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Europe/Israel Enterprise/Tech Weekly

The Angle Issue #97: For the week ended November 16, 2020

Author

Angular Ventures
November 17, 2020

Change is in the air. You might have noticed (surely, you noticed?) that this newsletter has not hit your inbox in a few weeks. Part of that is due to a very intense period at Angular over the past month where we were closing several new and follow-on investments at the same time. But part of it was because between the election in the US and the announcement of Biden's decisive Electoral College win several days later, I barely slept. Like many Americans, I've been holding my breath since 2016 - waiting for America to return (even partially) to its senses. While there is much work and much uncertainty ahead, I think there is ample reason for long-term optimism on the direction of American politics. This has hugely positive implications for startup founders around the world - especially in Europe & Israel and especially for deep tech / enterprise founders.

The other big news impacting all of us is the massive resurgence in Coronavirus cases (US, Europe, Israel) coupled with the promise of multiple vaccines in the short- to medium-term. While we are certainly still in the grips of a crisis, it does not seem unreasonable to expect that perhaps 2021 will look substantially better than 2020 from a public health standpoint.

This week's must-read is by Craig Thomas: an analysis of VC fund sizes (AUM) and brand strength and the relationship between them. It's a sobering and thought-provoking read. 

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.

Angular Insights: Talks for Enterprise Founders

Angular is hosting a series of online interactive events with our community of early-stage enterprise tech founders from across Europe and Israel. These talks are designed to deliver practical startup advice in an easy-to-consumer format - with plenty of opportunities to engage with our speakers. Typically, these take place on Wednesday at 3pm UK, 4pm CET, 5pm Israel. To register for any of the sessions, just click on the links below.

Check out: www.angularventures.com/events for additional upcoming events, recordings of past events, and to subscribe to our event series.

From the blog

Europe/Israel Enterprise/Tech

  • Estonia/CRM. Pipedrive is officially a unicorn (Estonia’s 5th ) and an exit - having agreed to a majority buy-out by Vista Equity Partners for $1.5B. Pipedrive built a SaaS CRM platform optimized for SMBs and easy onboarding.

  • Israel/Chatbots. Snapchat acquired Voca.ai for $70M. The company, which raised $6M in venture capital, was focused on generating synthetic voice-based chatbots for outbound calls. "While other companies in the industry use technology that converts speech-to-text and only then processes it to communicate with users, Voca uses a speech-to-intent algorithm that enables two-way conversation that sounds completely human. In any conversation with a customer, the Voca Agents know how to adjust the voice, language, accent, and tone of speech, as well as their responses, providing customers with pleasant and efficient service without the user even knowing they are chatting with a bot."

  • UK/Virtual Events.  Hopin has raised $125M (now raised over $170mm since inception 9 months ago) for their online events software. Sifted interviewed CEO Johnny Boufarhat as well as some investors. "“Hopin is the fastest-growing company we have seen at this stage and meaningfully exceeded its plan since our last investment in June,” said Jules Maltz, general partner at US investment firm IVP, which has led this latest round."

  • UK/Document Automation.  Hyperscience has raised $80M for their data entry automation platform that includes including data validation and unstructured data processing.

  • Norway/Industrial Data.  Cognite has raised $75M for its industrial software-as-a-service used for the full-scale digital transformation of asset-intensive industries around the world.

  • Ireland/Business LMS. LearnUpon has raised $56 million for its online learning management system for enterprises.

  • Finland/Quantum Systems. IQM has raised $45M for its full hardware stack for a quantum computer.

  • Netherlands/Security Camera CV. Eagle Eye Networks has raised $40 million for its cloud video surveillance technology.

  • UK/Build A Bank. Railsbank has raised $37M for its open banking platform and APIs which help empower financial innovators to create financial services products and experiences.

  • Portugal/Global HR Services. Remote has raised $35M for its HR tech platform is built for companies with international payroll, benefits, and compliance issues.

  • Sweden/Graph Database. Neo4j raised $30M for its software that develops graph databases, which can show a variety of connections in large amounts of data for enterprises.

  • UK/Brand Research. Streetbees has raised $39M for its platform that captures consumers' emotions and context “in the moment” when they engage with brands, giving the company a unique way to make the offline world visible and searchable.

  • Sweden/PIM. InRiver has raised $32M for its SaaS-based product information management solution that integrates with other technologies in the ecosystem to enable users to sell more products online.

  • Israel/SaaS Config As Code. Salto has raised $27M for its software that allows business operations teams to automate the labor-intensive and error-prone ways they currently use to manage SaaS platforms.

  • France/Data Governance. Odaseva has raised $25M for its data governance platform for the enterprise which companies use for everything from backing up and archiving data to ensuring data privacy.

  • Israel/Security. Toka raised $25M for its cutting-edge and lawful intelligence-gathering platforms and products and advise governments on building an integrated cyber defense.

  • Netherlands/DevTools. CodeSandbox raised $17M to enable teams to prototype, build, and host web applications with its rapid web development platform. The startup will use the investment to launch its forthcoming team product, Pro Workspaces, and scale its remote-first development team.

  • UK/Drug Discovery. LabGenius raised $15M a biotech company using machine learning to rapidly identify and test potential new drugs, which cuts down the cost and risk associated with drug development.

  • UK/Insurance. Mind Foundry raised $13.6M for its AI platform that is designed to help insurers predict accidents and aid humans in preventing them.

  • Israel/B2C authentication platform. Lightico raised $13M for its software which enables companies to collect customer eSignatures, documents & ID Remotely with inbuilt workflows and mobile-first options.

  • Israel/Online Product Discovery. Syte has raised $15M for its e-commerce visual search platform.

  • Spain/Clinical NLP. Savana Medica has raised $15M for its AI toolkit turning clinical notes into care insights.

  • UK/Ecommerce Revenue Financing. Wayflyer has raised $10.2M for its eCommerce revenue-based financing and marketing analytics platform.

  • Slovakia/3D AR Design. Vectary raised $7.3M for its accessible 3D and Augmented Reality design platform.

  • Israel/Wix's quarter. Wix announced record revenues, but declining profits.

Worth reading

Enterprise/Tech News

  • DBT hits prime time. Fishtown analytics raised $29.5M led by Sequoia for a data engineering platform. The company is being the OSS project DBT which makes it easier for engineers to code and manage data pipelines

  • Apple shifts away from Intel. Ben Thompson provides an outstanding analysis of this very significant change, in an example of why everyone should subscribe to Stratechery. "Whilst in the past 5 years Intel has managed to increase their best single-thread performance by about 28%, Apple has managed to improve their designs by 198%, or 2.98x (let’s call it 3x) the performance of the Apple A9 of late 2015. Apple’s performance trajectory and unquestioned execution over these years is what has made Apple Silicon a reality today. Anybody looking at the absurdness of that graph will realise that there simply was no other choice but for Apple to ditch Intel and x86 in favour of their own in-house microarchitecture – staying par for the course would have meant stagnation and worse consumer products."

  • Palo Alto acquires Expanse for $800M. Security giant Palo Alto Networks bought Expanse for about $800M. "Founded in 2012, San Francisco-based Expanse develops solutions designed to monitor attack surfaces in order to perform risk assessments and mitigate threats."

  • Flying cars. Lillium, the German flying taxi maker, expects to be offering commercial service in 2025 and launched a US operational hub in Florida.

  • Stranger than fiction. The brother of the deceased Colombian drug lord Pablo Escobar and a Kalashnikov-wielding Swedish executive known as “El Silencio” are suing Europe’s most valuable fintech company, Klarna, in the US.

How to Startup

  • The 100x club. Kate Clark and Amir Efrati from Bessemer take a look at skyrocketing valuation multiples for tech startups. "Recent outsize bets on software startups can make their founders and early employees overnight millionaires, at least on paper. They represent another example of the tech industry’s divergence from the broader economy, which faces continued high unemployment due to the pandemic. The recent spate of steep multiples has also reenergized a Silicon Valley debate over whether high prices reflect a savvy bet on the future—or an irrational gamble that can come back to haunt young companies. Among the risks, if growth fails to materialize, companies may find it harder to sell or go public, and employees may see the value of their stock options diminish. “The question is, are prices really high because investors see tremendous growth or because…there just aren’t enough good startups?” said Will Gornall, an assistant professor of finance at the University of British Columbia who co-authored a paper estimating that unicorns—startups reported to be worth $1 billion or more—are widely overvalued."

  • Projects or pain? Dave Kellogg looks at whether SDRs should be looking for projects (defined budgets) or pain (problems that need solutions regardless of budgets). He argues that the answer depends on whether a market is hot (exists) or cold (no one is out looking). "In hot markets, you can probably fully feed your salesforce with inbound.  That said, many would argue that, particularly as you scale, you need to be more strategic and start picking your customers by complementing inbound with a combination of named-account selling, account-based marketing, and outbound SDR motion. In cold markets, the proverbial phone never rings.  You have no choice but to target buyers with power, target pains, and convince them your company can solve them."

  • Advice on exits. Robin Klein from Local Globe shares a lifetime of wisdom on how founders should think about exits. "It goes without saying that selling under any kind of pressure should be avoided at all costs. Therefore, planning well in advance is advisable. If you have strategic value to a large buyer, then the price is often determined by an auction amongst two or more buyers — rather than being based purely on metrics. So orchestrating an auction is the thing to do. Not easy and requiring a degree of finesse."

  • WFH is an insiders game. Emergence Capital's Gordon Ritter argues that WFH has made raising capital more of an insider's game. I think he's absolutely right - but Angular continues to be focused on outsiders as we always have. "In pursuit of what they consider to be lower-risk investments during a tumultuous year, many VCs are doubling down on entrepreneurs they already know and trust or who already have secured venture funding and are therefore already known and trusted by other VCs. This is one of the reasons that so much of the pandemic’s venture dollars have poured into later-stage startups and bigger funding rounds."

  • A review of design tools. Great to see an old angellist syndicate investment of mine (Utopia) on this outstanding map and analysis of design tools by Alexandre Dewez at Idinvest. I agree with him that "he handover between the designer and the developer is the biggest pain point that we have identified" which is exactly the pain point that Utopia addresses. 

How to Venture

  • A must-read posts on VC: brand vs. AUM. Craig Thomas, an LP with Investure, provides a very compelling analysis of fund size versus access/brand. It's a must read for any VC, but here are the money quotes: "So how should you think about brand and building a firm? Here it all ties back to portfolio construction, fund size, and ownership...Any firm can demonstrate increased ownership if their goal is to move upmarket. The question is whether the firm can increase ownership in quality founders and companies while avoiding potential adverse selection...The best firms I’ve ever seen have persistent returns as they have a brand that outstrips their AUM by a very wide margin....For me, one of the biggest mistakes is what I would call Premature Scaling...Premature Scaling happens when firms increase their AUM faster than they establish their Brand in the market...Part of the reason this is such a common mistake is because it’s really hard to realize this is happening in the moment and it takes a couple of fund cycles to assess whether the brand flywheel is spinning or not. What most emerging managers fail to see is that they become so beholden to their fund model and the requisite ownership that they unknowingly suffer from adverse selection..." In short, read the post! 

  • Stage + Sector specialization. A great discussion with Ed Sim who along with Eliot Durbin at Boldstart is an inspiration to everything we are trying to do at Angular. They are true stage+sector specialists.

  • Data on recycling. Munich-based LP BFP reviews the data on fund recycling and finds that less than half of funds have the opportunity to actually do it.

  • YC expands reach in Europe. Sifted covers how the storied US accelerator is taking on more European startups than ever before. "As a result, the incubator’s programme data shows that YC more than doubled its intake of European founders during lockdown. YC’s most recent cohort welcomed 26 founders from Europe; up from just 12 last summer and just 7 in 2018. European startups still only constitute 14% of the latest cohort. Yet this marked increase suggests YC is becoming more firmly established in Europe."

  • The importance of background distractions. Semil Shah writes brilliantly about what lockdowns and WFH have meant for his investment process. "2020 abruptly altered [the] pattern. The old distractions vanished....One casualty: The loss of time for background processing. And for an investor, that is a costly loss. The decisions we make are, by nature, long-term oriented, intentional, irreversible. Ironically, technology rushed in to fill the void and solve problems – less commuting, more time; no offices, but more Zooms; physical logistics evaporated, connecting with a global network never been easier. What was once a craft industry of allocating resources to creators and helping those creators along the way has been made more efficient, quicker, faster, more transactional, at arms-length, and… lightning fast. This is not to say that it will be this way forever. It likely will not. And this is not to say this is a complaint – I think there are real benefits for creators tapping financial resources to make the world a better place. But as an early-stage investor who wants to partner with these technology creators early, the distractions of the past that created the surface area for that subconscious background processing were critical for me."

  • The GP commit. Samir Kaji of First Republic offers some thoughts on the GP commit. "Penalizing new fund managers with small GP commits could result in talented managers (particularly those who don’t come from affluent backgrounds) not getting a shot on goal to start as a standalone venture investor, which doesn’t bode well for founders searching for quality and diverse capital."

Portfolio News

Candu launched on Product Hunt.
 
Vault Platform is fighting workplace harassment with an app that allows employees to document misconduct in real time. CEO Neta Meidav shared how organizations can protect their businesses and employees in a post-COVID world.
 
DUST Identity was awarded the contract by Nimbis to help address electronics supply chain security risks.
 
Crux OCM’s CEO, Vicki Knott, stated that increasing automation in the oil sector will play a major role in 2021.
 
Firebolt released their cloud data warehouse pricing guide.
 
Datos Health is being used to help cardiac patients recover at home with remote monitoring. (Hebrew)
 
Aspecto’s CTO, Michael Haberman, shared his thoughts on observability for developers and pre-production in the latest OpenObservability Talks session.
 
Planable’s CEO, Xenia Muntean, discussed virtual marketing teams on the latest Marketing Today podcast.
 
JFrog’s eyes continued growth after posting 40% revenue increase in first quarter following Nasdaq IPO.
 
Snyk achieved CarbonNeutral® company certification.
 
Sisense revealed new security measures across its cloud platform.

Portfolio Jobs

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Aquant.io

 Crux OCM

DUST Identity

Vault Platform

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