Europe/Israel Enterprise/Tech Weekly

Issue #48: For the week ended January 21, 2019

Good morning from a bright sunny London — where it seems I slept right through a lunar eclipse.

It was a pretty busy week in Israeli enterprise startup land — fairly quiet in Europe — oh yeah, quiet except for that $500M round in Veeam (founded 2006). Let’s get right to the news…

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

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

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

1Q18 & 2Q18 EU+IL VC Data.
$12.7B of VC investment summarized in 70 slides.

Europe/Israel Enterprise/Tech

• Switzerland/Disaster Recovery & Data Management. Veem, founded in Zug in 2006, raised $500M from Insight Ventures and the Canadian Pension Plan Investment Board. “Led by Andrei Baronov, CEO, and Ratmir Timashev, Executive Vice President (EVP), Sales and Marketing, Veeam is one of the largest privately held software companies in the world, with approximately $1 billion in sales and more than 325,000 customers, adding 50,000 new customers every year. The company’s global ecosystem includes 60,000 channel partners, Cisco, HPE, Lenovo and NetApp as exclusive resellers, and more than 21,000 cloud and service providers. Veeam has offices in more than 30 countries.”

• UK/Semiconductors. A detailed look at Graphcore, the emerging semiconductor giant from Bristol.

• Israel/Fleet Management. Salesforce is rumored to be in talks to buy ClickSoftware for $1.5B. This wouldn’t be an exit, as the company went public a long time ago, but it would be a pretty big deal. “Founded in 1979 by Israeli entrepreneur Moshe BenBassat, Burlington, Massachusetts-headquartered Clicksoftware develops and sells enterprise software, offering task scheduling, resource management, and customer service tools. In 2000, at the height of the dot-com bubble, the company started trading on Nasdaq. After reporting $126.2 million in annual revenues in 2014, Clicksoftware was acquired by San Francisco-based private equity firm Francisco Partners Management L.P. in a deal valued at around $438 million. In July 2015, Clicksoftware delisted from Nasdaq.”

• Israel/Sensors. Williot raised $30M from a set of corporate backers including Amazon and Samsung for a “Bluetooth sensor that harvests energy from radio waves.”

• UK/Sweden/Workforce Management. Quinx raised $25M for workforce management SaaS.

• Israel/Germany/Logistics. Brigg raised $25M for its logistics data API, including from Siemens.

• Israel/Computer Vision. AnyVision raised an additional $15M for software for real-time face and object recognition in large crowds, using artificial intelligence algorithms.

• Israel/Agtech. SeeTree raised $11M (a total of $15M) for a drone+AI solution to monitor the health and yield of agricultural trees.

• Ireland/Design Software/CRM. US design software giant Autodesk is relocating its EMEA hub from Switzerland to Dublin, citing access to talent as more important than tax incentives. Autodesk joins a long list of US tech giants with a strong footprint in Dublin. Meanwhile, Salesforce is struggling with Dublin’s housing crisis.

• Israel/Security. Israeli security giant Checkpoint bought ForceNock, a startup founded in 2017 or an undisclosed sum (congrats, Dotan!). It feels like only yesterday that I was sitting with them over a coffee talking about a seed round… “The startup has developed a fully autonomous web application security solution that is meant to replace existing solutions, using machine learning, behavioral and reputation-based security engines. The technology aims to free security teams from managing endless configurations and rules while continuing to maintain the highest level of security.” While this is a great outcome for the team and their investors — it does highlight a question that faces a lot of “AI/ML-for-security” companies: are these long-term sustainable businesses or is their “natural” outcome to be incorporated into the portfolios of giants?

Worth reading

Enterprise/Tech News

• State of Serverless. Adrian Colyer of Accel London takes a look at the state of the serverless market and…it’s complicated. “Taken together, these challenges seem both interesting and surmountable… We are optimistic that research can open the cloud’s full potential to programmers. Whether we call the new results ‘serverless computing’ or something else, the future is fluid.”

• State of Security. An awesome (if slightly hard to grok) set of notes on the state of the security market opportunity from Joel de la Garza at A16Z.

• Too late to transform. Ben Lamm argues that the era of digital transformation is basically over. I think this argument is more right than wrong. “The 88% of companies hanging out in the middle of their digital transformation journey are officially dead. Let’s call them the “Analog 88.” May they rest in peace. The 6% that haven’t even started planning a transformation were dead a long, long time ago. And the 6% that have completed the transformation are now the market winners.”

• Is Blockchain dead? Noam Levinsohn asks the question. “Revolutions are always messy. Radical ideas are never without issues and the old order never goes quietly. DLT’s rollercoaster last few years has all the makings of both the early stages of a successful revolution or the characteristical ashes of a failed one. I believe the answer rests somewhere in the middle. We must take our dose of reality, recognizing that greed and mismanagement led to the failure of many companies, an overestimation of the potential of the technology led to enormous speculation, and resisting institutions had far more impact than initially expected. In some ways, we failed to respect the enormity of the centralization v. decentralization debate — ours is only a microcosm of a thousand-year war. At the same time, we must not let fear cloud our judgment. Many fundamentals of blockchain and other DLTs have not changed. There are still many legitimate uses for the technology, albeit not as many as initially speculated.”

• An interview with the giant of RPA. Disruptive interviews Param Kahlon, Chief Product Officer at UiPath, and gets a bit of insight into what makes RPA so valuable. The interview provides a glimpse of RPA implementations in practice and touches on the question of whether or not it is a fundamentally “transitional” technology. Needless to say, UIPath doesn’t think so: “One interesting aspect of RPA is that…it could to a certain degree be interpreted as making itself redundant. This is because it is designed to fix inefficiencies in systems…Not so, according to Kahlon, as this state of affairs is far too remote to be a pressing concern. “This is a question a lot of people have,” he says. “If we had Utopia, would everything always be automated and there would never be a need for RPA? I wish we could get there. But, I think that it is very, very far away because what I see in enterprises today is still a lot of Mainframe systems.” “In fact, as companies are moving to the cloud I’m also seeing the dichotomy of systems increasing, not decreasing. In the past, you’d say “let’s just put everything in a mainframe or a business suite,” and you’d just use one system to run the process. What we’re seeing now is that people are buying best of breed applications. I’m buying Salesforce for CRM and I’m buying Workday for HR and SAP Ariba for procurement…Now we actually have processes that are more spread out rather than less spread out.”

• Impact of Open Banking. A look back at how the first year of the Open Banking initiative has started to bear fruit in terms of early innovation from large and small companies.

• The professor. 2019 tech predictions from my favorite prognosticator, Scott Galloway. Totally worth a read, but here’s a taste: “Hot or not. VR and crypto go from bad to worse. A.I. fails to live up to the hype. 3D printing rises from the ashes. Smart cameras become a hot category. Amazon spins AWS and births one of the 10 most valuable firms. Spinning AWS will reduce antitrust concerns for Amazon. The cloud is the fastest-growing part of technology, and there is no pure-play way to play it. At the spin, these two firms could be worth more than as a whole.”

How to Startup

• Build vs. buy: How AWS balances organic growth and strategic acquisitions

• Why do startups fail? CB Insights looks at the top ten reasons startups fail. Reason #1? “No market need.” Feels like that one could have been avoided…

• Tips from Thumbtack’s journey to $1B. The entire post is very good, but what struck a chord with me is that founders really need to think of the journey as founding multiple companies, one for each stage of the journey. So true — and a great way to think about it. “Scaling a startup is hard because you’re not actually building a single company. You’re really building a series of related but very different companies. At Thumbtack we’ve already built five companies: 1) the startup hunting for basic product-market-fit (1–10 team members), 2) the startup hunting for business-model-market-fit (10–40), 3) the startup hyperscaling (40–250), 4) the startup building out a leadership team (250–750), 5) the startup reinventing its business model and product (today). Thumbtack’s values and mission persisted across stages but our processes, org and team were very different. Each company is the foundation for the next, and each stage requires a new level of skillsets from the founders. “

• When to roll your own AI. Chorus.AI’s Micha Breakstone on why the company built its AI in-house. “So should you invest the time and money in hiring an AI team in-house to build out your own proprietary AI stack? If AI is an inherent part of your value proposition — and not only an add-on or afterthought — you probably should….Consider the [following] reasons…: Precision, Cost, Privacy, Real-time, and Owning your destiny. Most likely at least one of these reasons will apply to you, and while most you will not need to build everything from scratch, you’ll definitely want to build at least part of your AI stack in-house.”

How to Venture

• Portfolio management tips from Hunter Walk. Hunter offers two bits of great portfolio management wisdom: (1) don’t build a VC model that assumes outperformance on more than one metrics and (2) prioritize great companies over ownership — especially for Fund I. Amen.

• Deal opacity on the increase. Semil Shah observes that “we now live in a world of relative deal opacity where very few people know and track the moves of the best technology and startup investment firms” and reflect on why this is. Of the reasons he offers, I find #4 the most compelling: “Technology And Startup Fatigue: I can’t prove it, but I do believe the constant barrage of technology and startup news has forced some founders and investors to avoid any attention, period. In these cases, they’re less excited about announcing their rounds, or just want to wait for the big reveal, when something important happens, or a big milestone is reached.”

Portfolio News

Chorus.AI’s Micha Breakstone on why the company built its AI in-house. “So should you invest the time and money in hiring an AI team in-house to build out your own proprietary AI stack? If AI is an inherent part of your value proposition — and not only an add-on or afterthought — you probably should….Consider the [following] reasons…: Precision, Cost, Privacy, Real-time, and Owning your destiny. Most likely at least one of these reasons will apply to you, and while most you will not need to build everything from scratch, you’ll definitely want to build at least part of your AI stack in-house.”

SiSense launches Blox: “At Sisense Labs, we’re driven by how people will consume data in the future. So, over the past year, we have been creating a framework for developers to create their own analytics and BI applications — packaged BI capabilities for specific needs — that can be placed anywhere. We call it Sisense BloX. “

Front listed among fastest growing SaaS companies.

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. 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

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