public
list trade at a 6.3x higher multiple then the broader comp set.
Source: Capital IQ as of 12/31/2020 and Glassdoor.

Diversity, Equity and Inclusion (DEI)
DEI Initiatives
Organizations with
inclusive cultures
96% … and more 8x
of CEOS consider are 2x more likely to achieve
DEI to be a likely to exceed better business
strategic priority financial targets outcomes.
as those without… More Inclusive Tech
• The tech industry has a long way to go in terms of DEI and these spotlight nonprofits and startups are helping us get there.
Sources: Deloitte “DEI Tech: Tools for Equity;” Nasdaq.

Hack.Diversity and Girls Who Code
is closing the gender gap in tech

Hack.Diversity partners with fast growing tech teams to identify,
develop, and equip high-performing talent – who predominantly The gender gap in computing is getting
identify as Black or Latinx – to launch careers as software worse. In 1995, 37% of computer scientists
engineers, IT professionals and data analysts within the were women. Today it’s only 24%.
innovation economy.
Since inception 160+ Hack.Alumni… 500m 300k 50%

Of girls served
People Reached Girls Served come from minority
…have contributed to 30+companies backgrounds
• These two organizations are on a mission to close the race and gender gaps in tech. They’re joined by numerous other
organizations who are making a concerted effort to address inequality in the technology industry.
Sources: Hack.Diversity, Girls Who Code 95

Conclusion
96
A new decade in software
$2,500,000
$2,000,000
$1,500,000
What Will the Next Decade in Software Look

Like?
$1,000,000
$500,000
$-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Cumulative TEV
Source: Capital IQ
Data as of 12/31/2020 97
Still plenty of room to grow
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
Software
$5,000,000 is 6% of
S&P 500
$0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Software S&P 500
• Software is still only 6% of the S&P 500, but already bigger than traditional industries such as Real Estate, Materials, and Utilities.
There is still plenty of headroom from here.
Source: Capital IQ
Data as of 12/31/2020 98
New themes will emerge
Google Trends: 2010-2020 Google Trends: 2020-2030
Ecommerce Data Governance Machine Learning

2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
Ride Sharing Remote Work AWS
?
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
2010
2011
2012
2013
2014
2015
2017
2018
2019
2020
• This past decade saw themes like machine learning and data governance grow from niche to mainstream. What comes
next?
Source: Google Trends 99

It still won’t be easy to get there
33,700
companies
12,500
companies
3,700
companies 1,200 998 325
companies companies companies
501 - 1000 1,001 - 10,000 10,000+

201 - 500 employees employees employees
employees
51 - 200
employees
11 - 50
employees
• The road to one thousand employees is a long one for many start-ups, with over 120K software companies in the U.S.
and only 1,323 eclipsing that mark.
Source: LinkedIn company count with the keyword “software” 100

Data as of 1/10/2021
But even after a global pandemic, there has never been a better time to build a
software company
$12,000
Nasdaq composite index
* *
* * *
*
$10,000 *
*
* *
$8,000
* *
$6,000 * * *
*
*
* *
$4,000
* *
*
$2,000
*
$0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
* Denotes a current or former Battery portfolio company. Past performance is not indicative of future returns.
Note: Includes public cloud companies with TEV >$500M as of 12/31/2020 according to Capital IQ, cloud companies acquired for over
$500M since 2009 according to Pitchbook, and private cloud companies valued at over $1.5B as of 12/31/2020 according to Crunchbase.
Excludes companies based in Asia, Africa, and Latin America
101
Biographies
Neeraj Agrawal – General Partner
Neeraj joined Battery in 2000 and invests in SaaS and internet companies across all stages. He was a founding investor in BladeLogic
(NASDAQ: BLOG, acquired by BMC) and has invested in several other companies that have gone on to stage IPOs, including Bazaarvoice
(NASDAQ: BV); Coupa (NASDAQ:COUP); Guidewire Software (NYSE: GWRE); Marketo (NASDAQ: MKTO, acquired by Vista Equity
Partners); Nutanix (NASDAQ: NTNX); Omniture (NASDAQ: OMTR, acquired by Adobe); RealPage (NASDAQ: RP); and Wayfair (NYSE:
W). He also invested in several Battery portfolio companies that have experienced M&A events, such as APlaceForMom (acquired by
Warburg Pincus); AppDynamics (acquired by Cisco); Brightree (acquired by ResMed); Chef (acquired by Progress), Consona (acquired by
Vista Equity Partners); Glassdoor (acquired by Recruit Holdings); Internet Brands (acquired by Hellman & Friedman); OpsGenie (acquired
by Atlassian); Stella Connect (acquired by Medallia, Inc.); TrendKite (acquired by Cision); and VSS Monitoring (acquired by Danaher).
Neeraj’s is currently on the board of Amplitude, Braze, Catchpoint, Clubhouse, Dataiku, InVision, Kustomer, LogRocket, Mattermost, Nobl9,
Pendo, Reify Health, Scopely, Sprinklr, Tealium, Thundra, Wunderkind, Workato and Yesware.
Neeraj has been recognized on the Forbes Midas List, which ranks the top 100 venture capitalists in the world, for the past ten consecutive
years including breaking into the top 10 in 2019.
Brandon Gleklen – Vice President
Brandon joined Battery in 2015 and focuses on software investments across all stages. He is currently involved in Battery’s investments
in Clubhouse, Cohesity, Dataiku, Harness, InVision, Kustomer, Niantic, Nobl9, Redox, Reify Health, Thundra, Workato, Wunderkind and
Yesware, and was previously involved in Battery’s investment in Bonfire (merged into GTY Holdings).
102
Diego Liranzo – Analyst Olivia Henkoff – Analyst Matt Klineman – Analyst

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Software 2021

1 SaaS was the growth sector of the decade

3 Multiple categories within SaaS support large independent outcomes

4 SaaS companies perform through market cycles

5 Better understanding of the SaaS model

$24B in FCF 14.0x

Cumulative FCF NTM Multiple

Revenue at IPO Revenue Today Revenue at IPO Revenue Today

40% 8% 8% Q3 2020 Average Beat/Miss

Beat Estimates Missed Estimates Average Beat/Miss Top Decile Beat/Miss

Source: Capital IQ, FactSet

Net Retention = 120%+

Gross Margin = 70%+ Gross Retention = 90%+

ASP = $30K+ Recurring Revenue = 90%+

ARR Add / Burn = 1+ Magic Number = 1.0x+

ARR Add / Burn = 1+

Metric Monolith Era Multi-Playbook Era

GTM Top-Down Sales Top-Down Sales, Bottoms-Up Adoption, Channel-Centric

Interface Model Preference for “Workflow” “Workflow”, Headless, X-as-code

How to Pay Invoice Invoice, Credit Card Swipe

Geo Start Local Start Local, Start Global

Team-Building Office Office, Remote, Hybrid

Source: Internal Battery research. Examples given are illustrative. 14

Lower Gross Margins Lower ASP

Not fully recurring Lower Retention

Source: Capital IQ, Company 10K, and Company S-1s

ARR per customer

Average Net Retention

Source: Internal Battery research. Examples given are illustrative. 17

Situation Possible Cohorts

Customer starts a free trial in January and converts to paid in

Customer starts a free trial and converts to paid. An AE did a

Independent entity of a larger company signs a contract.

A remote company becomes a customer. They are nominally

A company does a free trial with 10 seats; converts to paid with

Sales team at a company adopts a product self-serve, and then

Source: Internal Battery research. Examples given are illustrative. 18

Source: Internal Battery research. Examples given are illustrative. 19

Annualized Gross $ Retention 80% 75% 79% 84% Q1-2018

Annualized Net $ Retention 104% 98% 102% 110% Q4-2018

Cohort by Original Pricing Plan

Retention Cohorts Q2-2018

Source: Sample data; not to be taken as representative of any particular company. 20

Cumulative Gross Margin-Weighted Profit Per Customer

Source: Sample data; not to be taken as representative of any particular company. 21

Cohorts over time:

Source: Sample data; not to be taken as representative of any particular company. 22

Traditional Sales Model Sample companies:

24+ month payback, stable annuity

$80,000 Potential Insights

$40,000 • The European segment has lower CAC than the

• Self-Serve customers have the lowest CAC and

$(60,000) Example Cohorts:

Source: Sample data; not to be taken as representative of any particular company. 24

• On average, software revenue growth was slower in 2019...

SaaS Index S&P 500 Nasdaq Dow Jones

35x 2018 2019 2020 YoY Delta

All 6.10x 8.09x 13.74x +5.6x

25x Mid Growth (15-30%) 7.53x 8.89x 17.61x +8.7x

Low Growth (<15%) 4.87x 5.61x 6.94x +1.3x