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Business Insider
2 days ago
- Business
- Business Insider
'Q2T3' is the 'freakish' new growth benchmark for AI startups
A new growth metric is doing the rounds in Silicon Valley that shows how exuberant investors have become about generative AI. In a new State of AI 2025 report, Bessemer Venture Partners introduced a growth benchmark that sets a high bar for today's AI startup ecosystem. Called Q2T3 — short for quadruple, quadruple, triple, triple, triple — this metric signals a dramatic departure from the SaaS era's more measured growth expectations, typified by the "T2D3"—triple, triple, double, double, double— playbook. "We share these admittedly freakish new benchmarks to showcase the reality of standout AI startups of the moment," Bessemer wrote. Bessemer didn't name any specific startups. However, the firm said that it came up with this new metric by studying 20 high-growth, durable AI startups across its portfolio and beyond, including Abridge and Cursor. Escalating Expectations Bessemer usually releases a "State of the Cloud" report each year. This year, the VC firm changed it to the "State of AI," a sign of how much generative AI is changing the tech industry, upending cloud computing, and pressuring established software business models. T2D3 became the north star for SaaS startups during the last decade. This metric required startups to triple their annualized recurring revenue in the first year, then do it again in their second year. Then, they had to double ARR in the third year, and repeat that feat in years four and five. In theory, this would get ARR from $1 million or $2 million to more than $100 million in about five or six years — enough to earn a potential valuation of $1 billion. Bessemer thinks T2D3 is now being rapidly eclipsed by AI-native companies, which are demonstrating unprecedented velocity thanks to generative AI's unique dynamics: rapid product cycles, explosive user demand, and new distribution channels. Enter Q2T3, a far more aggressive trajectory. The new benchmark reflects a faster path where AI startups quadruple revenue in years one and two, and triple ARR in each of the next three years, according to Bessemer. This implies growing ARR from $3 million to more than $100 million in just four years, and then more after that — a feat that redefines what hypergrowth means in a post-ChatGPT world. "Shooting Stars" vs "Supernovas" Bessemer's Q2T3 model is based on a new archetype it calls "Shooting Stars." These are AI startups that grow meaningfully faster than SaaS counterparts, while maintaining capital efficiency, solid gross margins (~60%), and strong product-market fit. According to Bessemer, these startups achieve roughly $3 million ARR in their first year of monetization and about $164,000 in ARR per employee. Some AI startups are growing even faster, hitting $100 million in ARR in about 1.5 years. Bessemer calls these "Supernova" startups. "These are at once the most exciting and the most terrifying startups we see," the venture capital firm wrote in its report. These numbers often come from situations where revenue may be fragile, driven by rapid adoption that may not reflect lasting value. Low switching costs, highly competitive markets, and thinly differentiated products can push profit margins toward zero or below, Bessemer warned. In contrast, Shooting Stars find product-market fit quickly, retain and expand customer relationships, and maintain strong gross margins—slightly lower than SaaS peers due to faster growth and modest model-related costs. They grow faster on average than their SaaS predecessors, but at rates that still feel anchored to traditional bottlenecks of scaling an organization. "These businesses might not yet dominate headlines, but they're beloved by their customers and are on the trajectory to making software history," Bessemer wrote. "Freakish" but achievable While Q2T3 seems "freakish," the firm said it's not impossible for AI startups to attain. Generative AI has drastically compressed time-to-market, with faster development, deployment, and go-to-market cycles, and Bessemer argues that dozens of startups are already proving this curve is within reach. Still, Q2T3 isn't for the faint-hearted. Is it a new way to redefine startup success, or a sign of AI frothiness? Only time will tell.
Yahoo
19-03-2025
- Business
- Yahoo
New Flexera Report Finds that 84% of Organizations Struggle to Manage Cloud Spend
The 14th annual State of the Cloud reveals evolving strategies for managing cloud costs and efficiency ITASCA, Ill., March 19, 2025 (GLOBE NEWSWIRE) -- Flexera, the global leader in technology spend and risk management, today announced the release of its 2025 State of the Cloud Report. The 14th annual report, which polled more than 750 technical professionals and executive leaders worldwide who were involved in the use of cloud, uncovered that 84% of respondents believe that managing cloud spend is the top cloud challenge for organizations today. With cloud spend expected to increase by 28% in the coming year, the report findings suggest that many respondents are rethinking their existing cloud cost management strategies. As organizations continue to invest in artificial intelligence (AI), nearly one-third (33%) of organizations are spending more than $12 million annually on the public cloud alone. With cloud budgets already exceeding limits by 17%, organizations are increasingly turning to managed service providers (60%) and expanding use of their FinOps teams to regain control over spending (59%). In fact, the number of respondents that use, or plan to use, a FinOps team increased by eight percentage points year over year. 'AI is in its prime with no indication of losing momentum,' said Jay Litkey, Senior Vice President of Cloud and FinOps at Flexera and Governing Board Member at the FinOps Foundation. 'I suspect we'll see further acceleration of AI use as more organizations embrace their own AI investments and technology vendors introduce agentic AI into their existing toolsets. To stay on budget and accurately forecast for future needs, organizations need to fine-tune how to track and manage their cloud spend and use with FinOps now—or risk a significantly wasted investment.' While estimated wasted cloud spend is falling, the adoption of AI-related public cloud services is rising. In addition to an increase in the use of data warehouse services (76%), often leveraged to feed AI models, generative AI (GenAI) public cloud services use is booming with 72% of organizations reportedly using the technology either extensively or sparingly, as compared to 47% in 2024. 'FinOps is taking center stage as many enterprises prepare for the onslaught of AI services to eat away at their cloud resources and budgets,' said Becky Trevino, Chief Product Officer at Flexera. 'As we're witnessing an increase in FinOps adoption, we're simultaneously seeing estimated wasted cloud spend trending downward. This illustrates the power and promise of FinOps practices, proving it is a winning strategy for organizations worldwide.' Additional key findings include: Cloud repatriation is starting to slowly unfold. Today, analysts and experts have indicated that some organizations are moving their workloads back to non-cloud environments (their own data centers and/or co-located/hosted environments). While this is beginning to happen, only a minority (21%) of cloud workloads have been repatriated. However, the ongoing migration to the cloud and net-new cloud workloads outstrip these cloud exits, resulting in continued cloud growth. Cloud sustainability initiatives are becoming top-of-mind. Organizations are highly focused on fine-tuning their sustainability practices. Over half (57%) of respondents reported they have, or plan to have, a defined sustainability initiative in place within twelve months, including carbon footprint tracking of cloud use. Regardless, saving money is still top of mind given 57% said cost optimization takes priority over sustainability. Cost efficiency continues to be the shining metric. Eighty-seven percent of respondents indicated that cost efficiency/savings is the number one metric used for assessing progress against cloud goals for the sixth year in a row, a 22-point increase from 2024. Organizations are also focused on the volume of workloads migrated (up from 36% in 2024 to 78% in 2025), and cost avoidance, which saw an uptick from 28% to 64%. This continues to validate the narrative that more workloads are moving to—or being developed in—the cloud, making a case for increased cost optimization tools. Organizations are extending the scope of cloud costs to SaaS and software licensing. Those responsible for managing cloud use and costs are increasingly expanding their world beyond public cloud (IaaS/PaaS) to more effectively balance costs, usage and future spend. Seventy-nine percent of respondents indicated that they are now involved in cloud software decisions, with 69% involved in managing use and/or cost of SaaS applications and 64% are managing the use and/or costs of cloud licenses (or software running in the cloud). Amazon Web Services (AWS) and Microsoft Azure competition remains heated. According to those surveyed, AWS and Azure continue to compete for the top spot regarding public cloud adoption. Recent data shows that AWS maintains a lead among SMBs—53% of SMBs reportedly use AWS, compared to 29% leveraging Azure. Google Cloud Platform holds the third spot, with just under half (46%) of all organizations running some or significant workloads on it. For more information on the Flexera 2025 State of the Cloud report, please visit: Follow Flexera on LinkedIn on X (formerly Twitter) on Instagram About FlexeraFlexera helps organizations understand and maximize the value of their technology, saving billions of dollars in wasted spend. Powered by the Flexera Technology Intelligence Platform, our award-winning IT asset management, FinOps and SaaS management solutions provide comprehensive visibility and actionable insights on an organization's entire IT ecosystem. This intelligence enables IT, finance, procurement, FinOps and cloud teams to address skyrocketing costs, optimize spend, mitigate risk and identify opportunities to create positive business outcomes. More than 50,000 global organizations rely on Flexera and its Technopedia reference library, the largest repository of technology asset data. Learn more at For more information, contact:Ciri HaughFlexerapublicrelations@ in to access your portfolio
