Europe/Israel Enterprise/Tech Weekly

The Angle Issue #31: July 16, 2018

Welcome to Issue #31! Good morning from NYC! Earlier today, I released the bi-annual Angular Ventures data deck on European & Israeli Venture Investment. If you haven’t seen it before, it’s a 70-page look at the EU+IL VC landscape based on a proprietary dataset. This is the first time I’ve released the report under the Angular Ventures brand, which is a big moment for me — but just another data dump for you. Enjoy!

The big tech news of the week was Broadcom’s decision to acquire CA Technologies for nearly $19B. The logic of this acquisition, in which a San Jose-based semiconductor giant acquired a NY-based systems and infrastructure company has eluded many analysts, including myself. The Register called it the weirdest acquisition ever. Wall Street analysts were unimpressed. On the face of it, the acquisition is supposed to represent an effort to create the world’s leading integrated computing infrastructure company — from the software infrastructure layer all the way down to the silicon — and, on some level, that makes sense as compute loads have gradually driven increased attention to the silicon layer. On the other hand, the big trend of the past decade has been towards “abstraction layers” — the commoditization of each layer of the stack. Containerization, virtualization, and cloud computing itself have all driven this trend — a trend which has negatively impacted both the semi industry and the SW IT infrastructure industry. Another theory is that this acquisition is a response to the Trump Administration’s decision to block Broadcom’s planned acquisition of Qualcomm.

For startups, there are three takeaways here:

1. Two industries that drove tons of venture (and founder) returns over the past three decades (semis and infrastructure) both appear to be in secular decline.

2. Two of the most acquisitive companies in the VC universe — responsible for countless exits — have merged. Because the merger is vertical — not horizontal — the impact on acquisitiveness might be muted, but it will be felt nonetheless.

3. From the smallest acquisition to the largest, it’s often impossible for outside observers to really understand what is motivating these M&A decisions. The only responsible path for a founder is to build a sustainable business. Never try to game the M&A world…

Two readers of this newsletter sent in their take on the acquisition:

• Gil Gabay, Checkpoint: “Diworsification. I can’t find a single reason why. They could have expanded within semiconductors.”

• Michael Lopiansky, COO Prosoture: “Could hint on the direction BC is heading: product line expansion. Software — to complement their semiconductors unit, as a means to become more influential; hot commodity — talent pool, and of course, an ‘in’ at many of Fortune 500.”

Please feel free to email me with comments (or startups) and if you like this — please forward to friends. Thanks!

From the blog

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

Europe/Israel Enterprise/Tech

• Israel/Marketing. Salesforce acquired Israeli marketing analytics company Datorama for $850M. Impressively — the company only raised $50M on the way to that exit. “Datorama has developed a platform that enables advertisers to obtain information about the impact of their campaigns on their revenue. The company integrates data from all of a company’s advertising on the various advertising channels with sales data in order to present the impact of advertising on sales in real time. Datorama’s product will be integrated into Salesforce’s campaign management and customer relations management platform. Salesforce and Datorama already collaborate in this respect.”

• Israel/Collaboration. Monday (formerly Dapulse) raised $50M for enterprise collaboration SaaS tools to take on Slack. Here’s an interview with Monday CEO Roy Mann on how the company tripled YoY revenue.

• Israel/Security. Radiflow raised $18M for critical infrastructure security.

• Finland/Market Research. Verto Analytics raised $13.4M for consumer audience measurement.

• Israel/Automotive. Aurora Labs raised $8.4M for “self-healing” software for automotive platforms.

• Czech Republic/Product Management. ProductBoard raised $8M for its SaaS platform for product management.

• Israel/5G. An interview with Elkana Ben Sinai, who leads Intel’s 5G efforts in Haifa. “5G is a revolution on all levels: devices, cloud operators, service providers, and content providers. It means a whole new network and new infrastructure. There will be a sharp increase in the number of people connected and everything will be connected and able to communicate,” says Ben Sinai, who joined Intel in 2010 after it acquired chip company Comsys, of which he was CEO.

• Israel/Personalized medicine. How Israel’s heterogeneous population makes it an interesting testbed for personalized medical innovation.

• Israel/Exits. A review of Israeli exit activity in the first half of 2018. “Israeli startups and high-tech companies were sold for $6.22 billion in the first half of 2018, according to a new report released this week by Israel-based IVC Research Center and law firm Meitar Liquornik Geva Leshem Tal…The figures reflect a dramatic increase in funded exit activity, as the average exit in the first quarter of 2018 soared to $107 million in 2018, compared to $31 million in H1 2017…The report also noted that the number of total exits in the first half of the year sank 20 percent in line with the downward trend that began in the first half of 2015. There were 72 exits in the first half of 2015, 68 exits in the first half of 2016, 63 exits in the first half of 2017, and 58 exits in the first half 2018.”

Worth reading

• Wither enterprise software? Logan Barlett of Battery reviews the status of the enterprise software market, why deal volumes are declining, and why he is more optimistic than ever. “As I explore with my colleague Neeraj Agrawal in a recent report called Software 2018, released last month, a closer look at the PitchBook data shows that the fall-off in software deal volumes is primarily in the Bay Area, where an overheated market has boosted valuations and caused some investors to temporarily pull back.”

• Building a product education function within your company. Openview interviews Intercom’s Ruairi Galavan, Senior Manager of Product Education, on how Intercom uses customer education to accelerate growth.

• How to IPO. The Economist with some advice to CEOs on going public. “Even with thoughtful shareholders, you will have to articulate yourself in a new way. You are used to being visionary, passionate and profane. Your new financial friends will be abstract, obsessed with numbers and keen on comparing you with your competitors. Karl Popper, the philosopher, said that scientific knowledge progressed through the falsification of hypotheses. Often it will feel like you are advancing hypotheses about your firm’s opportunities, and they are just shooting them down.

• Blockchain databases. I’ve been reading up on this — as I look at some companies building blockchain-style databases for the enterprise. Some of the best things I’ve found are: (1) Blockchains versus Traditional Databases, by Shaan Ray; (2) Blockchain technology — a very special kind of Distributed Database, by Sebastien Meunier; and (3) What Are Blockchains Actually Good For?, by Michael Siliski

• A printed (industrial) future. Jason Pontin in Wired with a look at why 3D printing is the future of factories. No no, don’t be negative. For real this time. This time is different…”Factories will still exist in 2050: buildings where people operate machines that make particular products. It’s difficult to fully imagine the economic structures of a world where cheap, high-volume, mass-production 3-D printing is commonplace. But we can hazard some guesses. Designers will be more esteemed than machinists. Products will be adapted for local needs and preferences, and organic in appearance. There will be fewer warehouses. Factories themselves will be more numerous, smaller, and mostly dark, their machines quietly tended by a highly technical guild.”

Portfolio News & Jobs

Datos is hiring a BD lead in the US.

Moltin is hiring for multiple roles in the US and UK.

Resin is hiring globally.

Moltin released a whitepaper on how its API-first e-commerce platform can power self-checkout.

Angular Ventures

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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