Europe/Israel Enterprise/Tech Weekly

Issue #61: For the week ended October 8, 2019

Survey. Atomico is preparing their annual "State of European Tech" report, which is typically released around Slush in November, You can still contribute to the survey here. 

Travel. I spent an amazing few days in Madrid, where I spoke at South Summit on B2B early-stage investing. If you are a Spanish B2B startup that hasn't yet met with Angular, please reach out! Next week, I'm in New York, followed by San Francisco - so if you are a European or Israel enterprise tech founder in those locations and want to meet - drop me a line! Also, Andrew Poesaste, Angular's powerhouse analyst, will be representing us in Dublin at SaaStock. Reach out to him here. 

The big story. Running a bit behind today, and want to get this out before Yom Kippur, so let's get right to the news. The biggest news in Israeli tech this week (perhaps a fitting story for the day of atonement...) is the $250M mega-merger between Taboola and Outbrain. Both companies built content recommendation platforms that allowed publishers to better monetize their traffic. Both scaled massively and internationally. Both sparked the ire of many for their promotion of "click-bait." Rumors of acquisition talks have surrounded these companies for years - and to many, it seemed that a merger would be the only way to end the mutually-destructive competition that defined these companies that, in turn, defined the space. In a weird cultish way, these two players seemed to divide the Israeli tech community - scratch the surface and nearly everyone in Israeli tech had a view on which of them was the "good guy." Here's the best take I've found, from Digiday. "With Taboola and Outbrain poised to become a single company, they no longer have to worry about competing with one another for business. But as a combined company, a different set of factors will prevent them from squeezing the publishers that spent years pitting the two companies against each other. Digiday spoke to sources at five different publishers that are using either Taboola or Outbrain about what the merger might mean for their businesses. And while some said they worried that a combined Taboolabrain could do away with revenue guarantees that provided a lifeline to so many, most think the realities of digital media make it tough for them to leverage their situation too much. More than half the publishers contacted for this story saw it as equally likely that the extra size, plus pressure from other competitors, could wind up making the widgets more valuable." Love them or hate them, this is a successful outcome for two giants of Israeli adtech - born in another era and now better poised than ever to play an important role going forward.

Long game. They say venture is a long game - and part of that is because it takes years to see how a story plays out and try to learn the lessons. I remember listening to Yaron Galai pitch Outbrain back when it was a pre-product browser plug-in that was supposed to help end-users rate and recommend stories in RSS feeds (remember those?)...now it's part of a $2B advertising behemoth trying to give Facebook a run for its money.

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

Technology for Trust. Why we invested in Vault Platform (read about the follow-on round here)

Stop counting unicorns. How fund economics are inflating the private tech market and wrecking companies.

2015-2018 Europe & Israel Venture Data: $25.1B of 2018 VC investment summarized in 83 slides.

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/Adtech. CVC acquired a 25% stake in IronSource for $450M.

• Israel/Insurance. Next Insurance raised $250M for SMB insurance.

• UK/Israel/Payments. Rapyd raised $100M for cross-border payments.

• UK/Hotels API. Impala raised $11M for an API to unify the hotel industry.

• Germany/Productivity. Pitch, founded by the Wunderlist founders, raised $30M to take on PowerPoint.

• Europe/Startup Wealth. Edward Robinson of Bloomberg argues, compellingly, that employee compensation challenges and not the absence of capital is the biggest single factor holding back entrepreneurial success in Europe. "In many  ... European markets, startup founders have to use various workarounds to vest employees in their businesses. In Sweden, options can be taxed as income at rates of more than 50%. Klarna, a digital payments powerhouse, sidesteps the bill by issuing warrants priced at fair market value using the Black-Scholes model, which are taxed as capital gains at 25% to 30% at the time of sale. But, as incentives, fully priced warrants aren’t as potent as cheaper priced options, says Knut Frangsmyr, Klarna’s chief operating officer. Companies in Austria, the Czech Republic, Germany, and Spain distribute “virtual share options,” but the instruments are really just cash bonuses by another name and may not deliver the windfalls that bona fide options do when a company is acquired or holds an initial public offering."

Worth reading

Enterprise/Tech News

• Software golden age? CNBC looks at what is driving the renaissance in enterprise software IPOs.

• Zero trust. A look at the emerging "zero trust" cyber-security paradigm. 

How to Startup

• Enterprise Sales Playbook. Our friends at WorkBench released an awesome enterprise sales guide (which should be required reading) and added two components to it recently, a guide to sales process definition and a guide to customer evaluation. Check it out. 

• How to learned to love my CFO. Ben Horowitz on the CEO-CFO relationship. "In a well run company, the CEO typically owns the terrain and the CFO owns the map. But in order for things to work well, the CFO must have a great understanding of the terrain and the CEO must comprehensively know the map."

• Market Size, top-down versus bottom-up. Leo Polovets of Susa Ventures put our a great twitter thread on why bottom-up market sizing thinking is usually more helpful than top-down. I totally agree. No one ever sold anything top-down. "The bad part about a bottom-up analysis is that the market size may be much lower than you hoped. The good part is that it's probably much closer to reality."

• Starting up remote. Tomas Tunguz of Redpoint argues that remote working often drives startups to better and more disciplined work environments. Done right, remote work is a powerful tool indeed - and can drive the sort of culture improvement Tomas is talking about. Done wrong, it can lead to very bad places. 

• 30 Interview Questions. Emergence Capital put out a list of 30 interview questions they find insightful.

How to Venture

• The Antidote to Getting a VC Job. Michael Tefula of Downing Ventures offers a refreshing and contrarian take on breaking into the VC industry: "How does one to get a job in VC? In some ways you have to do exactly the opposite of what you would instinctively want to do. Most VC job guides provide tactical steps (join a startup, attend events, network with entrepreneurs/investors etc), which is no doubt useful — and you’ll get some of that here too — but considering tactics in absence of higher-level strategic principles inspires a short-term mindset and plays to our craving for quick fixes and easy wins."

Portfolio News

Dust Identity was profiled for its engineering culture.

Aquant put out a video that explains what it's all about.