We launched the Polychrome Developer Tools Indices at the beginning of 2021 on the thesis that within B2B SaaS there was a particularly interesting area in developer tools. The developer tool space, long dominated by a few juggernauts (Microsoft, IBM) was starting to explode and some big valuable businesses were emerging (Atlassian, Datadog, PagerDuty). Out of interest, we began tracking an index of the largest public and an index of the largest private developer tools companies.

With the first year in the books today we will check-in on how the indices performed, and also make updates to the included companies for 2022.

2021 Performance

Polychrome Developer Tools Public 20

First, let’s see how our Public 20 index performed in 2021. As a reminder this list is the most valuable 20 developer tools companies, by market cap, which initially listed their stock publicly within the last 10 years (as of Jan 1, 2021). Let’s see how Q4 and the full year fared for the index and compare the performance vs. other indices.

The Polychrome Developer Tools Public 20 declined in Q4 by 3.0%, but was able to end the year up 23.4%. Great returns in year 1, but a decline in Q4 and clouds on the horizon for tech and the markets in general. I’ll say it again, we are in it for the long run.

In 2021 we saw an interestingly large divergence in performance across the portfolio. Some companies were up over 100% and others down over 50%. The index ended up 23.5% on a market cap weighted methodology. However it was only up 16.3% on an equal weighted methodology. This shows that the larger companies in the index performed better than the smaller ones. In fact, starting the year, 10 of our companies had a market cap greater than $10B and 10 had a market cap less than $10B. Of those above $10B, 6 increased in value in 2021. Of those below $10B, only 4 increased in value in 2021.

Another interesting thing that happened is that 3 of the 20 companies were acquired. That’s 15%! This shows that developer tools companies are being seen as strategic areas for larger technology companies to invest in. We will see what happens with this in 2022, when prices might look even more tempting.

Notes:

• Slack was acquired by Salesforce on July 21, 2021. For Q3 and Q4 2021 we will use the acquisition price of $27.7B as the market cap for WORK.
• Cloudera was acquired by KKR on Oct 8, 2021. For Q4 2021 we will use the acquisition price of $5.30B as the market cap for CLDR.
• FireEye sold its FireEye segment and rebranded as Mandiant MNDT on Oct 8, 2021.

Polychrome Developer Tools Private 30

Now let’s check in and see how our Private 30 index performed in 2021. Again, this list is the 30 most funded developer tools companies, by dollars raised, which remain private (as of Jan 1, 2021). This updates total funding, valuation range, and shares a few items to note. In terms of funding, valuation ranges, and IPOs, this index had a great year!

Let’s start with the IPOs; 5 of the 30 companies went public in 2021. That’s 17%! Those companies entered 2021 having raised $1.2B and now have a market cap of $43.7B. Congrats to DigitalOcean, Amplitude, Kaltura, GitLab, and HashiCorp.

Let’s check out total funding. These numbers exclude the five companies above that went public. Our remaining 25 companies started the year having collectively raised $6.2B. In 2021 18 of the 25 raised additional capital (72%). In total they raised $5.9B, bringing the total funding for the group to $12.1B!

It’s interesting to look at the trend by quarter as well. Q4 had the least rounds closed (3), but they were some big ones (total $2B)! Congrats to the companies that raised in Q4; Checkout.com who raised $1B, Airtable who raised $735M, and Cloudbees who raised $245M.

Without further ado, here is the 2021 performance for the Polychrome Developer Tools Private 30.

2022 Kick Off

As we said when we launched the Developer Tools Indices, we would rebalance annually. This is to make sure we always are tracking the largest public and private developer tools companies. It’s also helpful since there were a lot of graduates from last year's indices. We also said that we hoped the Public 20 could become the Public 30 someday, and this year we are bumping it up to the Public 25. So here are the companies that will make up each index for 2022!

Polychrome Developer Tools Public 25

This list is the most valuable 25 developer tools companies, by market cap, which have initially listed their stock publicly within the last 10 years.

Here’s what changed in the index from 2021:

Here is the Polychrome Developer Tools Public 25:

We are a bit into 2022 and by and large Q1 has been bad for this index. We will have our regular quarterly update and thoughts when Q1 closes in just a few weeks.

Polychrome Developer Tools Private 30

This list is the 30 most funded developer tools companies, by dollars raised, which remain private. There are a lot of changes to this index, which gives a little insight on how 2021 was for private developer tools companies.

1. A lot of venture capital was deployed in 2021. The least funded company to make the list for 2021 was $66M, to make the 2022 list a company needs to have raised >$200M! The companies on our list for 2022 raised a total of over $20B, and all but two raised money in 2021.
2. Open Source companies are holding five spots in the index with names like Redis, Docker, and Sourcegraph. Open source developer tools is a space we know well, our portfolio companies Flagsmith and Browserless are both open source developer tools. This is a trend we are keeping a close eye on.
3. Several Blockchain / Fintech companies jumped onto this list. 2021 saw a huge amount of buzz in that market, and it showed by landing big funding rounds for companies like Checkout.com, Lacework, Forte, and more.

Here’s what changed in the index from 2021:

Here is the Polychrome Developer Tools Private 30:

With 2021 being the year of the IPO, what will happen in 2022? There are some big names in this group still waiting to break out; Stripe, Snyk, Airtable - we will have to wait and see.

Check in again soon to see Q1 results and our analysis of what is going on for these companies in the current market selloff.

Thanks,

Alex