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Technology Spending Patterns of the Bn dollar valued organizationsJULY 2017
2Source : DRAUP
Total Funded Start-ups analysed
~30,000Founded after 2003
FILTERED – USD Billion dollar plus valuation companies
Sources: DRAUP Platform (Engineering module, Start-up module, Fortune 500 module, Ecosystem module and Talent module )
Other Sources: a16z, Greylock Partners, Forbes , Wall Street Journal, New York Times
Private Unicorns
224*companies
DRAUP has built a list of 224 Unicorns. Analysing 16+ sectors and 30,000+ unique funded start-ups. These companies founded since 2003 were tagged in our platform with all the relevant details including funding investors, market etc..We shortlisted most promising 224 companies across sectors with highest private market valuation.
*Excluding 28 Unicorns which have IPO’ed & 34 Unicorns which got acquired since 2003
Research Tracks
DRAUP followed a rigorous and structured research approach to analyse 224 private companies with a valuation of greater than 1 Billion USD
Key Inputs
Methodology
With Digital stake-holders across G500 technology spenders, VC partners and start-up founders
30+ Primary Interviews 16+ Industry Verticals
120+ hours of research Spread across primary interview, secondary data collection, consolidation and analysis
20 Research ReportsValidated data from Bloomberg, Reuters, CrunchBase, a16z, WSJ and others
70+ Marquee InvestorsInvested in Unicorns including angels, institutional investors and Public market large funds
1050+ Investment RoundsRaised by Unicorns across various growth stages such as early stage, mid-stage and late stage
Largely dominated by e-commerce, enterprise software, travel-tech, fintech and social
Note: DRAUP has a database of 100,000+ start-ups as of May, 2017. The dataset is compiled using proprietary machine learning algorithms along with human curation to verify company information. The platform is updated in real time and analysed on a quarterly basis.
3Source : DRAUP
Objective
Key Questions Answered
Key Takeaway
§ Analyse landscape of Billon Dollar Valuation start-ups –Referred as Unicorns
§ Understand the technology spending patterns of Unicorns
§ What is the current Unicorn Landscape and how has it evolved ?
§ How much do the unicorns spend on technology and what are the typical spend areas?
§ How does the technology spending distributed across industries and geographies?
§ How does the spending change with scale and size of Unicorns?
§ How does Unicorns build technology capabilities as they scale?
§ Who are the decision makers in Unicorns and how are the responsibilities distributed?
§ Are unicorns a viable segment for technology service and solution providers to target?
Objective
Key Questions Answered
Objective
4Source : DRAUP
Global Unicorns Landscape01
Unicorn’s Technology Spend Analysis02
• Historical viewpoint on billion dollar valued companies
• Unicorns growth patterns during last 5 years
• Unicorns landscape : Geography foot print and top companies
• Top Industry Verticals where Unicorns are formed
• Top VCs and other Non traditional Investors who are leading investment in Unicorns
AGENDA
5
Source : DRAUP
History has shown that technological innovations have given birth to Unicorn companies. The phenomenon has reached its peak in the recent years
1960 1970 1980 1990 20102000 Present
Semiconductor
PersonalComputers
Networking
Internet
Social Networks
Microsoft fetched a 6X multiple when it went public in 1986, at a market cap of $778 million
The 1990s gave birth to Google, currently worth nearly 3x Facebook; and Amazon, worth ~ $160 billion
Cisco became the most valuable company during the heights of dot-com bubble with market cap ~ $500 billion
Facebook priced the third largest IPO in US history, in 2012, with a pre IPO valuation of $104 billion, raised $16 billion.
Intel raised $6.8 million through IPO in 1973, and reached a market cap ~ $1.7 billion in 1980
Source: DRAUP Engineering Module – Includes companies across major geographies such as US, Canada, Israel, Europe, China and India. Coverage may be limited in China and other south east APAC regions
6Source : DRAUP
Unicorns are no more mythical and rare companies now-They are plenty in the ecosystem and creating a massive impact
Note: List above is non-exhaustiveSource- DRAUP Start-up Module. Our proprietary algorithms track start-up activities such as VC funding, M&A, IPO, Leadership change etc. The list above is updated as of May, 2017
224Unicorns
RAISED REACHED
~724Billion USD
~128Billion USD
CREATEDMARKET VALUATIONINVESTMENTS JOBS
~350K
7Source : DRAUP
Unicorns have disrupted many traditional industries as a result of Global user base, Optimizations in technology product development and a change in customer mindset to adapt to new products
Source- WSJ, NASDAQ Listing, DRAUP Start-ups Module (Includes start-ups across major geographies such as US, Canada, Israel, Europe, China and India. Coverage may be limited in China and other south east APAC regions)
Uber Airbnb WhatsApp‘A competitor’ with just a team of 50 engineers disrupted the telecom industry in less than 4
years
500 MNGlobal Users
2013 2016
982 MN
Loss in SMS revenues
$7.5 Billion
2.6 XDelta
2013 2016Loss in SMS
revenues
$20 Billion
Airbnb has disrupted NYC lodging industry and NYC economy
NYC LODGING MARKET
2014-2015
Revenue loss for NYC lodging industry
Jobs lostinvolving hotel operations, room service etc.
Lost tax revenues annually for local, state and federal governments.
$2.1bn
2800
$226mn
US TAXI industry has been hammered by an “Uber Effect,” with stock price down by nearly
49%
NYC Taxi Medallions
0
10
20
30
40
50
60
$258 mnSeries C
Uber
Val
uatio
n ($
bn)
Medallions Stock price
UBER Valuation
$1.2 bnSeries D
$1.2 bn Series E
$1 bn Series F
Jul 2013Oct 2013Jan 2014Apr 2014Jul 2014Oct 2014Jan 2015Apr 2015Jul 2015
8Source : DRAUP
Unicorns have been increasing significantly with their number growing by 230% over last two years….
>77% of VC funds have been raised in last 3 years
2009 2010 2011 2012 2013 2014 2015 2016 2017Cumulative Unicorns
$16.1
$26.8 $31.3
$46.8
$79.0
$111.7
$125.6
22453 95443930 22318126YTD*
~14.7Billion USD
~128Billion USD
Cumulative Funding x
34 acquired & 28 IPO’ed
Highest Exits in Social & Enterprise Software
5 Exits
11 Exits
12 Exits
18 Exits
Source- DRAUP Start-up Module. The list above is updated as of May, 2017 Note: No inflation assumed (all values in 2017 USD). Funding details are updated with nearly 70% accuracy
9Source : DRAUP
…And they have not been restricted to a particular geography or industry
Geographies
~$62bn ~$11bn~$40.5bn ~$3bn
Investment by Verticals
Travel tech
~$26bnEcommerce/Marketplace
~$17bn ~$14bnEnterprise Software HealthcareFintech
~$7bn~$12bn
Who is Investing?
>15 Unicorns 10-15 Unicorns <5 Unicorns
SV Angel, Sequoia, Tiger Global, KPCB, Goldman Sachs, Tencent Holding
Accel Partners, IVP, NEA, Google Ventures Microsoft, Didi, Red point
TOP INVESTORS
Source- DRAUP Start-up Module. The list above is updated as of May, 2017 Note: Primary locations of analysis include North America, UK and India. Hence coverage may be restricted in other locations. Funding details are updated with nearly 70% accuracy
10Source : DRAUP
Israel
UK
14
23
Germany
Canada
South Korea
26
Singapore
26%
5%
3%
2%
4%
2%
1%
51%
Emerging across the global technology hubs; Brazil, Indonesia and Nigeria have joined the Unicorns club in 2017
USAChina
India
Sweden% Unicorns distributionby HQ location
1%
1%Russia
1%
1%
Brazil
Nigeria
1% Japan
1% Indonesia
X%
2242017Number of
Unicorns till date
• Fastest growing internet market• Hotspots like Bangalore and Shanghai have
mature start-up ecosystem
• Mature start-up ecosystem focussed on technology innovations in Bay Area
• Large enterprise drivers : Facebook, Google, Microsoft, Apple and Amazon have scaled R&D presence
• Large Financing options from institutional investors
• Israel and UK are top hotbeds for start-ups and universities with high focus on emerging technology focus such as Cyber Security and Big Data
France
1%
2%
*63% of the Unicorns which have been established in last 5 years are outside US
Source- DRAUP Start-up Module. The list above is updated as of May, 2017
Note: 1% represents maximum 2 Unicorns in a location; Unicorns such as Africa Internet Group in Nigeria, Gojek in Indonesia, Decolar in Brazil and Mercari in Japan are the only companies headquartered from respective locations
11Source : DRAUP
…And not limited to just being Unicorns- Scaling to Pentacorns and Decacorns
Source- DRAUP Start-up. The list above is updated as of May, 2017
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
Curr
ent V
alua
tion
($bn
)
~43%
$720.0 bn>$10bn $2bn - $10bn <2bn
ü 14 decacorns as of 2017 Facebook was the only one in 2013
ü 8 of these decacorns are headquartered in US. 5 from China and 1 from India
ü E-commerce and Enterprise Software have 3 decacorns each, while Travel-tech has 2
~23%
(14) (64) (143)~x% % of total valuation in the range(x) Number of unicorns in the range
~34%
12Source : DRAUP
Global Unicorns Landscape01
Unicorn’s Technology Spend Analysis02
§ Unicorn’s Technology spending analysis across following
dimensions
- Product development and Infrastructure spend
- Geography wise tech-spend distribution
- Emerging and traditional tech-spend areas by verticals
- Potential executive buyers in Unicorns
§ Challenges and collaboration opportunities with Unicorns
13Source : DRAUP
Methodology for calculating Unicorns technology spend
Methodology
Technology Spend Analysis of
Analysis Tracks
224 private Unicorns
Addressable market for Unicorns technology
spending?
What is the addressable spend across different target segments?
Objective
30+ Primary Interviews with CXOs and Technology
Experts from the Hi-tech, VC & start-up community
50+ IPO Unicorns analyzed across industry verticals
founded during past 5 years
Methodology
Breadth of Activities
Product Development (PD)
Spend
Infrastructure & Support (IS)
Spend
Source: DRAUP Methodology
14Source : DRAUP
DRAUP analysed technology spending of Unicorns across four key dimensions
Methodology
4 LENSES OF ANALYSIS
Potential buyers and Decision Makers
Industry Deep Dive3.
4.Geography Footprint
PD* & IS* activities 1.
2.
*Product Development & *Infrastructure & Support
Source: DRAUP Methodology
15Source : DRAUP15
What is the technology spend and how it is distributed?Distribution of technology spend by product development & infrastructure support areas
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
16
Source : DRAUPNote : 1) *Spending includes both employee compensation and related expenses, as well as allocated overhead on infrastructure, devices and tools2) Non-Tech spend are not included in AnalysisSource: DRAUP Methodology
Operating Cost breakup: For the analysis the technology spend has been categorised across three segment: Product Development and Infrastructure & Support
16
1Product Development (PD) spend*:• Distributed across product development lifecycle such as design, prototype, development, Q/A and support activities• Typical technology spend areas are AI, Design & Experience, Bigdata and Mobility• Also includes spend on scaling platforms, adding enterprise features, functionality and enhancing the ease of use of cloud-based services
2
3
Infrastructure Support (IS)Spend*: Majorly consists of Cloud infrastructure hosting, IT Procurement and digital IT spend on business function• IT Procurement: Leasing and hosting cost on Cloud enterprise servers, storage, personal hardware and software licensing• Also includes spending on digital marketing platforms such as CRM, analytics, customer support and sales enablement functions
Other Non-tech Spend:• Expenses incurred by other business functions including personnel-related costs for business functions like operations, marketing, sales etc.
Also include costs incurred for indirect advertising, market research, tradeshows, branding, marketing, promotional expense, and publicrelations.
• Cost incurred on BPO and General and Administrative expenses
Methodology
Not included in the analysis
17Source : DRAUP
DRAUP evaluated 50+ previous, current and exited Unicorn companies to arrive at technology spend analysis
Note: 1) Figures are average spend as percentage of operating cost; 2) Non-tech spend includes spending on marketing, sales, BPO and customer support operations;3) Non-tech spend are not included in the analysis; 4) Figures are rounded off , therefore might not add up to 100%Source: DRAUP Methodology
Insights
Majority of the operating cost comprises of Non-tech activities like marketing, BPO, delivery executives and customer support salaries
Majority of spend across both product development focused on user experience and cloud infra to process massive amount user generated dataset
Non-tech spending such as driver salaries, incentives, marketing, BPO work and managing partnership takes a large share of operating costs
Enterprise Software
E-Commerce
Social
TravelTech
FinTech
Consumer electronics
HealthTech
Industry vertical Product Development Infrastructure Support Other Non-tech Spend
Technology spend areas considered for the analysis
Technology spend is majorly on Product development. Infrastructure spend includes salaries, infrastructure hosting and depreciation cost
Infrastructure spend on hardware ,software technologies cost along with their maintenance cost takes large share of technology spend
Infrastructure spend includes depreciation of servers and equipment, security services and other tools, as well as amortization of acquired technology.
Technology spend is majorly on Product development such as digital payments. Infrastructure spend comprises of cloud platforms to process large transactions and active security requirement
30-35% 15-20% 35-40%
10-15% 15-20% 65-70%
25-30% 20-25% 35-40%
10-15% 20-25% 65-70%
35-40% 20-25% 25-30%
20-25% 25-30% 25-30%
10-15% 35-40% 35-40%
Methodology
18Source : DRAUP
Unicorns technology Spend reached USD 32 Billion in 2016; with Infrastructure Support spending contributing ~53%
Note* : Spending includes both employee compensation and related expenses, as well as allocated overhead on infrastructure, devices and toolsSource: DRAUP Methodology
Global UnicornsTechnology spend reached
USD ~32 Billionin 2016
USD
~17Billion
Product Development (PD)
Spend
USD
~15Billion
Infrastructure Support (IS)Spend*: Majorly consists of IT Procurement and Business functional digital IT spend
Infrastructure Support (IS)
Spend
Product Development (PD) spend* PDLC spend on product design, development, Q/A and support activities. Typical technologies are AI, Design & User Experience, Bigdata and Mobility
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
19
Source : DRAUP
~55% of technology spending is distributed across Mobile, Bigdata and cloud infrastructure
Product development - ~$15 bn
AI Design & Experience Mobile Data Engineering
Bigdata platforms to understand customer behaviour across multiple channels such as transactions, social, mobile and web
High focus on application developed for mobile operating systems from Apple, Android, and others• Mobile app design and development• API & Integration, mobile testing SDKs
and platforms• Mobile collaboration tools
User interface design for easy navigation though products and services:• Conversational UI• Adaptive and Reactive UI
AI technologies to feed right information into existing products and services:• Product Personalisation (AI, analytics
and mobile) • Intelligent Chatbots;• Voice recognition
10-15% 20-30%
• Platforms to measure device performance, server performance,
• Devops platforms to monitor infrastructure & support collaboration between dev and operations team
• Digital tech spend across Business functions such as Marketing automation, Sale Enablement and Customer Support solutions
Infrastructure Support - ~$17bn
Cloud Infrastructure Data Management Platform Security
Security solutions to measure vulnerabilities across network, endpoints, access, applications, and cloud. For example:• Biometrics and Identity Management• Monitoring web traffic for optimum
shopping experience
Data integration and analytics platform to scale existing products/services and ensure seamless connectivity across multiple channels such as smartphones, web and social for engaging customers across multiple touchpoints
Scaling cloud infrastructure through cloud platforms and services • Amazon Web Services;• Microsoft Azure;• Google Cloud Platform.
40-45% 10-15% 15-20%20-25%
10-20% 25-30%
Network and other digital spend
ExecutiveIndustry
Deep DiveGeography Footprint
PD and IS activities
Note:- Figures are derived basis analysis of 50 IPO companies and primary interview insights from digital stakeholdersSource: DRAUP Methodology
20Source : DRAUP
E-commerce and TravelTech verticals have high spend on Infrastructure Support in contrast to enterprise software and consumer electronics
Note:- Numbers are derived basis analysis of 50 IPO companies across verticals and primary interview insights from digital stakeholdersSource: DRAUP Methodology
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100
Infra
stru
ctur
e sp
end
dist
ribut
ion
inde
x
Product development spend distribution index
Product development and Infrastructure spend (by Industry)
ü Enterprise Software, Bigdata and Social Unicorns have high
Product development spend
ü Large Product development spend is attributed to IP creation leveraging high end skills in design, development and data
science
2
ü E-Commerce, TravelTech & Health Tech upwards of 50% of
total technology spend on Infrastructure supportü Infrastructure spending is attributed to large number of
customer transactions and active security requirements
across multiple touchpoints
ü Product development spend is distributed across creating
personalised experience and improving usability (Analytics, ML)
1
Very Low MediumLow High Very HighVe
ry Lo
wM
ediu
mLo
wHi
ghVe
ry H
ighKEY INSIGHTS
A
E-Commerce
Hardware/Consumer ElectronicsBigData/Cyber Security
HealthTech
AdTech
TravelTech
SocialFinTech
Media &Entertainment Enterprise software
Note: Distribution index of technology spend across verticals.0 – Minimum spend100- Maximum spend
Min. Spend
Max. Spend
Min. Spend
Max. Spend
21
Source : DRAUP
Among the 100 companies studied as part of deep dive, Uber (Traveltech) and Palantir (Enterprise) have the widest spend areas
Note:- Numbers are derived basis analysis of 50 IPO companies across verticals and primary interview insights from digital stakeholders
Source: DRAUP Methodology
ExecutiveIndustry
Deep Dive
Geography
Footprint
PD and IS
activities
0
10
20
30
40
50
60
70
80
90
100
0 10 20 30 40 50 60 70 80 90 100
Infr
astr
uctu
re S
pend
Dis
trib
utio
n In
dex
Product Engineering Spend Distribution Index
Very
Low
Med
ium
Low
Hig
hVe
ry H
igh
Enterprise Software/Big Data TravelTech Fintech
Product development and Infrastructure Spend (by company)
E-Commerce
Uber
GrabTaxi
Didi Chuxing
Lyft
Ola
BlaBlaCar
Lu.com
StripePayTm
Credit KarmaMozidoZenefits
China Internet Plus Holding
Flipkart
Coupang
ContextLogic
VANCLHouzzAvito.ru
HellofreshBlue ApronWeiying
Quikr InforDropBox
Slack
Cainiao-LogisticsDocuSign
MuleSoftPivotalGitHub
Palantir Technologies
ClouderaSocial Finance
Fanatics
Very Low MediumLow High Very High0 – Minimum spend
100- Maximum spend
B
22Source : DRAUP
CASE IN POINT: Airbnb developed capabilities through integration and acquisitions during growth stage; Since 2013 it has been investing in-house to develop core capability & also open sourcing its ecosystem to scale
Source: Airbnb blogs and Crunchbase
0
5
10
15
20
25
2009 2010 2011 2012 2013 2014 2015
Valu
atio
n ($
bn)
Airbnb
Building capabilities on 3rd Party Applications Acquiring capabilities Bringing capabilities
in-houseOpen-sourcing existing
capabilities to scale
Airbnb hosted on AWSstorage cloud
Backend server
infrastructure supported
by nginx
Integrated Braintree:
payment provider in US
Added search and discovery feature for 35k
listings of diverse properties
Developed an open source framework, AirMapView, which
supports multiple native map providers
Integrated Twilio to automate
mobile communication between
rental hosts and potential guests
Acquired LocalMind for local
recommendations and host
guides
Airbnb has been taking promising steps
for enterprise offering through its
business travel platform
Acquired Fondu for reviews
about places to eat and
drink
Acquired Nabewise as
neighbourhood discovery
platform.
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
23Source : DRAUP
CASE IN POINT: Unicorns have acquired many solutions to bring partner’s key capabilities in-house to scale…
Note: List above is non-exhaustiveSource- DRAUP Start-up Module. Our proprietary algorithms track start-up activities such as VC funding, M&A, IPO, leadership change from websites such as Crunchbase, WSJ, Bloomberg etc. The acquisition tracked here are from last 7 years. The list above is updated as of May, 2017 .
ExecutiveIndustry
Deep DiveGeography Footprint
PD and IS activities
8
14
15
19
23
Product Development
- Cloud Migration - In-app 3D content sharing and creation platform
- Photo-sharing company- Customized Storage for media content
- Cloud-first supply chain management platform
- Integrated predictive customer analytics for retailers and brands
- Machine Learning based background checks for identity verification
- Location-based Q&A platform for nearby places
- Full service villa rental company
-Human-powered search engine
- Digital Payments
- Database platform across Tier-1 cities for logistic and inventory distribution
-India’s largest Fashion aggregator
Infrastructure Support Total tech acquisitions
24Source : DRAUP
CASE IN POINT : ….and have high focus on building critical assets in-house
Source: DRAUP
Other Sources include Business Insider, VB Journal
Potential opportunity for solution providers to offer platform integration and cloud migration solutions as Unicorns invest in bringing R&D in-house
Uber has shifted from Google maps and brought its mapping services in-house in 2016. Its planning to create its own detailed maps for traffic
patterns, pickup location etc. for its autonomous car project
USD 0.5 BillionTo be spend on its global
mapping project
Cloudera plans to build out the necessary data centre infrastructure in-house for new cloud services that the company could then customize to
customers
USD 1 BillionTo be spend on building
cloud service
Dropbox is spending heavily on custom-build cloud infrastructure to
customize its cloud services in mobility, IoT security etc for users. It is
building its own hardware and software for the infrastructure, and plans
to reduce networking costs by ~50%
UndisclosedCustomized cloud storage
solutions
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
25Source : DRAUP25
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
What is the geography wise technology spend distribution ?Global hubs for new age engineering skills and technology focus in each location
26Source : DRAUP
27%
34%
35%
Unicorns Technology Spend by HQ
Europe
Asia 24%
62%
14%
Technology Spending of Unicorns is consolidated in
headquarter locations largely due to limited global engineering presence
~$ 32 bn USD
~85% of tech-spending is consolidated between Unicorns headquartered in North America and Asia
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
North America
Note:-. Coverage may be limited in China and Japan, Analysis till May, 2017Source: DRAUP Methodology
27
Source : DRAUP
Investment into new age skills such as AI, Bigdata and Security are common theme across global hotspots
Note:-. Remaining tech spend is distributed across Unicorns in other locations in US (New York, Seattle etc). Coverage may be limited in China and JapanSource: DRAUP Methodology
ExecutiveIndustry
Deep Dive
Geography
Footprint
PD and IS
activities
IsraelInfinidata and Conduit are enterprise software Unicorns.
Technology spend areas are cloud security and predictive
analytics for IT performance and monitoring solutions
IndiaUnicorns like Flipkart and Ola have high engineering focus on
improving customer experience /personalisation across web and
mobile channels leveraging data science and ML skills
SingaporeSingapore has 2 Unicorns: GrabTaxi and Garena. Grabtaxi has
technology spending across mapping, GPS and data driven
navigation for fleet management
XXSkill
Availability
YY Technology Spend
2016
X% Percentage New
age tech spend
HOT SKILLS: AIà Artificial Intelligence, SECà Security, MOBà Mobility, BD à Big Data
40%SEC BD AI 15% 30%MOB AI SEC
$1-2 bn40%
50%BD 20%AI 15%MOB 15%SEC
$ 0.1-0.3 bn50%
XX%
$1-2 bn60%
MOB BD 30%
Bay AreaHub for new age engineering in areas such as AI and Data
Science. Unicorns such as Uber, Airbnb, Dropbox have core
engineering teams leveraging AI/ML skills across product design,
development and customer experience
UKMajority of Unicorns are from Healthcare sector such as
BenevolentAI and Oxford Nanopore technologies have high
engineering spending in areas such as biomedical data analysis
and Cloud infrastructure management
ChinaB2C aggregators and marketplace players have high engineering
spend on data driven product engineering. High focus on AI and
Data Science to improve customer experience across multiple
online channels
50%AI BD 10%MOB 10%SEC
40%
40%BD AI MOB SEC
50%
40%AI 30% 20%MOB 10%SEC
$16-18 bn$ 0.5 - 1 bn
$ 4-5 bn
30% 30% 20% 10% BD
20% 20%20% 25%
Geography wise technology spending pattern of Unicorns
65%
Bay AreaUK
China
SingaporeIndiaIsrael
28Source : DRAUP
CASE IN POINT (Bay Area): The hubs of large Unicorns are restricted to Bay Area which they are leveraging for new age capabilities
Note: Numbers above are rounded off, therefore they might not add up to 100%Source: DRAUP Methodology
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Technology spend in Bay Area
Big Data AI Design & Experience Security Mobile
31% 22% 15% 4% 28%
30% 21% 17% 4% 28%
37% 4% 18% 7% 35%
28% 15% 18% 8% 31%
30% 6%13% 31%20%
Uber is ranked as the 8th largest employer in San Francisco. This office has and Advanced Technologies group is comprised of Uber’s self-driving engineering team.
Stripe operates in 25 countries but has ~ 61% of engineering team in Bay area.
Engineering team scaled to 550+ from 40 in 2013. San Francisco team is working on multiple functions including Data Science, Security, mobile etc.
The San Francisco-based company, and is currently applying sophisticated machine learning to the problem of identifying what’s in all those images.
Since launching Magic Pocket last year, Dropbox has been storing and serving more than 90 percent of their users’ data on their own custom-built infrastructure
~ $400 Million
~ $220 Million
~ $170 Million
~ $80 Million
~ $50 Million
29Source : DRAUP
CASE IN POINT (Stripe) Stripe engineering capability is restricted to US, however it has adopted a globally distributed IT/Support structure in non HQ locations
Source: DRAUP Engineering Module
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Key Highlights
#IT/ Support HC: 200 - 300
# IT/ Support Centers: 10USA : 30 - 503
UK: 25 - 35 1
Japan: 20 - 40 1
Ireland: 80 - 1001
France: 10 - 20 1
Singapore: 20 - 30 1
Canada: 20 - 402
Seattle: 30 - 501
San Francisco: 130 - 200 . 1
2
Region: Headcount
#EngineeringCentres
10
Region: Headcount
#IT Centres
Engineering Centre location Key Activities Headcount
USASan Francisco
• Development of Stripe API and Machine Learning. Development of Payment Infrastructure, adding features to the Stripe API, big data, security, and services.
130-200
USASeattle
• Development of software testing/ QA solutions 30-50
30Source : DRAUP30
What are the emerging and traditional spend priorities?Deep dive on traditional and emerging technology areas in E-commerce, TravelTech, Enterprise Software and Fintech Unicorns
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
31Source : DRAUP
Industry wise technology spending landscape: eCommerce vertical has the highest technology spend reaching ~$8 bn USD in 2016
Note: Numbers above are rounded off, therefore they might not add up to 100%Source: DRAUP Methodology
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
15
17
Overall
Infrastructure Support Spend
ProductDevelopment
Spend
~$32 Bn
3.50
1.47 1.38 1.23 1.21 1.10 1.23 0.820.18 0.39
4.50
1.651.10 1.11 1.09 0.92 0.95
0.710.63 0.36
eCommerce
TravelTech
Hardware
/Electronics
Enterprise S
oftware
Media & Entertainment
Fintech
BigData/Cyber S
ecurity
Social
Healthcare
Adtech
Product Development Infrastructure Support
8.0
2.7 2.22.0
3.12.2
2.1
0.81 0.68
1.53
x Total Technology spend for the vertical ($bn)
*All figures in $bn
~$ bn
~$ bn
32Source : DRAUP
Fintech: RPA, Blockchain and Robo Advisors are emerging spend areas
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Mobile Payments Blockchain
Biometric Identity ManagementBiometric Identification through Iris Scanners, face & voice recognition and fingerprint identification
Blockchain to reduce infrastructure costs for cross-border payments, securities trading and regulatory compliance
RPA systems to scale business processes using rule-based decision trees for shorter transaction times for customers
Fraud detection using MLPattern recognition to identify potentially fraudulent transactions in real time
Alternative Credit ScoringCombining Quantitative customer data with qualitative concepts like -behaviour, willingness, ability, etc for credit scoring
Cloud MigrationHybrid cloud services to ensure both privacy and security compliance as well as to enable microservices such as P2P lending, mobile payments, blockchain etc.
Analytics Platforms to track transactionData pipeline tools which allows user to pull customer information in real time such as transactions, demographics etc
Mobile Wallets and Mobile based merchant payment solutions
Robo-AdvisorsUses machine learning to automatically move users’ money around based on the best rates available at any given time.
Peer-to-peer lendingPractice of lending money to individuals or businesses through online services that match lenders with borrowers
Traditional Spend Areas New Age Spend Areas
RPA
Source: DRAUP Methodology
33Source : DRAUP
E-Commerce: Conversational UI, IoT Platforms and Beacons are emerging spend areas
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Supply chain analytics Conversational Commerce
IoT platforms
Voice-activated AssistantsVoice based personalised shopping assistance, for customer retention and better consumer experience
Chatbots offers personalised shopping assistantConversational UI for customer support and m-commerce
Helps in tracking and monitoring the shipments in transit, in real time and enhance customer satisfaction by tracking delivery.
Data IntegrationBack end system to help keep track of inventory and order fulfilment
Cloud SecurityMonitoring web traffic for optimum shopping experience, investigate malicious behaviour and identify suspicious bot crawling activity
Predictive Analytics platformsDifferentiated customer experience via segmentation, targeting, journey mapping by measuring multiple customer touchpoints.
Big DataBig Data supports dynamic pricing & track customer journeyInsights on customer behaviour to offer personalized solutions
Optimising logistics across smaller stores, local drop off points via real time fleet analytics tools
Beacons TechnologyPush alerts and messages to customer regarding brand promotions, products offers and personalised notifications
Memory MirrorProvides 360-degree back and side views of new outfits, using few recorded body gestures
Traditional Spend Areas New Age Spend Areas
Source: DRAUP Methodology
34
Source : DRAUP
TravelTech: In-vehicle analytics, self-driving and mobility management platform are emerging spend areas
ExecutiveIndustry
Deep Dive
Geography
Footprint
PD and IS
activities
Fleet Analytics In-vehicle customer Experience
Network Management Platforms
Autonomous car platforms Cloud platform for the operation optimization of autonomous
vehicle fleets
Mobile chatbots for ride booking, infotainment and in vehicle
customer support to drive better customer experience and
engagement
To ensure seamless connectivity across multiple channels such as
smartphones, web and social to remain actively engaged with fleet
and customers
Real Time MappingComputer vision for 3D maps and ML for dynamic route
suggestions. Predicting daily routes using core mobile applications
Hybrid Cloud ModelInvestment in multiple cloud data centre providers to ensure
continuous business operations
Real Time Monitoring PlatformsDetects anomaly in fleet operations by examining incoming metrics
and comparing to historical data
Fraud DetectionEnd point security solutions for real-time ID Check through facial
recognition to ensure safety of riders
GPS fleet tracking, details related to driver activity and
performance helping drivers achieve maximum performance
and efficiency
Beacons based vehicle monitoringProximity beacons and other forms of indoor location sensors
provides information about how people travel improving flow
as well as forecast
Head up displays(HUD)Empowers technicians and experts in other locations to assist
though photos or real time video
Traditional Spend Areas New Age Spend Areas
Source: DRAUP Methodology
35Source : DRAUP
Enterprise Software: Chatbots, CRM automation and Cognitive services APIs are emerging spend areas
Source: DRAUP Methodology
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Big Data Chatbots for workforce communication
CRM automation tools
IoT PlatformsIntegration platform to collect customer interactions to across various devises such as mobile, web, smart -sensors and network-captured data
Messaging platforms like Slack have high engineering focus on internal chat bots for enterprises and developing chatbot frameworks
Intelligence chat bots and analytical platforms on top of legacy CRM solutions leveraging AI algorithms for data-driven decision making and business process transformation
User Interface DesignHigh spending on UX Designers for interaction design and visual design to help developers translate the concept to final products
Network PerformanceTools to measure device performance, server performance, log, audit, and status data from enterprise server deployments
Security & Risk ManagementSecurity solutions to measure vulnerabilities across network, endpoints, access, applications, and cloud
Hybrid CloudSpending on tools to enable users to seamlessly extend workload migration across multiple cloud platforms with zero downtime
Integrating enterprise data, customer and other stakeholders data across multiple channels such as social, mobile etc for data driven decision
Augmented realityEmerging use cases of AR such as streamlining the Configure, Price, Quote (CPQ) and Quote-To-Cash (QTC) operations
Cognitive Services APIsArtificial intelligence algorithms for vision, speech, language, and knowledge to build more personalised apps
Traditional Spend Areas New Age Spend Areas
36Source : DRAUP36
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
How is the decision making structured in Unicorns ?Executive analysis by scale & size of Unicorns. Analysis of diverse roles and responsibilities by different industry verticals
37Source : DRAUP
As Unicorns scale, decision makers become more distributed with diverse roles and ownership (1/2)
Source: DRAUP Methodology
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Size of the bubble indicates executive’s ownership and responsibilities at a particular level
Democratisation of decision making with Unicorn progression
VCsCo-foundersCXOs
CEO CTO
CFO VCsCo-foundersCXOs
SVPsVPs
Business OperationsCore Platform
Directors
VCsCo-foundersCXOs
SVPsVPs
Business Operations
Directors
Board Members
VP-Customer Exp.
SVP User Exp.VP Products
VP Client Engineering
Chief Brand OfficerCMO
VP Cloud StrategyVP –Emerging
Market StrategyVP Mobile
Chief Design Officer
Mid-size Unicorns(Revenue $0.1- 1Bn)
Large Unicorns(Revenue > $ 1Bn)
Small Unicorns(Revenue < $ 0.1Bn)
CXOs and VCs have critical decision making responsibilities across multiple products and business segments
Newer roles such as VPs, SVPs and Directors share decision making responsibilities across new products and redefined operations
New Age and diverse vertical specific rolesemerge as Unicorns scale. Scaled Unicorns have large number of decision makers across markets, products and business segments
38Source : DRAUPSource- DRAUP Executive Module: Coverage may be limited in China and other south east Asian countries
As Unicorns scale, decision makers become more distributed with diverse roles and ownership (2/2)
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
46%
29%25%
11000+Global
Executives(CXOs,
Cofounders,VPs,
Directors)
Multiple responsibilities limited to top C-level executives
Multiple stakeholders have shared responsibilities androles across products and business segments
Brad KeywellCo-Founder and CEO at Uptake Technologies
David WiesenCo-founder and Engineering Lead at Nextdoor.com
Shawn DavenportVP, Security at GitHub
Gilad LotanVP, Head of Data Science at BuzzFeed
Security
Data Science
Data Science
Core Products
Mary TrickChief Customer Officer at Infor
Stefaan van HooydonkChief learning officer at flipkart
Customer experience
Learning and Knowledge Management
Joop WijnChief Strategy and Risk Officer at Adyen
Strategy and Risk
Kevin ThompsonVP, Marketplace Engineering at Uber
Stefaan van HooydonkVP, Client Engineering at Credit Karma
Bozoma Saint JohnChief Brand officer at Uber
Marketplace Engineering
Client Engineering
Brand Management
Infrastructure management
Product management
Product strategy
Infrastructure Management
Emerging Markets Operations
Product management
0
20
40
60
80
100
120
140
11.9 2.7
1.7
1.0
0.8
0.8
0.7
0.6
0.5
0.4
0.4
0.3
0.3
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1Nu
mbe
r of e
xecu
tives
Revenue (Size of Unicorn)
39Source : DRAUP
Source- DRAUP Executive Module: Coverage may be limited in China and other south east Asian countries
Travel-tech & Ecommerce are go to sectors for executives with diverse roles across products, operations and emerging markets
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
Mid-size Unicorns(Revenue $0.1- 1Bn)Industries
E-commerce
TravelTech
Enterprise Software
FinTech
• VP of supply chain• Director of Online Marketing &
CRM• Vice President, Industry
Marketing• Director of Business Products
• Chief Research Officer• VP of Infrastructure & CISO• VP of User Experience• Director of Product & Design,
Mobile
• VP Customer Experience and Trust
• Director of Growth Engineering• Director, Head of Data Mining• Director, Business Analytics
Large Unicorns(Revenue > $ 1Bn)
• Chief revenue officer• Chief Learning officer• VP, Consumer Experience &
Product Catalog Engineering• Vice President - Mobile,
Electronics and Computers
• Chief creative officer• Chief Business Information
Officer• Chief Customer officer• VP, Cloud Strategy,
Architecture and DevOps
• Chief Brand officer• VP of Mobile• Senior Director of Product,
Maps• Vice President, Marketplace
Engineering
• Chief Strategy and Risk Officer
• VP, Business Development -Global Payments
• Global Digital Director• VP Global Strategic Sales
• Vice President Of Product Management, Data
• VP Revenue Strategy and Planning
• Vice President, Client Engineering
Small Unicorns(Revenue < $ 0.1Bn)
• Chief Marketing officer• VP - Business & Operations• CEO & Co-Founder
• SVP, Engineering and CTO• Senior Director, Digital
Marketing• Chief Product Officer
• Senior Vice President and COO
• Chief Financial Officer
• Director of Engineering –Infrastructure
• Vice President, Operations, Core Platform
xxAvg. Number of Executives per company
~150
~130
~120
~90
~110
~100
~90
~75
~70
~50
~35
~35
40Source : DRAUP
US headquartered Unicorns have hired majority of decision makers from traditional Hardware/Software companies during last 5 years
Note:- Executive Movement during last five years
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
• Charles Ng – Chief Data Scientist at Coupang• Previously Sr. Director, Retail Science andAnalytics at IBM
• Chris Bream – CTO at Tanium • Previously Director of product security at Facebook
• J. Nicholas Jitkoff – VP of Design at Dropbox.• Previously Principal Designer at Google
SAMPLE EXECUTIVE PROFILES
• US based Unicorns have been hiring decision markers from large enterprise/internet companies leveraging their expertise in engineering globalisation, outsourcing and vendor selection
• ~20% of the executives have been hired from traditional hardware and software enterprises such as IBM and Microsoft
• E-commerce Unicorns are top employers, leveraging skills in operation transformation for optimisation of inventory pricing, promotion and forecasting
0
5
10
15
20 Decision Makers hiring pattern (Analysis of executive hiring in Unicorns during last 5 years)
Previous Company
INSIGHTS • Cal Henderson - CTO at Slack. • Previously Director of Engineering at Yahoo
• Klaus Kaasgaard – VP of User Experience at SurveyMonkey• Previously VP of Experience Design, Small Business Group at
Intuit
• Ashish Suryavanshi – Director of Technical Program Management -Data & Analytics at Coupang
• Previously Principal PM Manager at Microsoft
Source- DRAUP Executive Module: Coverage may be limited in China and other south east Asian countries
41Source : DRAUPSource- DRAUP Executive Module: Coverage may be limited in China and other south east Asian countries
Note:- Executive Movement during last five years
Indian Unicorns have hired nearly 90% of the executives from peer Unicorns
ExecutiveIndustry Deep Dive
Geography Footprint
PD and IS activities
SAMPLE EXECUTIVE PROFILES
0
5
10
15
INSIGHTS
Decision Makers hiring pattern (Analysis of executive hiring in Unicorns during last 5 years)
Previous Company
• Top Ecommerce firms such as Flipkart has seen large top-level exits due to Operational restructuring
• Indian Unicorns have limited executives hiring focus from MNC GICS centres in India
• Suresh Shenoy - VP Of Engineering at Ola. • Previously VP - Engineering and Technology, Supply
Platform at Flipkart
• Rajiv Mangla – Chief Technology Officer at Snapdeal• Previously VP Engineering, Digital Marketing at Adobe
• Suruchi Rikhi – Director of Engineering at Quikr• Previously Engineering Manager, Mobile at InMobi
• Rishi Gupta – Associate Vice President – Engineering at Snapdeal
• Previously Associate Vice President – Engineering at Paytm
• Ravi Vijayaraghavan – VP - Analytics and Decision Sciences at Flipkart
• Previously Chief Data Scientist and Global Head at [24]7, Inc
• Vikas Agrawal - Senior Vice President – Engineering at Paytm• Previously Founding Member and CTO at Fasionara.com
42Source : DRAUP
Recommendation to partner with Unicorns• Operational traits and challenges faced
by Unicorns• Strategies and best practises to identify
potential buying opportunities
43Source : DRAUP
Unicorns: What are the typical challenges?
Operations Traits
• Small existing development team, usually experienced in agile development
• Small existing infrastructure set-up
• Born digital first and spend is largely on open source, digital Platforms
Challenges:• Scaling up the workforce to match the hockey stick revenues growth
• Scaling up the infrastructure set-up & managing multiple cloud services
• Limited talent to focus on non core activities such as Devops, Support, testing/QA services etc.
• Lack of cloud specialists in their IT teams to help optimize the cloud for cost, governance, and security
• DevOps is a latent need across these companies, while the importance of Testing and Customer Support also came to the fore
Source : DRAUP Analysis and primary inputs from interviews with digital stakeholders and DRAUP’s existing customers
44Source : DRAUP
Sales Executives of Engineering Service Providers have to take proactive approach to explore partnership opportunities with Unicorns
Source: DRAUP analysis and recommendations
Be early and track proactively : Identify growth companies early and partner with younger Unicorns; Offer
integration services to scale their core product capabilities1
Explore digital partnerships : Establish more agility through spending in UI/UX, API management and apps
integration capabilities2
Focus on On-shore models : Most of the Unicorns does not have global engineering presence. SPs need to leverage
on-shore delivery models to work closely with the in-house engineering teams3
Digital Stakeholder connect: Establish deep connections with functional and business heads as compared to
restricting engagements with CIOs 4
Co-Invest: Instead of typical T&M and project based models co-invest with Unicorns in new engagement business
models such as revenue sharing, outcome based pricing, risk reward etc. 5
Contextualised Selling: Sell customized services by understanding the technology stack and dependencies of the
prospect through deep understanding of the pain points6
45Source : DRAUP
Multiple individual events occur in Unicorn’s ecosystem which can lead to potential partnership opportunities
Source: DRAUP analysis and recommendations
Proactive tracking of Changes or Events within an organization or the ecosystem which can lead to potential partnership opportunitySIGNALS
Potential eventPotential Buy
Signal
Mass LayoffsCentre carve outs and potential opportunity for SPs to sell end to end pre packaged digital
offerings
IPO filing/ Late stage
fundingExpanding product offerings in diverse areas to scale and mitigate risk from competitors
CEO ChangeOrganisational restructuring and strengthening existing capability through new investment
plans, new product ownership or new age technology development
Market ExpansionLarge customer support team requirement for localization of operations such as local
language support, new product development or new business unit setup
New R&D set-upScale existing products and new age skill requirement in areas such as UX design, AI and data
science
Shopify has set-up new R&D centre in
Toronto in May 2017 and have plans to
hire 2000 engineers In UX, product
engineering and support
Laid off ~400 employees from bay Area
to centralise the operations in Arizona.
Outsourced its insurance business
Plans to enter peer-to-peer payments in
India. Also plans to use UPI, a cross-bank
payment system to enable payments
between users
Cloudera plans to raise $200M from IPO
to scale and compete with AWS, IBM &
customize its cloud services for mobile
banking, IoT services etc.
Flipkart new CEO Kalyan Krishnamurthy
announced plans to expand into Tier-2
cities and invest in growing skills like NLP
& Image Science to personalize shopping
experience
Case Studies
46Source : DRAUP
Zinnov DRAUP platform connects multitude of events which occur in isolation to generate actionable insights
DRAUP Proprietary
LEADERSHIP CHANGE
M&A
MARKET EXPANSION
CUSTOMER FEEDBACK & EXPEREINCE
NEW PRODUCT LAUNCH
MASS HIRING
LEADERSHIP QUOTES
VC INVESTMENTZinnov DRAUP Platform
DRAUP platform tracks millions of independent events about organizations, stakeholders and ecosystem and find correlations and predict outcomes that may impact your organizations and roles
Leveraging Big Data, Machine learning and Consulting expertise to help you connect the dots
Signal Processing
47Source : DRAUP
DRAUP Signal Processing: Helping you connect the dots
DRAUP Proprietary
Signal Tracking Signal processing RecommendationsSignal Filtering
Track millions of signals happening around your organisation, stakeholders and ecosystem
Filter out most relevant signals relevant to your offerings
Analyse signals through ML and Big Data algorithms to find correlations and predict outcomes
Actionable recommendations and insights to sell to Unicorns
48
Source : DRAUP
Some of the ESPs have already taken a step ahead by collaborating with Unicorns in Niche technology areas….
Source- DRAUP Engineering Service Provider Module: Currently tracking outsourcing deals for Unicorns in Enterprise Software, Fintech, TravelTech and Ecommerce sectors
R&D Spenders Project DescriptionKey Vendors
Payment solutions integration• Integration between Intuit QuickBooks & Stripes Payment
• Integration of Stripe API
• Stripe Integration in GWT.
• Stripe Integration for WordPress
Avalara, 3E Solutions, Arosys
Technologies, Luxus
Worldwide
Android App testing and development• Development of Android app for shopping, Recharge, Bus ticket, Train Ticket, Flights
Ticket and movie Ticket booking and Hotels Booking
Mobile Application Q/A and testing• Testing the mobile apps of FlipKart. Perform Smoke, Sanity, Functional, Interrupt,
adhoc, & Usability testing on Mobile Application
Kellton Tech Solutions
Limited, Robosoft
TEKsystems
Wipro
Mapping and Customer Experience • Uber Map Improvement Group in India has partnered with Wipro in a BPO contract to
enhance its mapping assets, including to ensure faster pick-up times
Tata Technology Services
Electric Vehicle DesignTata-Tech has partnered with NextEV and Faraday-Future to develop and sell Battery
Electric and Hybrid Electric vehicles in wider markets of Europe, China and Japan
49
Source : DRAUP
…and are also moving closer to the innovation hotspots to proactively track potential partnership opportunities
Source- DRAUP Engineering Service Provider Module
Bay Area- The new innovation hotspot Service Providers are setting up innovation centers in the Bay Area
Partner with EV companies and Start-ups to
develop and sell their products in wider markets
of Europe, China and Japan
Electric Vehicles
To build vertical solutions focused on Industrial &
Manufacturing and Life Sciences & Healthcare
Internet of Things
Global frontier for building collaboration with
major technology players in the United States.
Engineering Services
Leverage its Lean Digital approach to harness
process-centric technologies, design thinking,
and deep domain expertise
Digital Transformation
Bay Area- The new innovation hotspot
50Source : DRAUP
Global Unicorns Landscape
SUMMARY
A brief history :• Companies with Billion dollar valuations have been created in each decade since 1960 (e.g. Intel, Cisco, Microsoft) which have driven the
technological transformations for the decade
• Over the last decade, there has been an exponential increase in the number of privately held Billion dollar valuation companies called as
“Unicorns”
• There were 26 Unicorns in 2009 , that number has swelled to 224 in 2017 ( And an additional 46 unicorns exited in that timeframe)
• Unicorns are getting created as start-ups are disrupting large global markets through technology and business model innovation
Unicorns are everywhere
• Unicorns are not just restricted to Bay Area, they have emerged across all global technology hotspots- Bangalore, Israel, Beijing, London etc. (Slide
12)
• 49% of the Unicorns are headquartered in US | 70% of the US based unicorns serve global markets presence.
• TravelTech, E-commerce/Marketplace and Enterprise Software are the verticals with most Unicorn presence. Approximately 70% of the
enterprise software Unicorns are based in Bay Area; China & India have a large presence of Unicorns in the Ecommerce and TravelTech industries
amidst their fast growing internet markets
• Some of the Unicorns have hyper-scaled to reach more than $10 bn in valuation (known as decacorns). There are 14 decacorns as of July 2017. In
contrast, Facebook was the only decacorn in 2013(Slide 13)
Raising funds from Non- Traditional Set of investors• Not just the traditional VCs or Angel investors but Public Market funds (MF and Hedge funds) have also jumped into investing in these unicorns
• Large investment firms like BlackRock and Fidelity Investments taken positions in firms like Uber and Pinterest. Aggregately more than 250 mutual
funds now hold positions with more than $10 billion in private market investments
51Source : DRAUP
SUMMARY
Technology Spend Analysis
Unicorns Spending on Technology§ Key differentiator and growth enabler for unicorns has been their superior product experience and robust technology infrastructure
§ Thus, product development and Infrastructure Support are major spend areas for all Unicorns. On an average, Unicorns spend 35% of their operating costs on
technology (Slide 19)
§ DRAUP’s analysis estimates that Unicorns spend on technology is $32 bn in 2016 growing exponentially at a rate of 133% YoY
§ Enterprise Software, Social and Fintech companies spend upwards of 40% of their operating costs on technology. In the B2C verticals, large technology
spending is attributed to high data intensity due to heavy active customer transactions, higher security requirements, product personalisation (AI, Mobile) to
improve product experience
§ Nearly 95% of the unicorn companies are leveraging cloud first delivery models. They are spending heavily on cloud hosting, infrastructure support &
maintenance activities (Slide 20)
§ Large Unicorns such as Uber, Infor and Palantir have been diversifying their technology investment in Non-Core activities such as Testing/QA automation,
Network management and Cloud security solutions either through acquisitions, partnerships or acqui-hires
§ Bay-Area and China have been central technology hotspots. ~70% of the spending is consolidated amongst Unicorns headquartered in these two geographies.
§ New Age engineering in Design, Data science and AI are amongst the core technology spend areas (Slide 29)
§ Unicorns in US and Asia have contrasting leadership hiring models. US based Unicorns have leveraged top level leadership from traditional hardware and
software giants (IBM, Microsoft and Amazon) (Slide 41). Where as Unicorns in emerging geographies have mostly hired laterally from peer Unicorns (Slide 42)
Challenges for Unicorns• Most of the Unicorns have small development teams focussed on core product activities. These companies face challenges in scaling up their existing workforce
and infrastructure set-up to address potential exponential growth
• Non-core product areas such as Dev-Ops, Customer Support and Q/A are the spaces where third party service providers are being leveraged by the Unicorns to
help them hyper scale
• DRAUP’s signal processing track Unicorns for activities such as mass hiring, leadership change, global expansion, acqui-hires etc. to identify partnership
signals and opportunities for solution and service providers