PreIPO INTELLI™ Weekly Insights | Series 35
Friday, June 2, 2023 | Volume 1 Series 35 | IT Startups to Watch for, Apple's upcoming AR/VR project, and a recap of Fintech in Q1
Hello everyone! We hope you're having a fantastic Friday! As the week comes to a close, we are excited to bring you the newest edition of the INTELLI™ Newsletter, packed with all the latest news and updates. In this weeks edition we talk about the IT startups to watch for this year, news on Apple’s AR/VR headset, and an update on fintech market for Q1.
💻 IT Startups to Keep an eye on in 2023
With its reach spanning from the Internet of Things (IoT) to cybersecurity, information technology (IT) plays a pivotal role in nearly every sphere of business, government, finance, and more.
Surprisingly, even in an industry considered "old," the IT landscape continues to thrive with a multitude of innovators.
Discover below our compilation of 10 emerging IT startups, driven by visionary ambitions to automate and revolutionize the future's technological infrastructure.
Orca - Recognizing the dominance of AWS (Amazon Web Services), Microsoft Azure, and Google Cloud, which collectively control over 50% of the cloud market, Orca Security emerged. Leveraging this valuable insight, Orca developed an efficient platform that offers exceptional cloud security tools built on industry best practices. By concentrating their efforts on these three major providers, Orca achieves deeper integration and enhanced functionality, setting them apart from competitors. Orca’s pitch is “complete cloud security in minutes”.
Perimeter 81 - Having recognized the highly lucrative nature of the Software-as-a-Service (SaaS) model, Perimeter 81 successfully applied a similar concept to network security, giving rise to Network-as-a-Service (NaaS). By operating as a unified platform, Perimeter 81 enables the swift deployment of secure cloud networks in a matter of minutes.
From its very inception, Perimeter 81 embraced a fully cloud-native approach. With over 1000 satisfied customers worldwide, the company not only provides robust security solutions but also delivers substantial cost savings of over 50% in the process.
Meilisearch - An emerging IT startup, offers a high-performing open-source search engine that prioritizes speed and relevance. Their platform seamlessly integrates into any application or website, enabling users to swiftly and accurately retrieve pertinent search results.
With Meilisearch's solution, developers can effortlessly incorporate robust search capabilities into their applications, eliminating the requirement for intricate infrastructure or specialized expertise. Their goal is to empower developers by providing them with a powerful and efficient search solution.
HackerOne - Established a distinctive business model centered around bridging the gap between hackers and large enterprises seeking to assess their cybersecurity prowess. This innovative approach involves providing a range of products, including compliance and attack surface testing, tailored to the needs of the financial services industry and other sectors. HackerOne's solutions have found significant traction in the market, catering to organizations eager to enhance their cybersecurity defenses.government.
Airtable - Boasting an impressive $270 million in their latest funding round, Airtable stands as a highly promising global IT startup. Renowned organizations such as Netflix, Time, Shopify, and Expedia rely on Airtable, with over 200,000 teams leveraging its capabilities.
Airtable revolutionizes the concept of relational databases by infusing them with vibrant and visually appealing views, transcending the traditionally utilitarian nature of spreadsheets. With Airtable's open-source software, users gain the flexibility to construct customized applications or implement integrated automation that streamlines mundane tasks. This innovative approach empowers teams to unlock new levels of productivity and efficiency.
MindsDB - An open-source platform for automated machine learning, designed to empower organizations in making predictions and extracting insights from their data, without the need for extensive data science knowledge. Utilizing natural language processing, MindsDB allows users to create models from raw data in a user-friendly manner, ensuring accessibility for all in generating accurate predictions.
At the core of MindsDB's vision lies the mission to democratize machine learning, making it accessible to everyone. By doing so, they aim to enable organizations to make more informed decisions and uncover profound insights from their data, ultimately driving better outcomes.
Immuta - Governing data is one of the top priorities of organizations worldwide. Immuta operates in the realm of automating data governance, offering an all-encompassing platform that consolidates management and data security functions in a unified location.
Renowned financial institutions such as Credit Suisse and S&P Global, which prioritize data security, rely on Immuta for its robust capabilities. As a result, Immuta has built a solid reputation within the data engineering community, solidifying its position as a trusted solution provider.
Softr - Revolutionizes web development with its no-code platform, enabling users to effortlessly create websites and web applications without the need for coding knowledge.
The platform offers a user-friendly drag-and-drop interface, along with a vast selection of pre-built templates and integrations. This combination empowers users to swiftly and efficiently craft tailored web experiences.
Softr's overarching objective is to democratize web development, breaking down barriers of technical expertise and experience. By making web development accessible to all, Softr enables individuals from diverse backgrounds to participate in and excel at building their online presence.
Adalo - An app building platform that empowers users to develop customized mobile and web applications without the requirement of coding. By utilizing its intuitive drag-and-drop interface and utilizing pre-built templates, users can rapidly and effortlessly create apps for a range of purposes, including e-commerce, social media, and productivity.
One of Adalo's primary aims is to democratize app development, ensuring accessibility for all. It enables individuals and small businesses to embark on creating their own mobile and web applications without the necessity of specialized knowledge or significant resources. This approach facilitates innovation and empowers a wider audience to bring their app ideas to life.
Pulumi - A platform for cloud engineering that enables developers to generate, deploy, and oversee infrastructure as code across various cloud providers, such as AWS, Azure, and Google Cloud. By adopting an infrastructure-as-code methodology, teams can define and govern cloud infrastructure utilizing familiar programming languages, simplifying the creation and management of cloud resources across diverse environments.
The platform's ultimate goal is to empower developers in constructing superior cloud applications. By offering a unified infrastructure-as-code platform, Pulumi streamlines the cloud engineering process, facilitating efficient and effective development in the cloud environment.
🍎 Apple Could Be Launching $20 Billion Dollar Platform Soon
Morgan Stanley, has raised its price target for Apple to $190, citing the anticipated launch of a category-defining augmented reality (AR) and virtual reality (VR) headset. The firm believes that Apple's entry into the AR/VR market will significantly expand the market size.
In preparation for Apple's upcoming WWDC announcements in June 2023, Morgan Stanley has incorporated estimates of Apple AR headsets into its overall prediction model for the company. As a result, the firm has raised its price target from $185 to $190.
According to analysts' notes seen by AppleInsider, Apple is expected to unveil its long-awaited "Reality Pro" AR/VR headset at WWDC 2023, with general availability likely in the December 2023 quarter. The analysts anticipate shipment ramp-up from 300,000 to 500,000 units in 2023, reaching 3 to 4 million units by 2025.
Morgan Stanley takes a conservative approach in its shipment ramp-up projections, predicting Apple to achieve 3.4 million shipments by 2026. This implies a revenue increase from $2.6 billion in FY24 to $8 billion in FY26, falling between the post-launch ramps of Apple Watch and AirPods.
The analysts expect Apple's headset to have a significant impact on expanding the market for AR/VR devices, similar to how the iPhone expanded the Total Addressable Market (TAM) for smartphones. They predict that the combination of technological advancements, new use cases, and lower price points will drive the AR/VR headset TAM to $100 billion by 2030 and over $500 billion by 2037. This suggests that AR/VR could become the next major standalone compute platform for Apple, surpassing $20 billion in revenue.
Morgan Stanley's growth predictions are based on Apple's track record of expanding TAM in new markets and recent developments in the AR/VR industry, such as increased venture capital activity, research and development efforts, and growing interest from consumers and businesses.
Furthermore, a survey conducted in 2021 revealed that three times as many respondents preferred to buy an AR/VR device from Apple compared to the second-place choice, Google. This indicates a strong consumer preference for Apple's offerings in the AR/VR space.
Buyers' preference for AR firms (source: 2021 Harris Group survey via Morgan Stanley)
While Meta (formerly Facebook) has also made announcements about its upcoming Meta Quest 3, Morgan Stanley's survey ranks it sixth in terms of consumer preference, behind Apple, Google, Samsung, Amazon, and Microsoft.
📊 Your Rundown on Fintech in Q1'23
According to the Fintech Q1 2023 report, fintech startups received over $14 billion in venture capital funding during the first quarter of the year. Although this figure falls short of the levels seen in 2021, it is higher than the funding received in the previous two quarters. Fintech funding is on track to surpass the levels of 2020 but is expected to fall short of both 2021 and 2022.
It's important to note that a significant portion of this funding is attributed to Stripe's substantial $6.5 billion megaround. When excluding such outlier deals, there is a 36% quarter-on-quarter decline in fintech funding for Q1. This suggests that the fintech market is still undergoing adjustments and changes.
In terms of investment, the fintech industry ranked second, behind enterprise software, with over $14 billion in funding during Q1. However, this represents a 60% drop compared to the same period in 2022, slightly exceeding the overall market decline of 51%.
The creation of unicorn companies in the fintech sector has significantly decreased, going from over 40 unicorns per quarter in 2021 to just 3 in Q1 2023. Nevertheless, fintech remains the leading industry in terms of unicorn creation.
In the face of the challenging market conditions, B2B Software-as-a-Service (SaaS) has emerged as a more secure option. Even without considering Stripe's outlier deal, B2B SaaS accounted for 44% of the funding in 2023, aligning with the long-term trend of shifting away from B2C and direct B2B models in fintech. If Stripe is included, B2B SaaS's share would exceed 70% in 2023. Although fintech SaaS is also affected by the market challenges, it is considered more resilient and adaptable in this environment.
Excluding Stripe's outlier, payments remain the sub-industry attracting the most funding in 2023 so far, surpassing sectors like cryptocurrency and decentralized finance (Defi) that were ahead of payments in 2022.
The report highlights some areas of interest for future analysis, including treasury management, CFO tech, debt collection, and alternative investments. These areas are experiencing increased attention due to factors such as diversification and risk management of cash reserves, rising interest rates, and the shift of value creation from public to private markets. These trends present opportunities and challenges that are worth monitoring.
Regarding the public market, it is expected to remain challenging throughout 2023, although a successful high-profile listing could change the landscape. The report also discusses the case of Stripe, which missed its IPO window in 2021 but raised $6.5 billion at a $50 billion valuation through alternative means. Stripe's valuation dropped significantly from its previous peak, but it fared better compared to other fintech stocks that experienced declines of 70% or more.
M&A activity remains strong in the fintech market, although slightly cooled compared to 2021. Notable M&A operations include bankruptcies and fire sales, incumbent acquisitions of fintech startups, startups expanding into new markets or acquiring peers, and private equity buyouts taking advantage of the challenging public market.
Overall, the fintech market continues to evolve, and promising startups are emerging, particularly in the early stages. These startups focus on building fundamental infrastructure for the future and benefit from a pool of talented engineers. As the industry matures, these companies are well-positioned to drive innovation and growth.