20 RED-HOT, PRE-IPO COMPANIES IN 2016

B2B TECHFrom Adaptive Insights to YellowPepper, IDG Connect Editorial Director

Martin Veitch gives his pick of companies yet to float

20 Pre-IPO Tech Companies 2016 IDG Connect

The third annual IDG Connect report comes at an interesting time. Companies that floated in 2015 are mostly significantly down from their asking prices on IPO. People are rightly sceptical of the ‘unicorn’ phenomenon where over 150 tech companies have been funded at valuations of over $1bn.

The unicorns have even created their own lexicon and a related debate. Should companies valued at over $10bn be called ‘decahorns’? Or do we need a new descriptor? (My colleague Dan Swinhoe suggests a breed that is rare but not that rare, like the red squirrel.) CB Insights recommends we talk of RABBITs (Real Interesting Businesses Building Interesting Tech).

More seriously, students of the IPO market have become familiar with ‘downrounds’: funding raised at a lower valuation than previously. And many companies that might have been expected to float are holding off.

What’s more important though is that we continue to see interesting companies with great prospects of long-term growth and developing products and services that help people work smarter. The public view given by CEOs has always been that if you take care of business the rest will sort itself out. Many of the companies on this list will never make it to IPO but they are companies worth watching nonetheless.

The usual caveats apply: this list is alphabetical and made up of companies I deemed interesting and with good scope for growth; it’s not a tip-sheet for investors, nor an attempt at an empirical forecast or survey. It’s more of a collection of pen portraits of remarkable companies and people that have the chance to do even more remarkable things. Many other companies could have appeared and I look forward to meeting some of them over the course of the year.

Numbers given were correct in late January 2016 and any errors will be corrected. You can see previous surveys here for 2014 and here for 2015.

Introduction

20 Pre-IPO Tech Companies 2016 IDG Connect

Against: Excel addiction and inertia

For: Huge and pregnant market opportunity

M icrosoft Excel might be the most overstretched software application ever.

For decades now this has been noted and various tools have been suggested as replacements for tasks where Excel is deemed not to scale or have sufficient features. However, business intelligence tools have often been too difficult to use or too expensive so many users end up B2E – Back to Excel.

Adaptive Insights is one of a new wave of companies that is attempting to fill the void but not so much in BI as in business planning or what is sometimes known as corporate performance management (CPM). Its offering is cloud-based and Chairman Rob Hull’s plan is to do to Hyperion what Salesforce.com did to Siebel.

Unlike some peers, such as Anaplan, Adaptive Insights sees its role as working in cahoots with the finance department. Finance leaders can get a lens on where they have been and where they are today by answering questions such as: ‘what’s my real cost per employee?’ Then they can use those metrics to project next steps.

Palo Alto, California-headquartered Adaptive is far from alone in the sector and competitors include the aforementioned Anaplan, Tidemark and Host Analytics. But, founded in 2003, it is no longer a raw startup and in an interview last year, founder Rob Hull said he saw the opportunity to lead a $20bn market and grow annual revenues at over 50% “for years”.

Having raised over $176m in funding, Adaptive Insights strengthened its management muscle in 2016 with the addition of former Citrix CEO Mark Templeton to its board. Citrix chairman Tom Bogan is Adaptive Insights CEO.

Adaptive Insights

Interview: Founder and chairman, Rob Hull

Adyen

Against: Crowded, fast-changing market

For: Scale, reputation breadth of payments coverage

Interview: LatAm sales VP Jean Christian Mies

A dyen is among the hottest companies in payments processing today, giving it a

skyrocketing valuation – the company is reportedly ‘worth’ $2.3bn, bolstered by an exceptional amount of declared funding by European standards ($266m).

The Amsterdam, Netherlands-headquartered company’s remit is broad and extends to handling payments online, in store and via mobile devices. In this it fits the bill of the modern demand for omnichannel commerce.

Adyen’s goal is to be the payments infrastructure provider behind today’s and tomorrow’s waves of transaction types and it has invested to deliver a reputation for strong and secure infrastructure and maintenance. That’s backed up by a successful partnering and plug-in programme.

The company has big ambitions. A 2015 service launch called RevenueProtect has a dual purpose, for example, providing merchants with a real-time display of the shopper’s recent activity and protecting against fraud.

The scale is big – Adyen processed over $50bn in 2015 – and its appeal covers a vast array of payment types and a big geographic span too. For example, transactions in Brazil have boomed.

Despite being backed by Mark Zuckerberg and powering many of the internet’s biggest names, Adyen might not yet have the name of a Square or PayPal but revenues doubled last year to $350m and the company has been profitable for years. That open disclosure, and the performance of Worldpay since listing last year, suggests a float is a strong possibility. Adyen is valued at $2.3bn.

20 Pre-IPO Tech Companies 2016 IDG Connect

Alteryx CEO Dean Stoecker told me when I interviewed him last year, “Nobody does data

blending for the sake of it.”

Ain’t that the truth? The work that his company does is not the most glamorous: it’s the heavy lifting and the picking and sorting that makes data available for inspection and hence - if moon and stars show up in the right place - insight.

That work figuring out what’s inside the torrents of new data and how best to categorise and match patterns is a tough challenge but invaluable. Companies that make the picks and shovels have a long and honourable tradition in enterprise software if you think of middleware veterans like Tibco or, closer to Alteryx, the data integration champion Informatica.

Alteryx is making the digging equipment for the new generation of business intelligence-cum-visualisation tools like Qlik, Tableau and Birst. With $163m in funding, Alteryx has the backing to be (excuse the mixed many metaphors) the threshing mill that makes data ready for the BI and visualisation tools to exploit.

CEO Stoecker does a good job hyping his Silicon Valley company as providing “rocket fuel” or the “elixir of life” but really what Alteryx does is prime the pump and there’s no shame in that. Customers include Ford, Experian, BSkyB, Unilever, Starbucks, McDonald’s, Verizon Wireless and Dunkin’ Donuts.

Alteryx

Against: Could be taken out by a predator

For: Well-funded, clear market need

Interview: CEO, Dean Stoecker

Avere Systems

Against: Lots of competitors

For: Clear need for smarter file handling in storage networking

Interview: CEO, Ron Bianchini

Y ou might think of the underlying technology of Avere Systems as a sort of bidirectional version

of Akamai, the company that made its name by caching network data closer to where users needed it.

Avere’s NAS filer appliance provides read and write caching too, mopping up latency for faster overall performance wherever core storage systems are located. That gives companies more flexibility and speed and it means that the age-old tradition of adding more and more capacity and sweeping data under an expensive carpet can be put to rest. Avere’s technology will be even more relevant as more companies use cloud in more sophisticated ways, for example bursting out for extra capacity at peak times.

This is a company run by file storage and management experts who have been there before. The technology has a strong reputation already and if Avere can capitalise on that with OEM opportunities too it could have another arrow in its quiver.

The proudly Pittsburgh-headquartered company has raised $92m on its promise and looks a fair bet to succeed among the many companies toiling in the enterprise network/storage convergence space. (See Avere and 11 more companies disrupting the datacentre in this special report.)

CEO Ron Bianchini isn’t holding back. “We can take this to IPO,” he says.

20 Pre-IPO Tech Companies 2016 IDG Connect

Aviso Basho Technologies

Against: Company is still young

For: Accurate sales forecasting is valuable and meets corporate governance needs

Against: Plenty of rivals

For: NoSQL pioneer as data needs change

Interview: Founder, KV Rao Interview: CEO, Adam Wray

For decades, sales training has been more about the school of hard knocks and learning at the

knee of the office master. Optimistic projections would be aired at meetings and forecasts met reality about as often as a total eclipse of the moon. But today firms are looking to account-based marketing and more sophisticated approaches that let sales execs get under the skin of target accounts and sales forecasting automation could offer a new dimension.

Three-year-old California-headquartered Aviso is one of a crop of companies working on how to apply the achingly trendy field of predictive analytics to the sales cycle. Aviso’s cloud-based service monitors micro- and macro-economic signals, sucks in data generated by internal systems and pattern-matches these against which sales tactics have (and haven’t) worked in the past to let companies better allocate resources and prioritise deals.

The idea is that selling becomes a bit less about emotion and a lot more about precedent. And as data gets added the ability to predict what happens next becomes more accurate.

Founder KV Rao likens Aviso to the logical advice of the world’s most famous Vulcan, Mr Spock of Star Trek fame. He says that if applied correctly, sellers will have greater visibility into currently foggy scenarios such as the likelihood of deals closing and when.

Several of today’s customers are in tech – Splunk, Talend, RingCentral, Marketo and HubSpot – but if Aviso has built a better mousetrap than the old Glengarry Glen Ross means of leads and hunches then the appeal should spread widely.

Crazy name, not so crazy company. Basho might be named after a 17th-centry Japanese poet

but it’s a very 21st-century company, a NoSQL database player for a world where relational database management systems aren’t always a good fit.

Basho’s Riak database can hold scads of unstructured data and the vast majority of today’s data is unstructured, making it a poor match for the rows and columns of classic RDBMS approaches. The likes of Oracle, SQL Server and DB2 won’t go away but IT shops are having to change their data management strategies to accommodate web pages, rich media and more. The Internet of Things and some Big Data approaches also seem a logical fit for the NoSQL camp.

That’s why Washington-headquartered Basho and peers have a decent chances of surviving and prospering. Basho has raised over $64m in funding and says its growth remains rapid - over 50% in 2015 by revenues.

There are many rivals and lots of big companies in the old database regime that could make a play for them, making staying independent a tough challenge. An IPO might be an outside bet for a while yet but Basho remains an attractive proposition.

20 Pre-IPO Tech Companies 2016 IDG Connect

Bluewolf Code42

Against: Scope could be broader

For: Deep Salesforce domain knowledge, strong culture

Against: Plenty of bigger rivals

For: Admired product, strong revenue stream

Interview: CEO, Eric Berridge Interview: CEO, Joe Payne

Salesforce has become the Pied Piper of business cloud computing and Bluewolf

has followed in its steps, providing consulting advice on how to deploy and get the most out of the CRM giant’s services and those of its ecosystem.

A smart, energetic company with a strong culture, New York-headquartered Bluewolf is admired as an innovator and for having people unafraid to speak out about the weaknesses as well as the strengths of the Salesforce flagship. It was an early proponent of gamification and it is highly progressive in terms of people management techniques. There will be no Death By PowerPoint here but plenty of leader boards, rich media content and showing, not telling.

The question for 15-year-old Bluewolf today might be how far it steps out of the Salesforce shadow and applies its nous to other platforms. There are clear rivals like Appirio and the big system integrators are, maybe reluctantly, turning their attention more to cloud work – Accenture bought Cloud Sherpas in 2015, for example.

But with Salesforce still growing that might be a question for another day and Bluewolf has grown its business to $100m a year on the back of a proven formula.

Code42 takes its name from The Hitchhiker’s Guide to the Galaxy, a Douglas Adams

science fiction novel where the number 42 is intended to be the answer to “life, the universe and everything”. The Minneapolis-headquartered company isn’t quite that, but it has become a compelling answer to the security needs of many organisations.

Code42 is synonymous with CrashPlan, its software for backing up data. So far a lot of sales have come from the freemium model but CEO Joe Payne wants the firm to be even more of an enterprise play to bolster revenues already north of $80m.

If Payne, the former CEO of Eloqua and the man who sold the firm to Oracle, can make that transition then Code42 has outstanding prospects of joining the ranks of publicly quoted tech firms. Based on rumours, late next year or at some point in 2018 might be timely, depending, as always, on the state of the markets. Certainly there’s no end in sight for data protection needs and in CrashPlan Code42 has a much-admired franchise.

Payne might be a hard taskmaster. On the back of snaffling an $85m VC round he laid off 30 staff; current headcount is almost 400. In total, Code42 has raised over $137m in funding.

20 Pre-IPO Tech Companies 2016 IDG Connect

Darktrace Dropbox

Against: The ever-changing security landscape

For: Autonomy pedigree and relationships

Against: Panoply of rivals, need to convert users to paying subscribers

For: Funding, scale, UXP, speed

Interview: CEO Nicole Eagan Interview: UK, Ireland and Benelux manager, Mark van der Linden

If Darktrace’s bullish messaging looks familiar that might be because a part of its funding

and staff come from Autonomy, the fellow-UK business software organisation that flew high and was acquired by HP before a messy and protracted (and still ongoing) legal case.

Darktrace is a security company that has emerged at a time when protecting the assets of organisations has never been a hotter concern. Headquartered in London, England, Darktrace was founded and is led by former Autonomy CMO Nicole Eagan. Eagan is also a partner at Invoke Capital Partners, an investment group founded by Autonomy founder and former CEO Mike Lynch. Both firms came out of work conducted at the University of Cambridge.

Darktrace bills itself as the provider of the ‘Enterprise Immune System’ and its trump card is an ability to identify unknown threats. That anticipates an emerging world where attackers don’t just rely on brute force and blended vectors of known threats but seek new ways to infiltrate themselves.

Unusually for a modern startup, Eagan is confident of being able to turn a profit very quickly at Darktrace and the company already has enlisted BT to help it sell its wares. A relationship with David Cameron’s UK Government that sees Darktrace executives accompany the Prime Minister on tech/security-related trips won’t hurt either.

Has Dropbox mistimed its run to an IPO? What does it do with that vast reservoir of cash?

Does it have the game to outfox Box? These and many other questions obsess Sand Hill Road and other venues where venture capital and a subset of the technology media congregate.

The attention that Dropbox has fetched is in some ways understandable, however. The company has raised a total of $607m from, count them, 25 investors in order to lead the race in platform-neutral file synchronisation/sharing/collaboration.

Will it win? It’s too early to say because the competitive situation is as crowded as a big-city marathon. First, there is Box with a strong security position as well as funding from already having gone public. Then there are the software giants like Microsoft and Google circling the space and a host of others from Citrix to EMC and Egnyte.

Dropbox has terrific scale, fast software, strong usability and a strong brand, however. The question is how well it can convert non-paying users to become paying users. If it can pull off that trick and become the de facto standard across industries then all the hype and attention might be deemed well merited.

20 Pre-IPO Tech Companies 2016 IDG Connect

Egnyte FinancialForce.com

Against: Competition is everywhere

For: Multiplatform and a huge market opportunity

Against: Being wedded to one platform might not suit some buyers

For: Integration with Salesforce platform, modernity

Interview: CEO, Vineet Jain Interview: CEO, Jeremy Roche

Egnyte might appear to be stuck between a rock (Box), a hard place (Dropbox) and

several more rocks for good luck (Microsoft, Google, Citrix, EMC etc.) but CEO Vineet Jain has a cunning plan to compete in the densely populated race to lead in storage, file synchronisation/sharing and collaboration.

California-based Egnyte offers its service both on premises and in the cloud so those companies nervous about putting their data online can be reassured. That was an interesting move given the cloud mania apparent when Egnyte was founded in 2007 but it now seems smart, given the Edward Snowden revelations and possibility of lurching Safe Harbor rule changes. Jain also thinks there are weaknesses in Box’s permissions model despite that company trading on its enterprise-grade security.

But what about those rivals? Box is a public company these days and Dropbox has huge funding while the periphery is filled with giants. Against this, Egnyte might seem like a younger, lesser funded operation although it has raised over $62m. But Jain sees Dropbox as being largely focused on user experience and he also spies a growing secondary market for predictive analytics and content inspection matching or exceeding the sync/share opportunity. Becoming a platform is the name of the game and if you can make it easy for people to figure out what to do with content quicker then you have a great chance, he contends.

If Egnyte can execute on its plan then an IPO could come inside 24 months and there’ll be no shortage of alternative routes.

Imitation being the sincerest form of flattery, Salesforce.com has many followers, from the

Salesforce Ventures-backed startups to those incorporated by Salesforce alumni from Okta to Zuora. But its clearest pure-blood descendant is FinancialForce.com.

“We committed early and everything is built around Salesforce.com. It was the back-end of 2007 and all the analysts thought we were mad,” FinancialForce’s CEO Jeremy Roche told me when I met him in the summer of 2015.

That decision doesn’t seem to be so crazy today with Salesforce acting almost as the operating system of cloud applications. Not only was the FinancialForce service built on the Salesforce development platform but Salesforce CEO Marc Benioff also supplied the name for the company and some funding. The result today is a financial management system that dovetails with Salesforce’s CRM, marketing and other services.

FinancialForce is interesting in other ways too with its twin major bases in the US and England. But what’s most interesting is the momentum the company appears to be enjoying with subscriptions up 91% annually based on the most recently disclosed numbers. Annual revenue run rate is over $50m and the company has 650 staff on top of $186m in funding. Since then the company has had its best ever quarter to close calendar 2015 and passed 1,000 customers.

That’s impressive progress for a young company and, especially if Salesforce continues with its remarkable cadence, there should be more opportunities to grow.

20 Pre-IPO Tech Companies 2016 IDG Connect

InsideSales.com JAMF Software

Against: An early-stage technology

For: Combines predictive analytics with sales nous

Against: Operates in a niche market

For: Strong niche, deep domain knowledge

Interview: SVP international strategy, Lindsey Armstrong

Interview: Founder and former CEO, Chip Pearson

Many companies say they want to be the “Salesforce.com for x”. InsideSales.com

is different in that it wants to go beyond Salesforce with automated assistance for sales executives rather than merely providing a record of transactions and an associated platform.

The idea is this: sales executives have traditionally learned at the knee of veterans or via internal training schemes. Training schemes today are few and far between and the nature of sales has changed in many ways – for example, the switch in software itself from products plus maintenance charges and a hard sell to subscription billing and account-based marketing. That means learning from the grizzled sales leaders might not be the way forward.

Enter InsideSales, a company with Salesforce connections and venture backing from the same source, and a desire to change the way sellers sell. InsideSales looks at a massive data set of precedents to give sales advice on what to do next, rather than have them relying on hunches or word-of-mouth.

Utah-headquartered and 11 years old, InsideSales has pulled in over $200m in funding for its “sales acceleration” story and promises that within a few months buyers of its service will see a double-digit rise in revenue. InsideSales does not disclose revenues but with about 1,000 staff it is entering maturity and with a unicorn valuation of about $1.5bn it might enjoy a range of options for its next stage. Investors also include Microsoft, another key partner.

The JAMF Software story has something of the feel-good Hollywood narrative arc about it

with the chances of a happy ending almost as high.

Headquartered in Minneapolis, the company came into being in 2002 after founders had a pressing need to create systems management software for a university network of Macs.

Word spread and as Apple started to become a significant force once again in organisations, JAMF enjoyed a nice tailwind to propel it to its current eminence. And from rags came riches…“We started before anyone saw the success of Apple coming,” said Chip Pearson, CEO when I spoke to him. “If you were going to put money into tech you’d have put it into Windows first, Linux second and Apple only third.”

Even JAMF’s leaders don’t pretend they were remarkably prescient. But what they have done is create a company with products, the Casper suite, which is of huge value to firms that have bet on Apple.

The recent start of a relationship with IBM, which is pushing hard to get Apple into the enterprise, could well be fruitful and the launch of the iPad Pro won’t hurt.

Today JAMF doesn’t disclose revenues but says it is growing at about 45% annually and has about 500 staff. This is a tight-knit operation and perhaps an unlikely IPO candidate but, thanks to that bold Apple bet, it has a world of options available to it.

20 Pre-IPO Tech Companies 2016 IDG Connect

Move Guides Nutmeg

Against: Barrier to market entry might be low

For: Unique, focused offering in an underserved market

Against: Rivals have huge pockets and bigger brands

For: Bright, standout offering that’s easy to use

Interview: CEO, Brynne Herbert Interview: CEO, Nick Hungerford

Move Guides is a company that embodies globalisation. This London, England-

headquartered startup that’s led by an American wants to be the go-to solution for companies moving employees and contractors around the world, helping them to settle into their new homes.

In many sectors today staff can expect to perform a tour of duty all over the world as organisations tap into their knowledge and seek to grow their experience. But moving home isn’t easy. There will be travel plans, new banking systems to figure out, schooling for kids, neighbourhoods that are desirable or better to avoid, and cities, languages and cultures to navigate.

Move Guides provides a cloud-based space to keep tabs on moves in progress and information about new locations, complementing that with a personal contact who has knowledge of the location and can act as an expert guide able to answer questions and work through snags.

The company is the brainchild of former investment banker Brynne Herbert who has seen the challenges to upping sticks at first hand. Today, companies like Adobe, SurveyMonkey, Société Générale and Tesco use Move Guides’ services. The company now has 100 staff, has banked over $25m in funding and set up offices in New York, San Francisco, Hong Kong and London. Revenue numbers aren’t disclosed but they are in millions of dollars and growth is 289% year on year.

How big is the opportunity? Herbert is bullish: $50bn, she says, and the competition today is stuck in old ways of doing things with Excel and email.

“It’s really not rocket science,” said Nutmeg founder and CEO Nick Hungerford when I spoke to him in early 2015.

Hungerford’s mission is to take the opacity out of financial services and the former Barclays banker seethes at the current setup with its obscure jargon and ‘where-did-that-come-from?’ add-on costs. In effect, he wants to create an Amazon for financial planning.

In 2015, London, England-headquartered Nutmeg worked on getting its pension planner product to market and improving the mobile experience for Nutmeg users but the company is still a young startup, having been founded in 2010. Still, it has raised £35m ($50m) in funding and has doubled its headcount to 80 in the last year as well as nearly quadrupling its customer base.

Gaining acceptance and trust in the risk-averse world of financial affairs is tough but Nutmeg has an excellent word-of-mouth reputation. Its success will attract the attention of rivals, naturally, and at the end of 2015 Moneysupermarket.com co-founder Duncan Cameron announced plans to take on Nutmeg and others with a forthcoming service called Evestor.

It’s too early to hype up Nutmeg as an IPO candidate. For now its task should be pursuing growth, investing in research and development and letting the rest take care of itself.

20 Pre-IPO Tech Companies 2016 IDG Connect

ShopKeep Uphold

Against: May need to see buyers scale for revenue to grow at pace

For: Booming market among entrepreneurs

Against: Colourful background to founder

For: Opportunity to disrupt the global banking sector

Interview: CEO, Jason Richelson Interview: Founder and chairman, Halsey Minor

City dwellers have enjoyed the boom in artisan goods over the last 10 or 20 years.

From specialist coffee shops to authentic ethnic food merchants, we no longer bow to the power and predictability of chains. ShopKeep is a company that’s attempting to be the point-of-sale (POS) and business management front-end/back-end combination that powers these small operations.

ShopKeep has raised about $95m in funding and claims to have 18,000 customers. Founder and CEO Jason Richelson has built the company on his own retail and technology experience having run his own outlets in Brooklyn, New York. The joy of rebooting servers remotely while on holiday led him to create a cloud-based, subscription-model alternative where the POS device is an iPad.

Effectively, ShopKeep is in the business of taking IT pain away from small business leaders who just want to focus on product and service. The company has about 250 staff in North America and the UK and Richelson says he’s still building out. As with many cloud businesses the losses will roll in for some time yet, but he’s confident that he’s on track and has the funding and customer roster to back him up.

There are obvious growth opportunities too, beyond just adding more customers. Offering more business dashboard capabilities could help customers and adding upsell counsel (based on what has worked across other subscribers) might be a boon.

Uphold, formerly Bitreserve, has an interesting heritage. It was founded by Halsey Minor,

the co-founder of tech website empire CNET and a serial investor in successful startups. Its CEO is Anthony Watson, a former CIO at Nike and Barclays.

The 2015 name change was to alter perceptions that the company is bitcoin-focused. Instead, its leaders say it is offering a new, transparent and ethical way to provide financial transactions and investments.

Uphold is lauded by some as a brilliant newcomer with dynamic leadership that is rewiring what it calls “the internet of money” and creating opportunities for the billions of people around the world currently considered “unbankable” – that is, not meriting the attention of traditional banks.

The startup is somewhat overshadowed by Minor’s colourful past: he filed for bankruptcy in 2013 after burning through his fortune, blaming a combination of a debilitating depression and the intransigence of financial lenders. That latter personal experience forms part of the impetus for Uphold.

The unusual backdrop might be a challenge for Uphold but there’s little doubt that Minor is a sharp operator with a strong CV and that personal finance is a field that is long overdue an overhaul. This is a company that is still very young, having been founded in 2013, but in the interests of transparency it has disclosed that it expects over $15m revenue for 2016, having raised about $20m in finding. Uphold is well worth watching.

20 Pre-IPO Tech Companies 2016 IDG Connect

xMatters YellowPepper

Against: Giants are bound to double-down on market opportunity

For: A strong Internet of Things play linking sensors to people

Against: Growth options eventually might be limited, given the scale of competitors

For: Strong focus on LatAm payments

Interview: CEO Troy McAlpin Interview: CEO, Serge Elkiner

There’s no shortage of technology companies with an Internet of Things pitch. In fact it

might be easier to see who’s not claiming to have a stake in the ground. But California’s xMatters is one of the more interesting and credible players.

Rooted in mass notification and business continuity, this company’s messaging software is the bridge between sensors and people. It sends valuable status information and alerts in close to real time and, most importantly, it’s instrumenting a lot of things were not originally digital in order to turn ‘dumb’ to ‘smart’.

So xMatters can tell a retailer when its refrigeration unit has failed, can inform a hospital that the shelf life of blood supplies is coming to an end and, just as importantly, not just send context-free data that becomes more line noise.

Founded in 2000 and with over 250 staff and about $50m in annual revenues, xMatters might appear a slow burn but CEO Troy McAlpin can see an IPO possibly coming in the next two or three years as the IoT market moves from paper talk to real money. Even if it doesn’t, the core notification communications business should be robust. Revenue growth rate is over 45% year on year.

Most tech companies pay lip service to globalisation but grow their businesses

in a traditional way, targeting North America and then cascading to other large economies. YellowPepper is an interesting exception: while based in Miami, Florida, its revenues mostly come from payment processing solutions sold to Latin America.

This is a trend that is something of a sleeper but there are many entrepreneurs that now see advantages of turning to the relatively new turf of markets located outside the well-trodden path.

Belgian-born founder Serge Elkiner sees two advantages: the chance to change LatAm’s payments culture but also a fast track to address several large markets.

“Ten years ago it was clear to me that it was an underserved market,” he says. “Also, there only tend to be one or two processors per country - and they also handle merchant services - versus the thousands in the US.”

Having banked $34m in funding, YellowPepper has a chance to one day be bracketed alongside MercadoLibre, Globant and other LatAm tech success stories, even if it is doing the job from the other side of the border.

20 Pre-IPO Tech Companies 2016 IDG Connect

Looking back over this third report into pre-IPO business-to-business tech companies, a couple of themes emerge.

One of them is that despite the talk about globalisation, North American companies are still hugely powerful. This is not just in terms of their ability to harness a large local market, recruit well and source funding. It’s also, I’m convinced, because they market and communicate so well. Despite being based in London, England, I often know about smart new American startups before I do about their European counterparts. The Americans tell a good story and can point you quickly to supporting materials.

Another notable theme is that the action is not dominated by a few trendy areas. The national media obsess over social media and messaging firms and cybersecurity but a lot of the companies I see doing well are the ‘picks and shovels’ makers and the bridge and platform builders – the under-the-hood companies making payments processing work, or financial management in the cloud, or making sense of what the Internet of Things means for the rest of us.

At the peak of the dotcom boom, lots of companies were given huge valuations despite not being able to articulate why they were deemed so important. Today that’s not so often the case and we are more analytical when it comes to the latest media sensation startups. The frothiness that saw watchers salivate over the Alibaba IPO ended up with flatter waters and a murky outlook for tech shares and IPOs – in the long term that many be no bad thing.

Conclusion

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