[phphphphp]

1Password, a competitor, raised ~$650m earlier in the year off the back of exceptional growth. The investment case is likely: Bitwarden are doing well, 1Password are doing very well, maybe Bitwarden can do very well too with some additional capital. Password management is rapidly growing in mindshare, there's a big market and great room for growth, the amounts involved are commensurate with the opportunity -- every single enterprise will have a robust password management setup soon enough.

[pbhjpbhj]

1Password is 4x the price and is not open source. Doesn't 1Password's stronger backing provide more risk for Bitwarden investors too (chasing the same customers but with less to spend on acquisition)?

Spitballing, $100M, assuming investors want 20% per annum return and Bitwarden do 50% profit ... they need 24M paying customers. Where are they at now?

[phphphphp]

Venture investments don't typically work that way: the goal isn't incremental returns YoY but rather major returns in the long term. Raise a fund, make a bunch of investments, report growth in valuation YoY (based on increasing valuations of portfolio) and then deliver returns once portfolio companies start to exit.

If BitWarden can use that $100m to 10x their valuation and then exit (whether that's an acquisition, going public etc.) the investors will have secured a win: if BitWarden's valuation stays where it is and returns ~$10m/year to the investor(s) over the next decade, that's not a great outcome considering the opportunity cost of capital.

Debt equity is the type of financing you're describing: lower risk, lower returns, not particularly exciting and not particularly attractive to investors if they believe the company has substantial upside potential.

[pbhjpbhj]

Yes, I'm not familiar with expected returns for investments so my back-of-napkin maths was based on approximate housing inflation in the UK. I figured they'd want more than that as a minimum.

Clearly Bitwarden isn't a unicorn, being a smaller entity in a growing market; do VCs really expect a 10x (in couple of years?) from that sort of investment?

So, do you agree with my basic premise that they'll need a whole heap of customers, that they don't seem likely to get, in order to make any dent in the investors hoped for returns?

[phphphphp]

I’d suggest with almost absolute confidence that they are betting on unicorn status for BitWarden. I’d be surprised if they expect anything less than a >$2.5bn exit.

[scarface74]

Or 1Password could just suffer from the DropBox problem - it’s a feature not a product.

Every company’s answer to that is also the same “we will target the enterprise”.

They aren’t “doing well” if they still require outside funding.

[bengale]

A feature of what service though?

The OS? iCloud keychain does this, it's not a compelling offering though if you need to use any other OS.

Something like Google? Not sure I'd want to risk my Google account ever getting locked and loosing access to all my other accounts.

I'm not sure what that leaves.

[everforward]

The browser is the obvious option. Firefox and Chrome both implement ways to save passwords in the browsers. I believe Firefox has a service to sync them, Chrome may too (I don't use them, so I don't know).

They could reasonably tie in to whatever Office-suite you use (GSuite, Office 365).

In the enterprise, it could be part of a larger "credential management suite" product managed by security. Allow syncing and auditing of credentials, like "when was the last time this cred was changed?" with some kind of automation to generate and push a new credential when need be.

From the outside looking in, a basic credential manager doesn't seem complex enough to be a standalone product.

[scarface74]

Is that a large enough market to be a sustainable, profitable business?

[bengale]

I would think so, on the business side of things. I'm not entirely sure what we pay for 1Password because we pay it without question tbh. We have a fair few subscriptions but 1Password would be up there with the indispensable ones.