Europe/Israel Enterprise/Tech Weekly

The Angle Issue #60: For the week ended October 1, 2019

Shana Tova and Happy 5780 to all of those celebrating this week…and buenos dias from 35,000 feet. I’m headed to South Summit in Madrid where I’ll be participating in a panel on B2B technology and hoping to meet some interesting Spanish enterprise tech companies. If you are one (or know of one), I’d love to hear about it.

In the meantime, the ripples from WeWork’s troubles (alongside those of Uber, Lyft, Juul, and a few others) continue to echo through the tech landscape. The week’s must-read piece is by (big surprise), Professor Scott Galloway who called this thing a mile away and is now broadening his focus to look at what the WeWork story means for startups, investors, and CEOs more broadly. His conclusion: avoid yogababble. Just read it. It includes a data-driven (!) chart of “bullshit vs. stock performance one year post IPO” for Zoom, Dropbox, Slack…and a bunch of others…

One the key effects is the growing internalization of a reality best summed up by Jessica Lessin at the Infomation: Growth is Not a Strategy: “It is easier than ever to scale many businesses — meaning your competitors can get big too. And then what? The internet has created a million new ways to advertise, and capital to plow into marketing is (at least for now) abundant. So growth is a strategy that is relatively easy to copy. Uber v. Lyft is the best example of this. Both just wanted to get big enough to beat the other, and while Uber won, Lyft is still a major competitor impeding Uber’s growth. A better strategy would be to focus on differentiation — that is what you do better than anyone else. Companies who want real staying power should prioritize that over getting big. In a world where the barrier to entry to starting a business is low, only the unique survive.”

The Wall Street Journal also weighed in with a piece on the downsides of the Silicon Valley Success Formula: ““Corporate governance has deteriorated in lockstep with the increase in available capital from people who haven’t traditionally been private-company capital sources,” says Adam J. Epstein, an adviser on corporate governance to CEOs and their boards. Investors “have to play nicely to be allowed into these deals.”Venture capital is about betting on the riskiest, against-all-odds ideas with the hope that they will deliver a massive return on investment. Investors at the earlier stages are typically more enamored by a bold vision — a business, and person, that can transform an industry and fundamentally change people’s behavior at a mass scale — than the actual economics. That kind of enchantment with a brilliant idea is increasingly part of later stage investments as well, allowing companies to stick to startup behavior long after they should have matured as organizations.”

In this light, some of those “boring” enterprise tech companies are looking pretty nice right about now…

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

• Germany/Collaboration. Teamviewer, founded in 2005, went public following a PE take-out by Permira in 2014. The company was valued on the private market at $948M in 2014 and trades at around $5.7B today.

• Romania/RPA. Forbes put out a detailed profile of Daniel Dines, founder and CEO of UI Path, on how he built Europe’s most highly valued enterprise tech startup in recent memory. “Dines, 47, didn’t invent RPA, but he’s adroitly positioned himself to dominate it. Two years ago, when European investors valued it at $110 million, UiPath was a little-known company of 150 based in Romania that had just booked less than $5 million in revenue. Today it’s headquartered in a gleaming skyscraper on Park Avenue in Manhattan and employs 3,200 in more than 30 offices around the world. It generated $155 million in revenue last year and expects to double that this year. The shift has shot it to №3 on Forbes’ 2019 Cloud 100. In April, Wall Street investors including Wellington Management pumped in $568 million, at a valuation of $7 billion, making Dines, who owns more than 20%, the world’s first bot billionaire.”

• UK/Brexit. Mike Butcher’s Coalition for a Digital Economy published a Brexit Guide for Startups.

• Israel/Fintech. Tipalti raised $76M for its accounts payable management platform.

• Portugal/Translation. Unbabel raised $60M for its blended human-automatic translation service platform.

• Israel/Counter-Drone. D-Fend raised $28M for its system that can identify and disable drones.

• Israel/Optical. DustPhotonics raised $25M optical modules for data centers and HPC.

• UK/Payments. Fidel raised $18M for a data platform on top of payments data.

• Israel/Agtech. A broad look at Israel’s agtech ecosystem, and a closer look at what is driving it.

Worth reading

Enterprise/Tech News

• The new productivity software wave. Ben Evans of A16Z argues that we are in the midst of a productivity software evolution powered by two trends. “First, every application category is getting rebuilt as a web application, allowing continuous development, deployment, version tracking and collaboration. As Frame.io (video!) and OnShape (3D CAD!) show, there’s almost no native PC application that can’t be rebuilt as a web app. In parallel, everything now has to be native to collaboration, and so the model of a binary file saved to a file share will generally go away over time (this could be done with a native PC app, but in practice generally won’t be). So, we have some generational changes, and that also tends to create new companies. But second, and much more important — everyone is online now. The reason we’re looking at nursing or truck drivers or oil workers is that an entire generation now grew up after the web, and grew up with smartphones, and assumes without question that every part of their life can be done with a smartphone. In 1999 hiring ‘roughnecks’ in a mobile app would have sounded absurd — now it sounds absurd if you’re not. And that means that a lot of tasks will get shifted into software that were never really in software at all before.”

• Cuts at Oracle. The database giant cut 10–15% of its Data Cloud workforce. According to AdExchanger, the cuts were concentrated on teams focused on third-party data: “Because of the strategic focus on contextual and measurement, teams centered on use of third-party data were hardest hit by the layoffs. ODC’s organization structure had been ill-equipped to weather the darkening forecast for third-party data. The tough work of integrating ODC’s many acquisitions — BlueKai, Datalogix, Moat, AddThis and Grapeshot — wasn’t done by senior leaders, multiple sources said. Instead, too many people worked without contributing to the growth or revenue of the business. For example, commissions were paid out to three or four teams, muddying who contributed what to overall revenue. Last year, ODC realized it was overpaying for some of its third-party data, and cut contracts with some data providers it used to compose data segments. But it also had trouble selling its third-party data, as it faced stiffening competition from IRI, LiveRamp, Eyeota and PushSpring.”

• Veeva buys Crossix. The pharma CRM giant purchased the pharma-oriented patient data and analytics platform for $430M. “The Crossix analytics platform aims to improve marketing effectiveness for pharmaceutical brands. The platform connects health and non-health data for more than 300 million US patients, such as Rx, OTC, clinical, claims, consumer, hospital, and media data. The platform is touted for its best-in-class privacy safeguards.”

• Next-gen Data Pipeline. A16Z backed Fivetran with $44M to build next-gen cloud-native data pipelines.

How to Startup

• How to run a planning process. As a startup scales, running a proper planning process is increasingly important. Lenny Rachitsky of AirBnB and Nels Gilbreth of Eventbright co-wrote a serious longread on how to optimally run such a process. They outline a four-step process, starting with (1) leadership setting context and (2) teams developing a proposed plan. Leadership is then responsible for (3) developing an integrated plan based on the teams’ input and then teams must (4) buy-in for this all to work smoothly.

• The importance of brand. The always-brilliant Louis Coppey of Point Nine on the why and how of branding an early-stage startup. It’s a great crash course. (We at Angular are massive believers in this, which is why we worked to convince Uri Baruchin to join our team as an Advisory Partner….)

• NFX Founder Library. NFX, the VC firm in California/Israeli with a focus on network effects, organized tons of their content in a “founder library” which they have placed right on their homepage. Check it out for a mix of generalist startup advice and a ton of content on network effects and marketplaces.

How to Venture

• Unicorn investment memo. Murat Bicer of CRV provides some excerpts from his original investment memo on Datadog, the French-founded cloud monitoring SaaS company.

• Covering Europe. Vincent Jacobs, formerly of Kima, wrote a post back in August about the various strategies that funds have for covering Europe.

• Softbank. Don’t do this.

• The Elusive $1 Billion Fund That’s Rattled Venture Capital. This story is almost too crazy to be believed.

Portfolio News

Vault was named a Top HR Product of the Year by Human Resource Executive Magazine. ““Human Resource Executive has been evaluating HR products and conducting this competition for more than 30 years,” explained Elizabeth Clarke, executive editor of Human Resource Executive. “Our goal has always been to identify products and services that clearly offer value to HR leaders while demonstrating innovation that will deliver what it promises. Vault is using technology to tackle a critical workplace challenge, helping employers better support their workers.””

Crate hired a CCO from Cisco.

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