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Europe/Israel Enterprise/Tech Weekly

The Angle Issue #70: For the two weeks ended February 19, 2020

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Angular Ventures
February 17, 2020

Europe/Israel Enterprise/Tech Weekly

The Angle Issue #70: For the two weeks ended February 19, 2020

Three must-reads this week. The first is this Guide to Enterprise Sales from Workbench. Just outstanding. The second is this fascinating analysis of why AI-driving software businesses may have fundamentally different economics (physics....) from traditional SaaS businesses. It was written by Martin Casado at A16Z and is very thought-provoking. The key take away is that we all may need to get used to the idea that these businesses are less profitable, harder to scale, and harder to defend that the previous generation of software. Would love to hear your thoughts on this. A third must-read is the annual presentation from Benedict Evans, who recently left A16Z in Palo Alto to return to the UK. His themes, among others, are the ubiquity of technology and the near-universal levels of adoption that entails: of devices and applications by consumers and of tech-driven strategies by enterprises of all types. He also touches on politics: the regulatory response to big tech and the increasing fragmentation of the global internet. As always, its thought-provoking and about a year ahead of most everyone else.

Berlin and Tel Aviv. Next week, I'll be in Berlin where I am leading a panel at SuperVenture on "VC in the Age of Abundance." Should be an interesting discussion - whether or not the age of abundance actually lasts through next week. (New data definitely supports the idea that European tech is having a moment.) The following week, I'll be in Tel Aviv. In both Berlin and Tel Aviv, I'll be having the first post-investment meeting with one German and one Israeli company that are new in the Angular Ventures portfolio. Exciting times. If you are in Berlin or Tel Aviv and want to link up - over a Kaffee or a Hafooch, ping me. 

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/Security. Advent International, the global private equity giant, acquired Forescout for $1.9B. Forescount was founded in 2000 and went public in 2017. "Forescout is an enterprise security company that offers clients solutions focused on device and network visibility."

  • Israel/Healthcare IT. Flywire acquired the Israeli company Simplee for an amount rumored to be over $100M. "Simplee, Founded in 2010, has raised $36.4 million prior to its acquisition, according to the statement. Its payment service enables healthcare providers to offer patients personalized payment plans."

  • France/La French Tech. Roxanne Varza, founder of Station F, reviews the current state of France's booming local (and increasingly international) tech scene.

  • Ireland/Overview. Finn Murphy of Frontline argues that Irish tech is headed for a banner decade.

  • UK/ML. Facebook acquired AtlasML.

  • Israel/Insight Ventures. Cacalist takes a close look at Insight Ventures' increasing activity in Israel, where is is rapidly becoming the dominant player in the local late-stage VC landscape.

  • Israel/Databases. DoIT acquired Superquery for an undisclosed amount. "superQuery optimizes Google BigQuery queries in real-time, maximizing query performance and efficiency while minimizing cost. It also provides a complete development environment, enabling data analysts and data scientists to work at peak productivity when analyzing data in BigQuery."

  • UK/AI Chips. Graphcore has raised $75 million to continue to build their artificial intelligence microchips.

  • Denmark/Customer Service. Dixa raised $36M for its “customer friendship” platform.

  • Germany/Simulation. SimScale raised $30 million for its engineering simulation software that allows users to test CAD models against real-world performance, durability and efficiency measures.

  • Israel/Security. Beyond comes out stealth and announces it has raised $21M from Sequoia. Founded by Assaf Rappaport, who only two months ago stepped down as the head of R&D at Microsoft Israel.

  • UK/Hotel Booking API. Impala raised $20M for its hotel API that lets people build applications that query hotel data directly with a few lines of code.

  • Poland/Robots. Nomagic raised $8.6M for a computer vision platform for their pick-and-place warehouse robots.

  • Israel/DevOps Policy engine. Datree has entered Y Combinator and announced it has raised $8M for DevOps policy engine on GitHub.

  • UK/Logistics Back Office. Shipamax raised $7 million for its Series A after pivoting to now serve all logistics providers for its specialised supply chain data extraction platform.

  • UK/Banking API. Teller has raised $4 million from Lightspeed and Founders Fund after shutting down its UK business to focus solely on the US, to take on Plaid and provide API access to bank accounts.

  • Germany/Debt Collection. Receeve raised $4M its digital debt servicing platform.

  • UK/Collaborative coding notebook. Deepnote raised $3.8M for its IDE-like collaborative online notebook that can help data scientists for building their machine learning models.

Worth reading

Enterprise/Tech News

  • Software can't eat people. Gordon Ritter of Emergence argues that software that empowers humans, including "Coaching Networks," represent a new wave of tools that he's very excited to back. "In all of these cases, employees are at the center of the value of this new type of software. It is not harvesting users' behaviors to find ways to replace them, but instead, Coaching Networks are designed to gather the constantly-evolving brilliance of workers in all industries and share it widely to create a continuous human learning loop."

  • Big fat ML models. Are some ML models too hefty to actually run in production? 

  • AI meets pharma. The worlds of drug discovery and artificial intelligence seem fated to inevitably fuse. Sifted took a deep look at this emerging trend.

How to Startup

  • The New Business of AI. Martin Casado of A16Z analyzes the physics of AI-driven SW companies. He argues that they typically are characterized by lower gross margins, scaling challenges, and weaker defensive moats. "Anecdotally, we have seen a surprisingly consistent pattern in the financial data of AI companies, with gross margins often in the 50-60% range – well below the 60-80%+ benchmark for comparable SaaS businesses. Early-stage private capital can hide these inefficiencies in the short term, especially as some investors push for growth over profitability. It’s not clear, though, that any amount of long-term product or go-to-market (GTM) optimization can completely solve the issue. Just as SaaS ushered in a novel economic model compared to on-premise software, we believe AI is creating an essentially new type of business." The entire piece is worth reading, but here's the punchline: "To summarize: most AI systems today aren’t quite software, in the traditional sense. And AI businesses, as a result, don’t look exactly like software businesses. They involve ongoing human support and material variable costs. They often don’t scale quite as easily as we’d like. And strong defensibility – critical to the “build once / sell many times” software model – doesn’t seem to come for free. These traits make AI feel, to an extent, like a services business. Put another way: you can replace the services firm, but you can’t (completely) replace the services."

  • How to Open Source. A super solid tweetstorm from Anna Khan of CRV outlined some best practices for open source strategies. Here's one of the best: "Watch your usage patterns before you decide on a go-to-market strategy. Usage is a leading indicator for commercial success. If smaller biz's are using your product, lead with a low friction product. If larger biz's are interested, go straight to offering premium tooling."

  • Enterprise sales guide. Our friends at Workbench in NYC have put together this unparalleled guide to enterprise sales for early-stage founders. Well done. 

  • The word is out. Engineering salaries are rising faster outside the valley than inside. 

  • How to hire a Head of Sales. Jordan Wan of Zocdoc and CloserIQ provides a detailed playbook on how to hire a head of sales. "If you don't take inventory of your problems, you can’t understand why your team isn’t hitting its objectives. So start with a gap analysis of the sales machines, don't even talk about the candidate. Just spend some time understanding where the sales machine is today versus what excellence looks like for this stage of the sales learning curve."

  • Startups are not straight lines. Manu Kumar of K9 Ventures embraces the sharp turns of fate in a startup's journey. "Every startup is its own unique puzzle. The founder's job is to decipher and figure out their puzzle. And like when you’re assembling a puzzle, you sometimes get it wrong, and have to go back and try again, or try a different approach."

  • US incorporation. One-fifth of Israeli startups incorporate in the US and that number is rising, up 10% over last year. We at Angular tend to think this number should be nearly 100% for startups that are serious about global domination.

How to Venture

  • The Benchmark. Brett Bivens does a deep dive on Benchmark and how they operate. Just read it. "Perhaps no VC firm embodies structural advantage — from the alignment of its organizational incentives to the brand edge it has built through a consistent approach applied over multiple decades — better than Benchmark. It is also likely that no other firm is as allergic to the notion of a top-down thesis."

  • On being a board member. Mike Volpi of Index Ventures offers some hard-won thoughts on how to be an effective board member as a VC. "One of the analogies I often use for the role of a board is that of being a “mirror” to the management team. Entrepreneurs, by their nature, live on a roller-coaster ride that is matching their startup’s journey. Their perception of the business is often an amplification of the current state of the business. The highs are often more optimistic than the business might really deserve and the lows are often much lower than they should be. The board should reflect a snapshot of the reality of the business. All businesses, both the most successful and the somewhat troubled, involve a lot of sausage-making. There are aspects that are not working well that shouldn’t be brushed aside or ignored, but should be focal points of improvement. Conversely, when things aren’t going well, entrepreneurs can often be too critical of their own business."

  • Surgical strike. Harry Briggs, formerly of Balderton and now of Omers, looks back at his investment in Digital Surgery, which was just acquired by Medtronic. Unlike most "victory lap" VC blog posts, this one is humble and open - and gives a good sense of how the process of reaching a decision actually worked at least in this case.

Portfolio News

  • Aquant raised $30 million in Series B led bv Insight Partners and was named as one of the 50 best small companies to work for in NYC.

  • Datos Health was selected by Israel’s Sheba Center as the remote care platform for their first known coronavirus telemedicine program.

  • DUST Identity partners with Cardano.

  • Crux OCM’s CEO, Vicki Knott, was recently featured on The Oil + Gas Startups Podcast. 

  • Sisense partnered with UIPath. "The integration of Sisense’s AI-powered analytics to the UiPath platform takes UiPath’s customers’ automation strategy to the next level. It allows them to measure the true impact of RPA on their organization and leverage the actionability of advanced analytics to align to strategic business outcomes."

Portfolio Jobs

 DUST Identity

Planable

 Valohai

 Vault Platform

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