Mobile Enterprise TrendsMarch 2017

Mobile Enterprise Trends 2016 Highlights

• Mobile continues to be an important initiative for CIOs and other technology buyers. From our conversations with technology decision makers, the key factors driving businesses to consider deploying mobile technologies are:

• Mobile-savvy millennials are playing a greater role in the workforce. • Deskless workers are receiving more attention from IT.

• Mobile applications are driving meaningful productivity gains.

• Funding of mobile enterprise companies grew 9% in 2016 despite the fact that the overall venture funding market contracted by 11%.

• We believe this highlights investors’ relative enthusiasm for mobile enterprise versus the index of other venture investment opportunities.

• More mobile enterprise companies are reaching meaningful scale. This resulted in an increase in later stage financings of mobile enterprise companies in 2016.

• Dollars invested in Series B and later rounds rose 33% during the year.

• 2016 was a banner year for M&A in mobile enterprise. • ServiceMax was acquired by GE for $1BN, marking the first billion-dollar exit for a mobile

enterprise company. • In total, there were 5 mobile enterprise mobile enterprise acquisitions in 2016 totaling over

$2BN. This is the biggest year we’ve seen for mobile enterprise M&A.

Why Mobile is Important to Business

Why Mobile is Important to Business

1

2 3

Millennials matter

Deskless dominates Productivity power

• By 2020, nearly half of all U.S. workers will be Millennials.

• 20% of Millennials don’t use a computer and have gone “mobile only”

• 80% of the global workforce doesn’t sit at a desk to do their job

• Mobile devices make it possible to deliver business apps to these workers for the first time

Source: University of North Carolina, ComScore, Google, Harvard Business Review, KPMG

• Mobile applications can increase worker productivity by 40% or more

• Improving productivity is a top priority of global CEOs and CIOs and has been for the past decade

Mobile Enterprise Venture Funding2016

Mobile Enterprise Venture Funding 2016: Key Takeaways

• Mobile enterprise funding grew in 2016 despite a decline in the overall venture funding market. • In 2016, venture firms invested $973MM in mobile enterprise businesses, up 9% versus 2015.

Overall U.S. venture funding was down 11% in 2016.

• The pace of early stage mobile enterprise funding slowed during the year. However, funding of later stage mobile enterprise companies grew dramatically, highlighting the fact that a greater number of mobile enterprise companies are reaching scale.

• Early stage funding of mobile enterprise companies was down 24% in 2016. This decrease is roughly in line with the drop in the number of new mobile enterprise companies created during the year (see the Mobile Enterprise Landscape section of this report).

• Later stage funding in the mobile enterprise space saw a meaningful uptick in 2016. Dollars invested in Series B and later rounds rose 33% during the year.

• Industry-specific mobile enterprise companies saw the greatest growth in funding in 2016. We believe this signals the relative demand for industry-focused mobile enterprise applications versus horizontal applications.

• Mobile applications focused in industries such as healthcare, hospitality, and restaurant saw significant percentage increases in funding during 2016. This continues a trend that began in 2015.

• Conversely, several major horizontal application categories saw saw slower or negative growth over the year.

$M

$200M

$400M

$600M

$800M

$1000M

$1200M

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mobile Enterprise Venture Funding 2016 v. 2015

2015$891MM

2016$973MM

Source: CrunchBase, Emergence Capital analysis

Venture funding of mobile enterprise companies in 2016 outpaced 2015 by 9%, whereas the overall US venture market was down 11% in the same period

Mobile Enterprise US Overall Venture

+9% -11%

Mobile Enterprise Venture Funding by Series By Dollars Invested, 2016 vs. 2015

58%

42%

Early Stage Later Stage

71%

29%

2015 2016

Source: CrunchBase, Emergence Capital analysis

Mobile enterprise financing activity skewed more toward later rounds than early stage rounds in 2016.

Top Mobile Enterprise Funding Categories 2016

Restaurant Mobile applications used by restaurants to help them manage their businesses

$77MM

Events & Contacts Mobile applications used to manage events

and contacts

$22MM 73% vs 2015

Source: CrunchBase, Emergence Capital analysis

Hospitality Mobile applications that enable deskless workflow

for hospitality management and staff

$32MM1005% vs 2015

77% vs 2015

Payments Mobile applications used to facilitate b2b payments

$10MM 76% vs 2015

Content Mobile applications used to create or consume

documents, images or video

$15MM 76% vs 2015

Funding has shifted heavily towards vertically focused apps from 2015 to 2016, and decreased in horizontal categories like content and payments

Healthcare Mobile applications used by healthcare workers

to simplify workflow and improve information access

$94MM 95% vs 2015

Mobile Enterprise LandscapeEnd of Year 2016

Mobile Enterprise Landscape End of Year 2016: Key Takeaways

• 2016 saw a slower pace of company creation in the mobile enterprise space. • Our 2016 mobile enterprise landscape includes 358 companies, up 14% from 313

companies in 2015.

• This is down from the 21% growth in new mobile enterprise companies we saw in 2015.

• We believe fewer companies were started during 2016 due to several factors, including: • It’s harder to build a mobile enterprise company than a traditional SaaS business. Multi-

platform development is challenging and expensive. Additionally, it’s tougher to manage sales and marketing in an environment that relies on app stores.

• Many of the more interesting mobile enterprise markets are in areas where deskless workers are prevalent. There are fewer entrepreneurs who today appreciate the opportunities in these areas than understand how to build apps for deskbound workers.

• This was a banner year for M&A in mobile enterprise • ServiceMax was acquired by GE for $1BN, marking the first billion-dollar exit for a mobile

enterprise company. • In total, there were 5 mobile enterprise mobile enterprise acquisitions in 2016 totaling over

$2BN. This is the biggest year we’ve seen in dollar terms for mobile enterprise M&A.

HORIZONTAL

VERTICAL BANKING/

INSURANCEGOVERNMENT

OTHER VERTICALSEDUCATION HEALTHCARE REAL ESTATE/CONSTRUCT.

RESTAURANTS

ACCOUNTING, FINANCE, ITSALES, MARKETING & SERVICE

PAYMENTS

HOSPITALITY

CONTENT COMMUNICATION TASK MANAGEMENT & CALENDAR

MOBILE FORMS

EVENTS & CONTACTS

OrderAhead

HR & RECRUITNG BI & ANALYTICS

ACQUIRED

RETAIL

TRANSPORTATION

MANUFACTURING

KURADO

PRODUCTIVITY

NeverEatAlone

Xplor

Mobile Enterprise Landscape End of Year 2016

Largest Mobile Enterprise Venture Rounds2016

Largest Mobile Enterprise Venture Rounds 2016

Provider of mobile contentmanagement solutions

$50MM

Series C

Provider of smartglass-based productivity solutions for doctors

$23MM

Series B

Provider of tablet-based loyaltysolutions for retailers

$50MM

Series C

Source: CrunchBase, Emergence Capital analysis

Provider of mobile construction management software

$50MM

Series H

Provider of mobile videoconferencing solutions

$100MM

Series D

Provider of mobile freight matching solution for truckers and shippers

$22MM

Series B

Provider of mobile platform forrespiratory health management

$21.5MM

Series C

Provider of mobile workplace safety and quality management

$23MM

Series B

Most Active Mobile Enterprise Investors2016

Source: CrunchBase, Emergence Capital analysis

(3)

(6)

(2)

(3)

(3)

(3)

(3)

Most Active Mobile Enterprise Investors 2016

Number of 2016 mobile enterprise investments is shown in parentheses.

(5)

(3)

(2)

2017 Mobile Enterprise Predictions

2017 Mobile Enterprise Predictions

• 2017 will see another mobile enterprise company acquired for $1BN or more by a major technology player.

• Realizing how far behind they are in terms of serving their customers’ mobile needs, a leading technology company (i.e. IBM, Microsoft, Oracle, SAP) will make a significant mobile enterprise acquisition. They will pay a “strategic” multiple — meaning higher than industry valuation comps.

• An increasing number of mobile enterprise companies will be created that take advantage of non-smartphone / non-tablet devices.

• Several companies on our landscape already utilize hardware such as head-mounted displays and drones. These types of devices can be incredibly valuable — particularly in deskless workforce environments. As this type of hardware becomes more capable and less expensive, we will see more businesses built around it.

• More mobile enterprise companies will be created outside of Silicon Valley than within it. • This will happen for two reasons. First, mobile is the preferred technology platform among

business users in many regions outside of the U.S. Entrepreneurs in these mobile-first markets have a deep understanding of how to build compelling mobile enterprise apps. Second, there is a greater understanding of deskless workers’ technology needs in areas outside of Silicon Valley.

Emergence Capital (@emergencecap), is the leading venture capital firm focused on early and growth-stage enterprise cloud companies. Our mission is to invest in cloud visionaries who are building the world's most important business applications.Emergence’s investments include companies such as Salesforce.com (CRM), SuccessFactors (SFSF, acquired by SAP), Veeva Systems (VEEV), Yammer (acquired by Microsoft), ServiceMax (acquired by GE) and Box (BOX).More information on Emergence Capital can be found at http://www.emcap.com.

About Emergence Capital