Europe/Israel Enterprise/Tech Weekly

The Angle Issue #49: For the two weeks ended February 18, 2019

For both early-stage investors like me and early-stage founders, the most important thing I've read recently is Mark Suster's analysis of the seed market. It's essential reading and critically important data - and you should both read the post and download the deck.

I've got a two-day hop to SF coming up tomorrow...so we'll get right to the news. By the time you read this, I'll probably be 40,000 feet over Saskatchewan.

If you are building an enterprise tech startup in Europe or Israel,
please let me know...  Now let's get to the news.

From the blog

2015-2018 Europe & Israel Venture Data: $25.1B of 2018 VC investment summarized in 83 slides. Show some twitter love by clicking here.

A Security Layer for the Physical World: Why we invested in DUST Identity

Angular's first investment: Why we invested in Aquant.io

Europe/Israel Enterprise/Tech

• Israel/Security. Symantec acquired Luminate Security for $200M. [The company's solutions allow enterprise users to] connect from “any device, anywhere in the world to corporate applications, on-premises and in the cloud, while all other corporate resources are cloaked without granting access to the entire network. This prevents any lateral movements to other network resources while eliminating the risk of network-based attacks.”

• Israel/Networking. It's not every day that a company emerges from stealth and announces a $110M first round of financing - but this is 2019 and the founders are both second-timers. Ido Susan founded Intucell which was acquired by Cisco for $475M in 2013 and Hillel Kobrinsky founded Interwise which was acquired by AT&T for $121M in 2007. The company's product is described as a "Network Cloud" which is "the world’s first true cloud-native disaggregated router." Techcrunch has a more helpful description: "The core of DriveNets’ service is something called DNOS (DriveNets Operating System), which covers a range of functions that would have traditionally been connected to network equipment (and usually different pieces of network equipment): ...The fact that Huawei is one of DriveNets’ biggest competitors is a significant detail. The company is one of the most prominent vendors in Europe, and so the recent turn away from using it amid a cooling of trade relations over security and other issues has meant that many of these carriers are open to considering DriveNets as an economical alternative (one of Huawei’s big selling points had been big functionality at very competitive prices)."

• UK/Marketing. Apple acquired DataTiger for an undisclosed amount.

• Sweden/Fintech. Tink raised EUR56M for its open banking platform.

• Israel/Security. PerimeterX raised $43M to identify and block malicious bots.

• UK/Payments. Rapyd raised $40M for its payments services.

• Israel/CRM. Gong.io raised $40M to analyze sales voice calls.

• Denmark/Customer Service. Dixa raised $14M for multi-channel customer support.

• Sweden/Security. Castle raised $9M to secure customer accounts. 

• Israel/Retail. Donde raised $6.5M to provide visual search to fashion retailers.

• Israel/Bamba. Look out, America. Bamba is coming!

Worth reading

Enterprise/Tech News

• A short history of the database. An interview with Dr. Michael Stonebreaker, an MIT professor who is credited with building the first relational database. 

• The Reverse Riptide of Talent. Robert Vis, founder of MessageBird, on why he and many other founders are eschewing the valley for other locales - in his case, Europe. "As teams become more distributed, they also become more diverse—which is an advantage for tech teams on both sides of the pond. Consolidating the tech industry into one geographic location, even an area as open-minded as Silicon Valley, runs the risk of creating insularity that won’t scale as technology brings us closer together. This riptide that pulls talent from every corner of the globe creates diversity of thought, which provides an edge when it comes to serving the diverse needs of global customers. And, that’s where true innovation begins."

• Backing the deskless worker. How Emergence Capital is looking for opportunities to back companies targeting the other 80%: "Enterprises spend $300 billion on software for people working at their desks. But that accounts for only 20% of the workforce. The other 80% are deskless and they don't have great software. Only 1% of the venture capital is going into this segment. And the knowledge on how to write such software is not all in Silicon Valley.""

• 5G and Huawei. MIT Technology Review on the "real reason America is scared of Huawei." "The US government appears to have decided that it’s simply too risky for a Chinese company to control too much 5G infrastructure."

• Watson goes multi-cloud. IBM opens up Watson to customers of other cloud platforms. 

• SAP adjusts to a new reality. How SAP is getting ready to tackle a tougher market for ERP overhauls. 

• Media is a zero-growth business. Scott Galloway explains.

How to Startup

• Prepare for funding apocalypse. Micah Rosenbloom of Founder Collective encourages founders of VC-backed companies to get ready to enter survival mode. "When a downturn comes, capital markets don’t soften, they seize. Depending on how bad a hypothetical financial crisis got, there’s a good chance that investors would close up their checkbooks and triage. If you aren’t one of your investor’s favorite portfolio companies, there’s a decent chance you may be left in the cold. Don’t even assume you’ll be able to close a down round. Fortunately, showing a plan with a clear path to profitability will allay investors concerns that you’ll need their capital indefinitely and make it more likely you’ll be able to raise."

• Blitzscale at your own risk. Tim O'Reilly argues that "the pursuit of monopoly has led Silicon Valley astray." Specifically, O'Reilly takes aim at the concept of "Blitzscaling," a term coined by Reid Hoffman (Paypal, Linkedin, Greylock) but adopted by just about everyone on the 101. "While Hoffman and Yeh’s book claims that companies like Google, Facebook, Microsoft, Apple, and Amazon are icons of the blitzscaling approach, this idea is plausible only with quite a bit of revisionist history. Each of these companies achieved profitability (or in Amazon’s case, positive cash flow) long before its IPO, and growth wasn’t driven by a blitzkrieg of spending to acquire customers below cost, but by breakthrough products and services, and by strategic business model innovations that were rooted in a future that the competition didn’t yet understand. These companies didn’t blitzscale; they scaled sustainably."

• How to negotiate with a VC. Gigi-Levy Weiss of NFX offers some insider tips on how to negotiate against VCs. It's a super useful post - packed with real-world examples of how to respond to various VC statements. Here's a sample: "Friendliness is often sincere, but it’s important not to confuse liking the VC with agreeing with their valuation. The key here is this: don’t get swept up in emotion. You are likely to overestimate how enthusiastic a VC really is about the deal, so don’t be surprised by a lowball curveball. Here use the same fix as you would for a lowball (#3 above) – only be even more cool! For example: “Thanks for the offer. We also loved the meeting and felt we could work well together. But this valuation is just so low that it seems out of market. Let us think about it and get back to you. We would of course love finding a way to work together!”"

• On failure to build a massive business. Jim Greer, founder of Kongregate, reflects on his company - and how the 3x return it generated wasn't sufficient for the VC model. His post is a reminder that the founder-oriented VCs are particularly important - especially when things don't work out as the VCs originally hoped/

• How to fall in love with your VC. Carmen Alfonso Rico weaves a valentines day theme into some pretty good advice for founders seeking funders. 

• A fundraising guide for the IoT founder. Robin Dechant of Point Nine with some sector-specific advice. 

How to Venture

• Mark Suster's data-driven look at the state of the seed market. Mark Suster looks at the trends in the VC and seed markets and asks "why the hell has seed financing declined so much in the past 3 years??" It's essential reading and critically important data - and you should both read the post and download the deck. I'll quote Mark's summary - but it doesn't do the post and the data justice: "The seed market was a result of the massively declining costs to start a business driven by cloud computing. This trend so a huge rise in funds, dollars and deals in the seed category. As the market segment borders have settled and the seed market has matured a naturally cooling off period was inevitable. Seed investing is here to stay (although the firms may change — with some seed funds becoming A investors)."

• When money isn't enough. Beezer Clarkson of Sapphire Ventures (a firm that is both a leading Series B+ investor and a highly-regarded LP) identifies seven strategies that VCs use to differentiate themselves in an effort to drive performance.

• There are only three VC strategies. Paul Arnold of Switch Ventures suggests there are only three VC strategies: (1) Add value, (2) Source better, and (3) Invest better. 

• Will seed be multigenerational? Hunter Walk wonders about the future of seed funds: "One question that’s been on my mind since we started Homebrew in early 2013 was whether seed venture would end up being multigenerational or not. It’s a question that, even six years later, is still unanswered."

• Saving Kleiner Perkins. A profile of Mamoon Hamid, the 40-year old VC who is turning Kleiner Perkins around.

Portfolio News & Jobs

Vault was profiled by the BBC in "Meet the tech entrepreneurs tackling sexual harassment "

Micha Breakstone of Chorus with five tips for founders building AI startups. 

A look at Snyk's annual All Hands meeting.

- - - Portfolio Jobs - - -

Aquant is hiring. R&D in Israel and Sales, Marketing, and Customer Success in NY.