YSL Europe/Israel Enterprise/Tech Weekly

The Angle Issue #24: May 8, 2018

Hello from London — and welcome to Issue #24! If you find this email useful, please subscribe and share with your network. Thanks!

This week saw the second largest acquisition in Israeli history, and it was in foodtech: The US flavor maker IFF bought Frutarom for $7.1B. Frutarom is not exactly a startup. It was founded in 1933 in Haifa by two Dutch industrialists and went public on the TASE in 1996. It is one of the leading producers of fragrances, flavors, and extracts in the world. According to the FT, the company, “sells over 70,000 products to more than 30,000 customers in over 150 countries, said it expects to take in more than $1.6B in sales this year and aims to hit $2.25B in sales by 2020.” Frutarom had been on something of an acquisition spree this year as the industry consolidates, but it looks like IFF made them an offer they couldn’t refuse.

From the blog

There are only three startup stages. In my view, and despite all the semantic chaos (seed, pre-seed, post-seed, early A….) there are really only three “stages” for venture-backed startups, and they are all defined by the Series A round: The defining characteristic of early stage is that the company is not ready to start building out the machinery of growth. In the enterprise context, this means the company is still lining up the evidence and traction it needs to justify the Series A: building product, deploying product with early customers, demonstrating product/market fit, proving out the sales dynamics that will support efficient growth, and making sure that the team is in place to execute.

2018 EU+IL VC Data. $20.3B of VC investment summarized in 74 slides.

Europe/Israel Enterprise/Tech

• Czech Republic/Security. Cyber-security company Avast is planning a $4B IPO on the LSE. The company was founded in 1988 and had 20 million users by 2006, going on to raise substantial investment an acquired both AVG and Piriform and becoming the market leader in antivirus software.

• France/Search. The Economist takes a close look at Algolia, the French search giant: “Algolia is growing unusually fast for a European startup. It has some 200 engineers and other staff, up from 60 in 2016, most of them based in penthouse floors at its new headquarters behind Paris-Saint-Lazare station (its legal headquarters and a marketing office are still in San Francisco). The firm says it has over 4,500 clients, more than double the tally of two years ago, mostly in America. Its platform is processing 41bn search requests a month, as of March, again more than double the equivalent figure two years ago.”

• France/Workplace Browser. Station raised $3.25M for its work-oriented web browser.

• Estonia/Robots. Starship, an Estonian-born autonomous delivery robotics company, announced the start of a large-scale US rollout, an anticipates deploying over 1,000 robots in the US this year.

• Israel/Chip Design. Dutch-born Synopsys CEO Aart de Geus visits the Silicon Valley company’s Israel development center and sits down with Globes for a wide-ranging interview.

• Israel/Video Security. Cisco is selling off part of its NDS assets back to Permira. Cisco acquired NDS, an Israeli company, for $5B in 2012.

• UK/Brexit. Barry Ritholz on why Brexit may not happen.

• Italy/Israel/Biking. In a historic and unlikely first, the first stage of the classic Italian cycling race “Giro d’Italia” was held in Israel last week.

Worth reading

• Must-read slide deck. Battery released their 92-page review of the state of the software market. It’s a gem.

• How to do SaaS Pricing. Openview Partners released an updated version of their “Ultimate SaaS Pricing Guide,” a directory of dozens of very useful blog posts on the topic. Also last week, First Round put out this useful B2B pricing guide.

• How to do network effects. NFX, a VC fund focused on network effects, released a 47-page Network Effects Bible — definitely worth reading.

• How to be a technical founder. A superb podcast (audio) conversation between Sunil Dhaliwal of Amplify and Adam Jacob, CTO & Co-Founder of Chef on the Evolving Roles of the Technical Founder.

• Dropbox- the ultimate mouse hunter. Christoph Janz, founder of Point Nine, offers this fascinating analysis of Dropbox, with an emphasis on the company’s low ACV and the potential threats from that positioning.

• The status of the self-driving race. Jason Costa of GGV with a great breakdown of the current status of the race towards self-driving carsbetween incumbent auto-makers and new entrants.

• Cisco buys Accompany. Cisco, which bought Accompany for $270M, will incorporate the technology into its collaboration products, for example by introducing company and individual profiles into Webex meetings.

• A mega-round for Mesosphere. The container giant raised $125M, bringing its total financing to $250M. “More than 125 enterprise companies, including 30 percent of the Fortune 50, use Mesosphere to automate hybrid cloud operations in production.”

• Company struggle with AI Interpretability. AI researchers from a number of large corporates spoke of the importance of AI explainability at an O’Reilly AI conference: “An AI system that can explain its decisions is helpful for two main reasons: when you have to decide whether to override the decision it’s making, and when you want to try to improve decisions it will make in the future, said Peter Norvig, director of research at Google, who also spoke at the conference. Google is developing tools to understand artificial neural networks and other types of machine learning algorithms, Mr. Norvig said in an email. Researchers at Google have visualized what a machine learning system is learning and the ability to debug a deep learning system, he said.”

• Facebook moves deeper into the enterprise. The WSJ reported on Facebook’s announcement that it is adding a set of business software integrations to its “Workplace” product. With over 30,000 organizations and over 1 million users, Workplace is an increasingly significant player. It more than doubled usage last year, and it’s charging $3/user/month.

• Amazon vs. Apple. Stratechery on the ultimate battle between Apple and Amazon.

• Blockchain struggles in the enterprise. Gartner data suggests only 1% of CIOs are actually adopting Blockchain, with only 8% experimenting. Still, Gartner expects Blockchain technology to hit an inflection point and reach over $3 trillion in business impact within ten years.

Portfolio News

Moltin announced that Tom Ebling, former CEO of Demandware, has joined the Board.

How Bit is using AI to help companies optimize their use of software code: “40% of all code developed is made up of previously written lines, Ran Mizrahi, co-founder and CEO of Bit, said in an interview with Calcalist Monday. “This means developers have to constantly reinvent the wheel or waste time on finding existing chunks of code,” he added. The company’s goal is to create Lego-like blocks of code that can be assembled again and again, Mr. Mizrahi said.”

Cloud66’s announcement of Copper, a complete container delivery pipeline, made this list of the most important announcements at Cloud Native Con 2018.

Innovid announced a deeper partnership with Hulu.

Findify was acquired by Namaste. Investors made a healthy multiple, and the team is very excited about what’s next. Congratulations, Meni!

I curate this newsletter by hand and hope you find it useful. I am an early-stage VC and angel investor based in London and Tel Aviv and investing across Europe & Israel. You can follow me on Twitter andMedium or connect with me onLinkedIn. 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 I can help. You can find a list of current portfolio companies here.

Yours,
Gil Dibner

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