Europe/Israel Enterprise/Tech Weekly

The Angle Issue #62: For the two weeks ended October 22, 2019

Good morning! It's actually the middle of the night here in Burbank, CA, where my flight to SFO has been delayed by an hour and a half - but it's morning somewhere - and i've got just enough time to get the newsletter out.

On US incorporation. A few weeks ago, Angular co-led a seed round in a non-US company. Part of that process involved flipping the company's structure into a US parent ("topco") and a non-US subsidiary in the company's home country - something that I suggested and for which I advocated. I find myself in this position a lot: nine times out of ten, I'm the guy telling anyone who will listen why a non-US company should incorporate in Delaware before it's too late. And that was the case here too - where I ended up writing a pretty long email explaining the rationale to both the company's founders and a US-based VC investor that we had introduced to the company and was joining us in the investment.

In response to my email, the American VC wrote back to me: "I want to frame this email. Best writeup on foreign flips I've read from a VC." So with thanks to a still-unnamed co-investor on a still-stealth investment, here's the blog post that came out of that email: US Incorporation: Just do it.

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

US incorporation? Just do it. Why nearly all enterprise tech companies should incorporate in Delaware.

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.

Technology for Trust. Why we invested in Vault Platform (read about the follow-on round here)
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/Commerce APIs. CommerceTools raised $145M from Insight to power its API-first e-commerce platform. Given the company's complex financing history, it's unclear whether this is a truly a "venture" round or a buyout or a hybrid, but its a powerful endorsement of the API-first trend in e-commerce.

• France/Search. Algolia raised $110M for its search SaaS devtool.

• France/Customer Feedback. Critizr raised $17M for a customer feedback SaaS platform.

• Switzerland/Fleet Management. Avrios raised $14M for fleet management SaaS.

• Ireland/Contract Workers. Utmost raised $11M to bring visibility to contract workforces.

• Ireland/Customer Service. Sweeper raised $9M for an in-home customer service platform.

• UK/Messaging. New Vector raised $8.5M for a distributed communications platform.

• Romania/RPA. UiPath gets acquisitive, buying two companies, Stepshot and ProcessGold, to augment its capabilities.

• France/CMS. Strapi raised $4M for a headless CMS.

• Bulgaria/Venture. How a Bulgarian VC is making it in Silicon Valley VC.

• Netherlands. Gitlab wants to control all of devops.

• Europe/University spinoffs. The WSJ profiles how European universities are working to catch up with their US counterparts in spinning off innovative technology.

Worth reading

Enterprise/Tech News

• Zoom when they zag. A look at why Zoom was a contrarian investment at the time.

• Low-code. The WSJ looks at the boom in low-code software investment. "“The thing people underestimate about no-code products is, if done right, it could scale to the level of replacing major workflow products for corporations,” said Max Gazor, board director at low-code startup Airtable, and general partner at CRV."

• SAP struggles. SAP is working to shed its image as "big, complicated, and expensive" by shifting companies to the cloud in general and SAP HANA in particular.

• Explaining explainability. A look at varying frameworks for AI explainability, a trend I'm very intrigued by. (If you are working on this or know someone who is, please let me know!)

• Bill Gate is still working at Microsoft(!). The information profiles Gates' continued involvement with Microsoft. "While he left day-to-day work at Microsoft in 2008, Gates has over the past several years deepened his involvement in the company he co-founded in 1975 at the invitation of Satya Nadella, who became CEO of Microsoft in 2014. His official role is “technical advisor.” But that title doesn’t quite capture the extent of his responsibilities at the company, where he acts as a sounding board for researchers and product development teams and is a figure whose stature as an iconic company founder forces Microsoft employees to bulletproof their work."

• Pendo. The product analytics company raised a $100M round, crowning a new leader in the "SaaS for product management" category.

• Canva. The Australian design SaaS company is now valued at $3.2B and targeting the enterprise.

• BofA goes cloud. How Bank of America is slowly but surely migrating to the cloud, despite previously trying to build a private cloud.

How to Startup

• A SaaS operating model (excel). Lightspeed published an excel model designed to help SaaS operators track their business.

• Which way do you run? Ben Horowitz of A16Z writes that this question - and the answer to it - separates the great CEOs from the rest of the pack: "Which way you run is often the key differentiator between effective and ineffective CEOs. Almost all CEOs know where the problems are, but only the truly elite ones run towards the fear."

• Trim the hedges. Semil Shah of Haystack takes a measured look at the possibility that we are entering a tech slowdown. While there is evidence on both sides, ultimately Semil concludes that some caution (and preparation for a downturn by CEOs) is probably warranted: "While recent events in a few portfolio companies are still anecdotal, the difference this time is the attention given to these events and the size of the positions. Just like optimism can compound on itself, so too can hesitation and a bent toward slightly more conservative cash and planning management. I’m not saying that next year will actually be different — I have no idea. But, what I am saying is, the leaders of recruiting firms, VC firms, and pre-IPO companies are grabbing their clippers to tidy up the yard and most certainly planning for that rainy day."

• SaaS survey. KBCM published the results of a survey of over 400 SaaS companies. It's chock full of data on ARR, CAC, LTV, CAC/LTV, ACV, ARR/FTE and every other three-letter SaaS acronym you can think of. 

• What is marketplace liquidity? Julia Morrongiello of Point Nine has thought a lot about this. "Let’s start by defining liquidity as the probability of selling something you list or of finding something you are looking for. Given that most marketplaces are two-sided, an accurate representation of liquidity should usually capture both buyer liquidity and supplier liquidity."

How to Venture

• A tough look at seed. Michael Dempsey analyzes the evolution of the seed market and argues that seed funds should be small, multi-geo specialists with an informed view of the world. (We are doing our best to do exactly that.) Specifically, Dempsey argues that having an "informed view of the world" "allows investors to compete on the axis of both having a deeper understanding of a space versus the average investor, theoretically have an ability to know what they are looking for at a faster pace (and thus move faster), find/track things earlier due to focus, and meaningfully compete via outbound deal flow by using ammunition that they’ve built up in research." Yes.

• My first check. Mark Suster reflects on the first check he ever wrote as a VC. It was into a company called Invoca which, just now - ten years later, raised a $56M round. His 10-year lookback brings him to five conclusions. One of them is that defensible IP really matters. "When I’m asked by newer, younger VC partners for advice on our sector, one of the things I always emphasize is looking for companies who have built defensible intellectual property (IP). Of course everything could be replicated if a massive juggernaut like Amazon or Google wanted to pour all of their resources into it but I’m talking about technology that is hard to replicate, takes years of know-how and once adopted is significantly valuable."

• Board governance. Wilson Sonsini published a guide to board governance (pdf).

Portfolio News

Vault CEO Neta Meidav is published in Worldatwork on accountability in a #MeToo world.

Crate launches on Azure.

Snyk and Deliveroo talk about PCI compliance.