Enterprise & Deep Tech Weekly

Issue #84: For the two weeks ended June 22, 2020

A recent article in The Information asked if it’s possible for VCs to invest over Zoom. The VCs interviewed in the piece were mixed but for Angular Ventures, the answer is decidedly “yes.” In fact, we had a “zoom-only” investment in our portfolio that long pre-dated the Coronavirus crisis — and we are currently evaluating 4–5 opportunities that are in very advanced stages of our pipeline — three of which are (so far) “zoom-only” relationships. May was a record month for our deal flow — at least as measured by “top of funnel” metrics (how many opportunities made their way into our CRM system), and June is looking quite strong as well. What I love about this work is the close relationships that get built between founders and investors. These can be built over Zoom, but it’s not quite the same. We will continue to aggressively seek out opportunities remotely — and I am certain we’ll make investments during this bizarre period of “social distancing” — but I can not wait for the day when I can sit across a table from the founders we work with. Let’s hope that day comes soon.

Two areas we are thinking deeply about: (1) Privacy and (2) JAMstack. In recent weeks, we’ve been diving in deep on two areas that both seem poised for significant long-term growth despite considerable activity in recent years. We’ll save our thoughts on JAMstack for another time — but if you are working on something in that space (backend, frontend, API management, or — ideally — something totally new…) please do let me know. That shift in architecture is here to stay and will have massive implications for how business is done and applications are built, deployed, and managed for years to come.

On the privacy side, the market is getting more crowded and the picture is getting murkier by the day. This week saw round announcements by Transcend and OpenRaven. Evervault, an Irish player, recently raised in this category as well. UserCentrics (in Germany) is another leader also growing rapidly. BigID, Onetrust, TraceData, TrustArc, and many others are rapidly innovating here as well. Companies in the data privacy governance space seem to align into one or more of a few approaches: discovery (passive discovery of what data is where); novel storage approaches or DRM tooling; storage gateways for policy enforcement; SDKs which require re-architecting applications, and customer-facing privacy workflow automation tools (which help automate the DSARs). What’s becoming increasingly clear is that (1) this market is enormous and (2) this market is chaotic with nearly every player effectively competing with every other. The more I dig here, the less I feel I know about how this market ultimately shapes up. But if you are building something in this category — something revolutionary enough to drive adoption in the midst of all this chaos — we’d love to hear from you.

Finally, accessibility. I do everything I can to be as accessible as possible (you are reading this email after all….). But as Paul Murray recently reminded us on Twitter, VCs can always strive to be even more accessible. So just a reminder: please tell any early-stage enterprise or deep-tech founder you know that they can reach me at [email protected]. They don’t need a warm intro — just a coherent email. I run inbox zero, so there will be a response…

As always, if you are building an enterprise or deep tech startup in Europe or Israel, please let me know… Now let’s get to the news.

From the blog

Defining Enterprise/Deep Tech. What do we actually mean by the phrase “enterprise or deep tech?”
Introducing the Angular Ventures Team. Getting to know Anne and Andrew.
Launching Angular Ventures I. What we do, why we exist, and how we got here.
US incorporation? Just do it. Why nearly all enterprise tech companies should incorporate in Delaware.
Technology for Trust. Why we invested in Vault Platform
A Security Layer for the Physical World: Why we invested in DUST Identity
A System of Intelligence for Field Service: Why we invested in Aquant.io

Europe/Israel Enterprise/Tech

• Israel/Wix. A long-read on the growth of Wix to a $10B public valuation, with no profits along the way. “What Wix is experiencing is very similar to what happened to another company that reached incredible peaks during the coronavirus crisis, video call provider Zoom. The more you examine the business models and figures of the two companies, the more similarities arise. The American company, which nowadays is a household name, also failed to make a splash when it first went public last year. It too is merely another player in a crowded market, possessing no breakthrough technology. Like Wix, Zoom’s main advantage is its simple and user-friendly interface.”

• Israel/Travel Management. TripActions raised $125M in convertible-to-IPO debt to help it weather the Coronavirus storm. The company which, like the Spanish-Israeli TravelPerk, helps companies manage and optimize their travel spend, has no doubt felt the impact of Coronavirus over the past few months. The company laid off hundreds of employees in late March.

• Israel/Fintech. Pagaya raised $102M to use machine learning and algorithms to manage institutional assets. Back in December, the company released some data on its impressive growth, including total AUM of $1.2B. “Asset management hasn’t significantly evolved in the last 30 years, despite the proliferation of data and firms racing to adopt advanced technologies,” said Harvey Golub, Retired Chairman and CEO of American Express, and Pagaya board member. “Pagaya has accomplished what is just a hope and a dream for most firms and is ushering in a new era of asset management.” Unlike other asset managers, advanced technology fuels Pagaya’s investments as its AI analyzes millions of data points to underwrite assets and manage risk. The firm’s data-driven investment strategy consistently produces above-market-average returns for investors.”

• Germany/Headless CRM. Contentful raised $80M from insiders in what is being described as a pre-emptive round. The company is arguably the leader in the headless CRM category, which is emerging as a critical component of next-generation frontend stacks (JAMstack). Europe has been a hotbed of activity in the space with strong offerings from Strappi (France) and GraphCMS (Germany/Poland) as well.

• Israel/Disaster Recover. Zerto raised $53 million for its disaster recovery, backup and workload mobility software for virtualized infrastructures and cloud environments.

• Germany/No Code Robot Training. Wandelbots raised $30M for world’s first ‘no code’ handheld device that lets humans teach robots how to perform industrial tasks.

• Spain/Employee Knowledge Platform. Onna raised $27M for its “Knowledge Integration Platform”, which integrates all workplace apps together, from communication to storage and HR platforms.

• UK/Intelligent Documents. H4 raised $27M from a consortium of global banks and law firms for their platform that allows enterprises to create and gain insights from digital documents.

• Israel/Insurance Underwriting. Planck raised $16 million for its AI-driven data collection, processing and insight engine that helps insurers make underwriting decisions.

• UK/SME Loan API. Codat’s API facilitates data exchange between small businesses and the financial institutions that help them secure loans, insurance, or other services has raised $10M.

• Israel/Productivity Platform. Spike raised $8M for its workflow inbox, allowing employees to bring together email, chats, notes, tasks, calendar and video calls.

• Israel/Pre-emptive Cyber Advantage. Opora raised $7M for its platform that uses pre-attack adversary behavior analytics to deliver pre-emptive adversary threat protection against the most persistent, organized and largely uncontested cyber-criminals operating today.

• Germany/Customer Feedback. Zenloop raised $7M for its NPS feedback management platform.

• UK/Spatial AI for robots and drones. Slamcore raised $5M for its are developing SLAM algorithms that allow robots and drones to truly understand the space around them.

• UK/Quantum Computer. Universal Quantum raised $4.5M to build the world’s first “large-scale quantum computer using a pioneering approach developed at the University of Sussex.

• Armenia/AI Video Labeling. SuperAnnotate raised $3M for its AI-driven annotation platform for image annotation, providing a toolkit for manual labeling, a simple communication system, recognition improvement, image status tracking, templates, dashboards and other tools.

• Israel/Bitcoin Ransom. Sapiens reportedly paid a $250K ransom to hackers who penetrated its system.

Worth reading

Enterprise/Tech News

• SAP goes vertical. The ERP giant’s CEO said the company is focused on 25 industry-specific cloud applications as a means of luring new customers onto the core ERP offering. “The Industry Cloud can also help … push [prospects] into our ERP because then customers [are] seeing they can do more with [our] ERP in conjunction with these industry processes… I see this [as] a winning strategy,” he told analysts and the press. SAP said the underlying ERP system for its Industry Cloud — which it outlined yesterday — would be S/4HANA, but competitors could choose to enable their ERP systems for SAP’s Industry Cloud by supporting SAP’s OpenBusiness Data Model, Open Business Process Model and Open Business APIs. Some 25 industries are being targeted by SAP with an application built for them. But SAP is not attempting to build industry-specific applications alone, Klein added. “We are now going out and [saying] we [can support] 25 industries… This is nuts we can never do that! So I told our industry heads to come back with partner”s. So Industry Cloud is a big part [of it] also, [as is] going together with partners and there’s nothing wrong with that. Actually, I like it a lot,” he said.

• Why Figma wins. A fantastic teardown of Figma by Kevin Kwok, who worked on the deal at Greylock. “Much of Figma’s current success is driven by its ability to spread within companies. Figma becomes more useful as more people within a company use it, driving advantaged speed and scale of penetration within companies. Figma was quick to recognize that the constraints on design at companies is often not a problem of pixels, but of people. Many of Figma’s competitors are great tools for designers. But that’s who they are for — designers.Figma is a tool for teams to design. Not for designers alone.”

• Gatsby’s great plans. How the SSG leader plans to be much much more. “So, what’s next for Gatsby? Flush with his new round of VC funds, CEO Mathews says he wants to make Gatsby “usable for everyone.” To achieve this, the company is “working towards a low-code (or even eventually no-code) approach to Gatsby,” to bring in mainstream users.”

• Minimally Viable Happiness is the key to Marketplace Victory. Sarah Tavel of Benchmark breaks down what it takes to win when building a marketplace business. “The focus on transactions is understandable — it’s easy to measure, and milestones like “$1m of annualized GMV” can be useful to aim for. But the ultimate success of your marketplace will depend on your ability to create meaningfully more happiness in the average transaction than any substitute, not how many transactions you accumulate.”

• Low-code governance is going to be an issue. CIO Dive covers the adoption of low-code and need for new ways to control and manage the impact of low-code tools on enterprises. “Low-code platforms became critical to organizations grappling with seismic shifts, with their ability to integrate data from multiple sources and reduce development times from months or weeks to days. Companies that already leveraged low-code systems were able to respond faster to the pivot, Rymer said. Half of developers had already adopted or planned to adopt a low-code platform as part of their workflow, according to a 2018 Forrester study….Low code’s strength comes from its ability to quickly release and allow developers to iterate detailed pieces of software relevant to current needs. Though quickly spun-up apps help address urgent needs at scale, executives need to be mindful of retaining the trust, governance and controls in place that sustaining these apps require.”

• Palantir going public. The secretive and somewhat controversial data analytics software (or services?) company is reportedly filing to go public. Founded in 2004, Palantir offers software that lets organizations integrate their data, their decisions, and their operations into one platform. By allowing customers to integrate and analyze all of their data, the software empowers them to answer complex questions quickly by bringing the right data to the people who need it. For much of its history Palantir has been considered to be secretive because it works closely with various governments. The U.S. Central Intelligence Agency was an early investor in the company. Although it’s somewhat more transparent today in its operations, such as disclosing contracts with the U.S. Navy, the Centers for Disease Control, and the U.S. Space Force, national security concerns means that some of its services likely will never be publicly disclosed. The company has not been without controversy either. Its relationship in providing services to both the U.S. National Security Agency and U.S. Immigration and Customs Enforcement both have made headlines.

• Next-gen BD overview. Luc Perkins began a two-part review of some new key database technologies. Part 1 covers TileDB, Materialize, and (Germany’s own) Prisma. “Prisma isn’t a database but rather a set of tools that seek to abstract away your database as much as possible. It’s currently compatible with PostgreSQL, MySQL, and SQLite on the DB side and JavaScript and TypeScript on the language side (with support for more DBs and languages on the horizon). It touts itself as the “data layer for modern applications” and that sounds about right.”

• War on Apple. In case you are still wondering what all the ruckus is, Apple and Hey (a new email app) declared war on each other.

How to Startup

• Marc Andreesen’s keys to productivity. The Observer Effect interviewed Marc Andreesen of A16Z. Much of the discussion focused on productivity — and while it has a VC flavor, I suspect it’s useful for all of us. “So basically, there’s two kinds of projects. Apple has this concept they call the directly responsible individual — the D-R-I. For any project, I’ve tried to identify the DRI. Who is the person responsible for delivering the project? If that’s me, then the project itself gets on my calendar. If it doesn’t go on the calendar, it is not getting done. The weekly check-in is for all the projects other people are responsible for. As an example, you could have a company raising money or going through a big transaction. I don’t want to hound the entrepreneur or the CEO every day necessarily but at least want to stay up-to-date on a frequent basis, right? I never want these things to just go dark where you’re going “Whatever happened to that?””

• How to lead a remote sales team. Anne Talerico, co-founder of Beacon9, shares her thoughts. Here’s one tip: “A Slack channel filled with updates on revenue booked, opportunities opened, or deals won is a great source of encouragement and excitement for everyone. It almost replicates the energy of an office sales floor and keeps everyone accountable to their number. And daily team updates on activities and results keeps everyone accountable to hitting important goals.”

• YC is launching an evergreen startup school. YCombinator opened up its startup school for free. The entire video curriculum is available online here. I think it’s safe to say that we are well past “peak content” in VC land, but the YC content is generally very good and worth a look. In recent years, the wind seems to have shifted against YC in some of the more rarified circles in the valley. As the program has expanded (and, frankly, as its content has increasingly become commoditized along with all other VC content), its less clear that YC plays the same pivotal role in concentrating early-stage activity that it has in the past. It is still, however, one of the great brands in early-stage venture and probably the gold standard for accelerators. We may, however, have entered a post-accelerator age. In such an environment, open-sourcing their content is a smart move by YC.

• A new climate fund rises in Europe. Congrats to my friend Hampus Jakobsson on the launch of his new fund, Pale Bot Dot, which is focussed on climate technologies. Angular has been looking for, and looking into, some of these technologies for a some time as well — though we have not yet made an investment here. This is undoubtedly one of the most important areas for human activity over the next few decades — and I wish Hampus and his colleagues tremendous success. (If you are working on something in this area — particularly economically-viable carbon capture, please reach out to us as well.)

How to Venture

• Structural advantages. This week, I came across a piece from 2014 on how “structural advantages” are the real driver of sustained VC performance by the top firms. From the perspective of an emerging manager, this makes for thought-provoking and sobering reading. It also rings true. The question for emerging managers — or for any VC not in the pantheon of top firms is this: what structural advantages can we exploit or create?

• Discussion with Michael Kim of Cendana. Jason Calacanis, who is rapidly becoming one of favorite podcast hosts, interviewed Michael Kim of Cendana, one of the leading fund-of-funds focused on emerging seed managers, for well over an hour. It’s a great discussion on early-stage venture, with a lot of data and benchmarking for seed managers. We have our work cut out for us!

Portfolio News

Planable was selected as one of the nine best social media scheduling tools, and their CEO, Xenia Muntean, discussed innovating the marketing industry in the latest SIFTGroupX podcast.

Trellis’ Head of Product, Uri Rosenzweig, was recently featured on The Produce Industry podcast where he shared how AI is bringing a new level of efficiency to the food supply chain.

Vault CEO Neta Meidav will be participating in London Enterprise Tech Meetup’s discussion today, Beyond the Pandemic — what’s next for Enterprise Tech? Click the link to register to join.

Sisense’s core leadership team reached gender parity.