Angular Ventures Europe/Israel Enterprise/Tech Weekly

The Angle Issue #26: May 28, 2018

It’s a beautiful sunny Bank Holiday in London — and welcome to Issue #26! Over the next few weeks, I will be speaking at Lisbon Investment Summit and meeting startups there, spending a day meeting some Italian startups with my friends at Invitalia, and spending time in Tel Aviv sourcing investments. Please spread the word and refer some companies my way. Angular Ventures is open for business.

This week saw plans announced for the massive EUR 7–11B IPO of Adyen, as well as the implementation of the EU’s GDPR regulations, which led to no small amount of confusion and has already generated lawsuits against Facebook and Google. GDPR seems to have also shut down programmatic ad-buying in Europe. It’s not EU, it’s GDPR.

Notably, we also saw two acquisitions of other startups by Israeli startups. Kaltura bought Rapt (US) and Taranis bought Mavrx (UK). Links and much more below.

Please feel free to email me with comments (or startups) and if you like this — please forward to friends. Thanks!

From the blog

There are only three startup stages. In my view, and despite all the semantic chaos (seed, pre-seed, post-seed, early A….) there are really only three “stages” for venture-backed startups, and they are all defined by the Series A round: The defining characteristic of early stage is that the company is not ready to start building out the machinery of growth. In the enterprise context, this means the company is still lining up the evidence and traction it needs to justify the Series A: building product, deploying product with early customers, demonstrating product/market fit, proving out the sales dynamics that will support efficient growth, and making sure that the team is in place to execute.

2017 EU+IL VC Data. $20.3B of VC investment summarized in 74 slides.

Europe/Israel Enterprise/Tech

• Netherlands/Payments. If you thought Paypal’s announced $2.2B acquisition of Sweden’s iZettle was big news, Amsterdam’s Adyen filed to go public in Amsterdam for $7–11B. The company is notable for several reasons. First off — it’s a massive exit for an SMB-oriented company — and one with a non-US focus at that. Second — the company is going public in Europe as opposed to the US. In order words, this is truly a local European story: European founders, European customers, European business, and European exit. Thirdly — the investors in Adyen are notable: Index was an early backer — and this represents another huge win for Jan Hammer, who is arguably the best fintech VC in Europe. Felicis, a US VC, was involved. Their strategy is remarkable global — and kudos to them for picking Adyen out of the chaos. ICONIQ, another US-based Adyen investor, began as the money management firm for Mark Zuckerberg’s fortune

• Israel/Surveillance. There are rumors floating of a $1B merger between Verint and NSO, two Israeli companies that sell surveillance technology.

• Finland/Satellite Vision. ICEYE, a Finnish imaging company that helps satellites see through clouds, raised $34M from a constellation of VCs including True Ventures: “In January 2018, the company launched its first satellite, which is now successfully transmitting synthetic aperture radar (SAR) images to Earth. Now that the first satellite has successfully demonstrated that the company’s technology works, it will use the new capital to enable it to further develop its technology and launch additional satellites. “In addition to hardware and software improvements, we are also optimizing what happens on the ground as far as satellite operations,” said Modrzewski. “Which has a big impact especially as more and more satellites are launched.” One way that ICEYE is doing that is through the use of an optical terminal from communications startup BridgeSat. The two companies announced earlier this week that one of ICEYE’s future satellites will include this terminal, which uses lasers rather than radio, enabling greater bandwidth for data transmitted from the satellite.”

• Israel/Automotive. An overview of Israel’s rapidly expanding automotive technology sector.

• France/PaaS. Platform.sh, a French PaaS provider from the team behind Commerce Guys, raised $34M with the vision of simplifying cloud deployment for dev teams. Their original (Commerce Guys) project had to do with Drupal, but with this new venture, they have broadened out to a more horizontal PaaS offering.

• Israel/Video. Israeli video giant Kaltura acquired Rapt Media to add greater interactivity to its enterprise video offering.

• Israel/UK/Agtech. Israeli crop health monitoring company Taranis acquired UK-based drone imaging company Mavrx.

• France/Bluetooth. Tempow raised $4M to rewrite the Bluetooth stack.

• EU/Government VC. According to Reuters, France and Germany are pushing the EU to spend even more money propping up innovation. It is striking just how fashionable it is in EU circles to believe that private markets are failing to fund innovation and that, conversely, public programs will have an impact. The most disturbing aspect of all of this is the creeping sense that tech innovation is a battlefield for nationalism and protectionism. The NY Times had a piece this week on Macron’s effort to drive the innovation economy in France. As they noted: “though France makes billions in cheap loans and grants available to finance start-ups and accelerators through its public investment bank Bpifrance, critics say that can make it hard to tell if French start-ups are competitive.”

• Israel/Flight Delay. Looks like the launch of El Al’s planned direct TLV-SFO service is six months delayed. Will Israeli founders ever be able to get to America? Stay tuned to find out…

Worth reading

• GE’s road to hell was paved with good intentions. Fortune offered a long read on the troubles at GE, and pulled no punches. The article, “What the Hell Happened at GE?” is well worth a read. “GE was spending far more than it was generating. The company could pay its bills, but its cushion was getting thin, and heavy cash requirements loomed, such as restocking a pension fund that was underfunded by billions. From 2015 through 2017, GE generated about $30 billion from free cash flow and asset sales, but it spent about $75 billion on stock buybacks, dividends, and acquisitions. As economist Herb Stein famously observed, if something can’t go on forever, it will stop. GE was headed for a brick wall. The next thing the world noticed was the magnitude of the trouble unfolding at GE Power….”

• Serverless is where IT’s at. Sarah Guo and Jerry Chen of Greylock released a whitepaper on serverless technology, along with a blog post. Here is an except:
  “The promise of serverless is that application developers will no longer have to provision and manage physical servers, operating systems, traditional infrastructure security, or the myriad of other functions. They will be able to consume the compute (or packaged functions) they want, in a more granular and flexible way, with the freedom to use the right language for the job. While we are early in this shift to serverless, we already see many of our forward-leading engineering organizations adopt this mentality, and we believe it represents a significant long-term opportunity for enterprises and the vendors that serve them.” In terms of investment thesis, Sarah and Jerry is express an interest in four areas: (1) migration tooling to help companies move to serverless, (2) management tooling to help manage serverless applications, (3) developer tools for the serverless world, and (4) security.

• How to get things done as a founder. My friend and co-investor Hampus Jakobsson, now at BlueYard, put out a deeply personal post on how to actually get things done as a founder. I found it very useful.

• Robotics is where software was in 1976. In this reflective piece, Tim Enwall argues that the robotics space is where software was in 1976 — that is — before the emergence of integrated platforms (like the Apple II, the Commodore PET 2001, and the Tandy TRS-80) which made innovation much faster and easier: “When you substitute “robot” for “computer”, this sounds exactly like the world of 2018, not 1976. But what’s a developer to do today who believes in robots as the next world-changing software platform and is ready to take advantage of it? They’re screwed. Today’s web, mobile, enterprise, or STEM teen developer who dreams of what robots can do has only cumbersome, limited, or very expensive options.”

• VC Decision Dynamics. Mark Suster of Upfront continues his outstanding series on how to get venture funded, this time focusing on decision dynamics at VC firms.

• Mango seeds need to ripen faster. My friend Amit Karp, a Partner at Bessemer Israel, wrote that while seed rounds are getting larger, they are not re-labelled Series A rounds — they are seed rounds with all of the uncertainties and risks of that stage. Consequently, he argues, winners are getting picked earlier and earlier in the cycle.

• Leveling the playing field. Stanford Business on how tech companies alienate women during the recruitment process.

• Crypto corner. Thanks to Token Economy (easily the best newsletter on all crypto-related matters) for highlighting two important reads this week: The first is this piece by professor Stephen McKeon of the University of Oregon that outlines the “Security Token Thesis.” His most interesting and novel observation is that crypto-assets may enable asset interoperability. Here’s a taste: “The thesis underpinning the idea that everything will be tokenized is grounded in the aspiration that everything will be interoperable. I want to hold ownership claims to a commercial building, early stage equity, corporate bonds, a T-bill, my house, and a decentralized network on the same platform. I want these assets to be able to reference each other contractually and interact in an automated way. I want global pooled liquidity for all asset classes through a single interface. I don’t want to hold cash as working capital — I‘d rather stay fully invested while my wallet proportionally sells assets to make my mortgage payment each month.”
  The second is this piece by Jim Greco arguing that Wall Street is now driving the future of crypto. Not sure I agree entirely, but there may well be truth in his closing sentiment: “Thank you, crypto-nerds. You have invented the greatest financial instrument ever known to man. Wall Street will take it from here.”

• Hardware is hard. If you need more evidence of this, check out the account of Ossic’s disappearance.

Portfolio News

After a busy week last week, all quiet on the portfolio front.

Angular Ventures

I am the founder of Angular Ventures, a specialist early-stage enterprise tech VC firm based in London and Tel Aviv.
Angular backs companies born in Europe or Israel with the ambition to define a category and achieve global leadership, usually by starting with the US market.
You can follow me on Twitter and Medium or connect with me on LinkedIn. If you are running an early-stage start-up in the enterprise space anywhere in Europe or Israel, I’d love to hear from you to see if Angular can help. You can find a list of past and current portfolio companies here.

Yours,
Gil Dibner

If you find this email useful, please subscribe and share with your network. Thanks!