Europe/Israel Enterprise/Tech Weekly

The Angle Issue #47: For the two weeks ended January 14, 2019

It’s a crisp London morning (yes, I’m flying again, but not until the afternoon….)

Let me be among the last to welcome you to 2019! (I promise no Trump or Brexit news in this issue…)

One of the most controversial and interesting perspectives I read this week is this story in the MIT Technology Review on how Israel’s success in attracting multinational tech companies may threaten its status as a start-up hub. “But as the global giants arrive, they have been driving up salaries, rents, and reputations. Now some fear that the multinationals that once nurtured this fledgling technology powerhouse are unwittingly damaging the potent but fragile mix of entrepreneurship, military training, and chutzpah that drew them to it in the first place. That, they worry, could prevent it from developing into a mature digital economy.”

I think this is a real issue — but it’s also a sign of Israel’s incredible maturity as a technology eco-system. Yes. The presence of so many multinationals does raise HR costs in Israel and does raise the bar for everyone in terms of recruitment. But this is true in the Valley as well — and with $130B of VC flowing into US-based startups in 2018 alone, I think its hard to argue that Israel’s past success will prevent its future success. This is the very definition of a high-class problem — and I think its safe to say the future of Israel’s innovation economy is not in doubt.

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

Europe/Israel Enterprise/Tech

• Israel/Cloud. Amazon acquired CloudEndure for (a rumored) $200–250M. (Congrats, Ofer!) “CloudEndure offers a cloud disaster recovery and continuous cloud application backup service. The company founded in 2012 is headquartered in New York, and has a research and development arm in Ramat Gan, in the greater Tel Aviv area. It raised $18.2 million from investors including Dell Technologies Capital, Mitsui & Co., VMware, Infosys Ltd., and Magma Venture Partners.”

• Denmark/PR. Chicago-based Cision acquired Danish social media platform Falcon.io for $100M.

• Germany/Data. Alibaba acquired Data Artisans for $103M.

• France/HR. Talentsott raised $50M for HR SaaS. “Talentsoft has also announced a pivot from a SaaS model to an iPaaS model (Integrated Platform as a Service). This basically means that its software offering is set to become more of a platform open to external applications.”

• Israel/Video Advertising. Goldman Sachs invested $30M into Innovid. “Founded in 2007, Innovid partners with brands and ad agencies to deliver videos to connected TVs, mobile devices, and social platforms. Innovid lists Disney, Fox, Bank of America, and Loreal among its customers.”

• Israel/Semiconductors. Celeno raised $10M for Wi-Fi Chips.

• Spain/VC in review. A look back at foreign VC activity in Spain in 2018. (in Spanish)

• Germany/Hacking. A hacker released private data on hundreds of German politicians.

• Ireland/Semiconductors. Intel appears poised to double down on Ireland, to the tune of billions of Euros.

• UK/Compute. Improbable, which raised the largest VC round ever for a European startup, seems to have gotten into a spat with a key partner: Unity. “The company’s core product, a cloud-based server system called SpatialOS, allows video game developers and others to build enormous virtual worlds that exist and operate independently of player action. SpatialOS only works in a finished game when paired with a graphics engine capable of displaying those worlds on the computers, phones or games consoles of players. On Thursday, the developers of one of the largest commercial engines, Unity3D, told Improbable that a change to the engine’s terms of service was intended to block SpatialOS, and all games created that use the technology — including those which had already shipped — from working with Unity.”

• Israel/Agtech. The Economist on how Israeli tech makes the desert bloom: “Because it trades little with its neighbors, Israel long relied on the kibbutzim and other collective farms to grow food for its rising population. That heritage is providing rich pickings today: 54% of Israel’s agritech ventures are managed by someone who grew up in a kibbutz. Conditions forced them to be creative. The southern part of the country often receives less rainfall in a year than England gets in a day. That led to an early breakthrough in water management. In the 1950s Simcha Blass and his son, Yeshayahu, greatly reduced water use by applying it directly to the roots of plants. They helped form Netafim, the world’s leading maker of drip-irrigation systems, worth nearly $1.9bn.”

• Israel/Netherlands/Missed Opportunity. How Israel missed out on ElasticSearch. Definitely worth a read.

• Israel/Germany/Automotive. Daimler agreed to integrate Otonomo’s Data collection technology in Mercedes-Benz connected cars. Also — MobileEye (Intel) and Volkswagen announced plans to put hundreds of autonomous taxis on Israeli streets by 2022.

Worth reading

Enterprise/Tech News

• An open source master class. Mike Volpi of Index Ventures runs through the history of open source. It’s a long read, but pretty much mandatory. Some quotes: “Open source software permeates itself through the true experts and makes the selection process much more grassroots than it has ever been historically. The developers basically vote with their feet. This is in stark contrast to how software has traditionally been sold.” Also: “Virality allows for open source software businesses to be far more efficient than traditional software businesses from a cash consumption basis. Some of the best open source companies have been able to grow their business at triple-digit growth rates well into their life while maintaining moderate of burn rates of cash. This is hard to imagine in a traditional software company. Needless to say, less cash consumption equals less dilution for the founders.”

• No, the robots are not coming to kill you. Geoffrey Hinton of Google Brain and Demis Hassabis of (Google) Deepmind argue that artificial general intelligence (AGI) is “nowhere close to being a reality:” “Hinton argues that AGI won’t so much make humans redundant, though. Rather, he says, it will remain for the most part myopic in its understanding of the world — at least in the near future. And he believes that it’ll continue to improve our lives in small but meaningful ways. “[AI in the future is] going to know a lot about what you’re probably going to want to do and how to do it, and it’s going to be very helpful. But it’s not going to replace you,” he said. “If you took [a] system that was developed to be able to be very good [at driving], and you sent it on its first date, I think it would be a disaster.” And for dangerous tasks currently performed by humans, that’s a step in the right direction, according to Hinton. “[People] should be really afraid to ride in a car that’s controlled by a huge neural net that has no way of telling you what it’s doing,” he said. “That’s called a taxi driver.””

• Benedict Evans on whether AI makes tech companies stronger. His answer “it depends.” “This means that the implementation of machine learning will be very widely distributed. Google will not ‘have all of the data’ — Google will have all of the Google data. Google will have more relevant search results, GE will have better engine telemetry and Vodafone will have better analysis of call patterns and network planning, and those are all different things built by different companies. Google gets better at being Google, but this does not mean it somehow gets good at anything else.”

• AI predictions. Louise Coppey of Point Nine with some pretty cool AI/ML predictions for 2019. “I bet that in 2019, we’ll see more and more B2B startups arguing that they will build market domination by building data monopolies. It’s not yet certain that i) this is possible (in every market) and ii) that the regulators will give them enough time to build them but I would happy to bet on it.”

• Towards an AR Winter? Lucas Matney argues that AR’s golden age is still a ways away: “There are plenty of reasons to be long-term bullish on AR, but the time horizons some have espoused seems to be bogus and pitch decks organized around a near-term spike in phone-based or glasses-based users are going to have a tougher time being taken seriously in 2019.”

• Voice and VR will be very vital. Why Marc Andreessen thinks these two categories will be even bigger than most people think.

How to Startup

• More than just a chasm to cross. Martin Casado of A16Z, who is rapidly becoming one of my favorite enterprise tech writers. addresses the paradigm of “crossing the chasm” and why it might not be enough: “The other point I want to make in response to Moore’s argument about incumbents lack of desire to compete with startups…I disagree. The enterprise landscape has evolved to the point where not only do incumbents bother to compete with pre-chasm products, they’re even more able to do so because of cloud and open source. This is especially pronounced where incumbents own the technology distribution channel. Take for example AWS: They have full visibility on all the services that run on them; if they see a particular service gaining traction, they can easily offer the services themselves if the code is open source.”

• 2018 SaaS Benchmarks in Review. Tomasz Tunguz with a great post on what sort of metrics startups needed to hit in 2018 to get their rounds done. Bottom line: the bar keeps rising: “In 4 years, we’ve seen a 4x increase in the median MRR of a Series A SaaS company. That’s quite a growth rate. I didn’t calculate this figure in 2017. There are two reasons for this increase. First, the science of building SaaS companies is better understood today than in 2014. Consequently, more companies are able to reach $1M in ARR than in the past because they can be more efficient with their capital. Second, round sizes at the seed and the A have increased. More money enables startups to achieve greater milestones before raising the next round. Both of these factor work to increase the ARR at Series A.”

• 16 Ways to Measure Network Effect. A16Z provides 16 ways to think about this concept. Too detailed and geeky to summarize — but really really good.

• 30 Pieces of Advice. First Round posted 30 pieces of advice for founders from other founders. Definitely worth a read.

• How to manage your fundraising process. Carlos Espinal of Seedcamp with a helpful post (and google sheet template) for managing a fundraising process.

• The importance of written collateral. David Teten of HOF on why written collateral is so important in fundraising: “Providing answers in writing makes it easier for the lead Partner to share your view, and persuade her colleagues to back the investment.”

• From belief to knowledge. Hampus Jakobsson of Blue Yard on how VCs and founders get from belief to conviction to knowledge — and how their paths differ.

• Sevens don’t get funded. Charlie O’Donnell with an awesome piece on why only the best survive. “Think about asking investors what would make your pitch a ten — what crazy accomplishment that they could imagine would be game-changing for your pitch, especially if you’re feeling like you’re not getting negative feedback. If you’re not getting negative feedback, but you’re not getting a check, you need to find out what you’re missing to move from a seven to a ten.”

How to Venture

• A big year in US VC. In 2018, VCs deployed $130.9B into US-based startups, an all-time high. VC-based exits reached $120B for the first time since 2012. More numbers here and a quick summary from Fred Wilson here.

• Not for everyone. The NY Times returns to the concept that VC is not right for all entrepreneurs and Fred Wilson pushes back on the conclusion that “big bad VCs” are to blame for the venture industries current challenges.

Portfolio News & Jobs

Goldman Sachs invested $30M into Innovid. “Founded in 2007, Innovid partners with brands and ad agencies to deliver videos to connected TVs, mobile devices, and social platforms. Innovid lists Disney, Fox, Bank of America, and Loreal among its customers.”

Moltin is at NRF this week.

Portfolio Jobs

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

Vault is hiring a front-end developer in London.

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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