Discussing how the target market impacts fundraising and exit strategies and why raising capital at a unicorn valuation before there is a sufficient evidence of a large market can hurt the company
What are your thoughts on BigID quietly raising another $61.5M this week bringing them to $300M+ in VC funding raised? Oddly no announcement and press coverage like we saw with the series D round that gave them unicorn status. Guessing this was a down round took that status away? Clearly there's a market for data security, but they seem stuck in purgatory: not in the acquisition zone but can't IPO either.
The core narrative is the description of an (apparently) successful crossing of the chasm, followed by a much more apparent failure in continuing to innovate, thus alienating its alpha customers.
In practice, there are other forces pressuring the founders through this process. They will be coerced in expanding the TAM, but they will also be approached for acquisitions meanwhile. This is how many ventures end up in the hands of the big players in the cybersecurity industry, and don't ever publicly fail the innovation vs. TAM expansion tradeoff that you described.
There's also the push to become a platform rather than staying a standalone tool. This would naturally force some level of innovation that may or may not appeal to the alpha customers without eroding value propositions so much.
Overall I find this less of a cautionary tale for the founders about cybersecurity. I find it more of a cautionary tale for founders in general: understanding that funding also unlocks new responsibilities, and that often means to execute things differently to deliver on the implicit or explicit promises made to VCs. I find it of a very generic type of naivety to believe that there are value proposition and GTM autopilots for VC-backed startups. But maybe there's a founder out there in cybersecurity that believes it, but would they be smart enough to be reading your post? :)
Really good insights. On the "getting creative in go to market" front, an additional path to expanding the number of "mature enterprises" is to think beyond direct sales to larger enterprises at also consider service providers (MSSP/MDR) who may have the technical expertise to deploy a technology across their customer base. The GTM motion will probably affect how you build the product (multi-tenancy, etc), but can lead to a bigger TAM.
What are your thoughts on BigID quietly raising another $61.5M this week bringing them to $300M+ in VC funding raised? Oddly no announcement and press coverage like we saw with the series D round that gave them unicorn status. Guessing this was a down round took that status away? Clearly there's a market for data security, but they seem stuck in purgatory: not in the acquisition zone but can't IPO either.
The core narrative is the description of an (apparently) successful crossing of the chasm, followed by a much more apparent failure in continuing to innovate, thus alienating its alpha customers.
In practice, there are other forces pressuring the founders through this process. They will be coerced in expanding the TAM, but they will also be approached for acquisitions meanwhile. This is how many ventures end up in the hands of the big players in the cybersecurity industry, and don't ever publicly fail the innovation vs. TAM expansion tradeoff that you described.
There's also the push to become a platform rather than staying a standalone tool. This would naturally force some level of innovation that may or may not appeal to the alpha customers without eroding value propositions so much.
Overall I find this less of a cautionary tale for the founders about cybersecurity. I find it more of a cautionary tale for founders in general: understanding that funding also unlocks new responsibilities, and that often means to execute things differently to deliver on the implicit or explicit promises made to VCs. I find it of a very generic type of naivety to believe that there are value proposition and GTM autopilots for VC-backed startups. But maybe there's a founder out there in cybersecurity that believes it, but would they be smart enough to be reading your post? :)
Really good insights. On the "getting creative in go to market" front, an additional path to expanding the number of "mature enterprises" is to think beyond direct sales to larger enterprises at also consider service providers (MSSP/MDR) who may have the technical expertise to deploy a technology across their customer base. The GTM motion will probably affect how you build the product (multi-tenancy, etc), but can lead to a bigger TAM.