In terms of cloud investing and venture capital, the first half of 2014 has not met some investors expectations when compared to the value and growth spurts seen within the industry during 2013. Many market analysts feel as if cloud has endured a correction in terms of true market value. While valuations may be down, analysts at Bessemer Venture Partners are still optimistic on the cloud.
Byron Deeter from BVP was quoted as saying, “We are calling bottom; There is no question cloud is the future of software. It is just a short-term valuation question, and the public markets are trying to find fair value.”
Although cloud investments and valuations by venture capitalists have taken a noticeable hit since the beginning of the year, Deeter’s confidence isn’t phased. Deeter goes on to say, “As an investor, the positive of this is that as the correction rolls through the private markets, it will be a buying moment.”
Further explaining his position, Deeter goes on to mention, “The breadth of movement under the water line will shock people as they realize how many world-class companies aren’t yet visible at the public level.”
Evidence exists to support Deeter’s claims. While some clouds IPOs have been temporarily put on ice, Zendesk’s IPO has skyrocketed. In the past month, Cloud stocks have risen about 6.2% according to the WSJ.
The biggest question for investors right now is: “Have we survived the storm or is there more corrections to come?’ If you take the advice of Bessemer Venture Partners, Deeter’s warning of the cloud being at the “Bottom” and this being a “Buying” time is a good indication of his firm’s intentions. Will the second half of 2014 be referred to as the “Cloud comeback?” If trends hold steady and BVP’s predictions become true, the cloud correction of 2014 will simply become an afterthought.