YSL Europe/Israel Enterprise/Tech Weekly

Issue #11: January 26, 2018

Good morning from New York City - and welcome to issue #12. Please feel free to email me with comments - and if you like this - please forward to friends and subscribe!

From the blog

From last week: The Evolution of the AI/ML Application Space.

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

Portfolio News

Front announced a $66M financing round led by Sequoia and DFJ. The vision has expanded signficantly since the first round, the company's execution on product and sales has been very consistent and strong, and it's an honor to be a very small angel in this kind of story. What really set Front apart from day one is the team, led by the incredible Mathilde Collin. You can read her medium post on the recent round here, or watch her in action here. For one more perspective on how this company operates, check out their post (from 2015) on why they chose to make their product roadmap public.

Fred Wilson at USV wrote a powerful post this week on how important "explainability" is in the world of AI/ML. This is exactly the problem that James (yes, that's a company) aims to address - initially in fintech. James is operating in New York now, but was born in Lisbon and is hiring for engineering (backend, frontend, and ops) and finance (controller) in their Lisbon office. 

Jfrog brought on Ayalla Goldschmidt (Oracle, Tibco, IBM) as VP Marketing.

The CEO of Snyk, Guy Podjarny, literally wrote the book on Securing Open Source Libraries. 

Chorus.ai was highlighted as a key part of Showpad's stack in this interview with Showpad CEO Pieterjan Bouten. (Showpad is a Ghent-based SaaS business that just raised $25M from Insight, see below.)

Innovid CTO Tal Chalozin joined a panel discussion on the future of video advertising in an OTT world. You can find the video here. 

Khash Sajadi of Cloud66 penned a piece in InfoWorld on the SaaS economy in the age of containers: "The SaaS delivery model still has a lot of great things going for it—for one, it is now the dominant model for consuming software, wherever it sits or however it is procured. However, infrastructure arbitrage is not going to be one of its key advantages for long. While cloud computing was the killer application for virtualization, changing the economy of SaaS might be the killer application for containerization." 

Siemplify announced support for over 100 integrations to bring existing enterprise security infrastructure under one pane of glass and one integrated analytical framework. 

Europe/Israel Enterprise/Tech

• Estonia/CRM. Tallinn-born Pipedrive, which has been backed by Bessemer and is now HQed in New York, announced plans to expand into a London office as well. Pipedrive is one of the most high-potential SaaS businesses born in Europe...and this decision illustrates a more general observation: the best European/Israel enterprise tech companies conquer the US first and then circle back to conquer Europe after the US beachhead is secured.

• Belgium/Marketing. Ghent-based Showpad raised an additional $25M from existing investor Insight. Showpad helps sales teams build microsites to support sales efforts. The company has raised $89M to date. 

• Israel/Security. Calcalist has a piece on how Cybereason plans to deploy some of the $100M invested recently by Softbank: New office space, increasing headcount from 400 to 700, and expanded focus into automotive and blockchain. The company's endpoint security software detects cyber attacks through behavioral pattern detection.

• France/Israel/AI. VC-backed French e-commerce company Akeno acquired Israeli AI company Sigmento to bulk up its AI team. Terms of the acquisition were not disclosed. 

• France/AI/Google. Google announced plans to launch an AI research center in Paris, adding 64K sqft to its office space and increasing headcount to 1000. There's a lot of hype around the French tech eco-system - but lots of real stuff as well, and this is proof that "La French Tech" is alive and kicking for real. 

• Tel Aviv/Automotive. Nexar raised $30M of new funding from Alibaba and Nationwide. The company analyses dashcam videos and is creating a large database of driving behavior which could have a series of very valuable applications.

• Israel/Primary Data. Primary Data is a four-year old Los Gatos (CA) company that raised $100M of seed financing from some of the best VCs in the world only to implode spectacularly this week. The Israeli angle here is that at one point Primary Data acquired Tonian back in 2013 to add advanced storage technology its offering.

• Tel Aviv/Crypto-security. Nimrod Lehavi of Simplex on how he and his company are working to secure the crypto-ecosystem with anti-fraud technology. 

• Israel/Drones. How the FAA's eased drone regulations are making life a bit easier for companies like Percepto.  

• Tel Aviv/Ecosystem. Startus Magazine put together a fairly comprehensive guide to the Tel Aviv startup eco-system.

• Israel/Palestine/Startups. A piece in the Jerusalem Post on how my friends Saed Nashef and Yadin Kaufmann are defying the odds and working across the Israeli-Palestinian border to help foster the Palestinian tech scene. 

• Israel/Microsoft. Microsoft has a new head of R&D in Israel: Assaf Rappaport, who joined Microsoft with the acquisition of Adallom for $250M in 2015. Rappaport will lead Microsoft's ~1000 Israel-based employees, in the company's oldest R&D center outside the US. 

Worth reading

• Low-commitment. Battery Ventures' Dharmesh Thakker and Dan Nguyen-Huu argue that today's enterprise software market is characterized by low commitment and low stickiness. This has some profound implications for how to build an enterprise software companies. It's a very important set of considerations for any enterprise tech CEO. 

• No market? Martin Casado of A16Z on going to market when there is no market (yet): "One of the biggest myths founders have is that people will immediately see the value of the product they built, whether in understanding what it is or in paying for it. This is especially true in “pre-chasm” markets, where you might have a few early adopters who totally get it — but there’s also a deep chasm between them and later, more mainstream users...In fact, it’s not unusual for even the most magical products developed by world-class teams to suffer from years of little or no growth before eventually taking off."

• The spinmaster. A profile of Margit Wennmachers, an operating partner at A16Z: “The running joke of the firm is that we’re a media company that monetizes through venture capital,” Andreessen says. It’s a joke, but also an inevitable evolution of Wennmachers’ role—in which a communications lead begins to look much more like a media tycoon.

• Security overload? “Suddenly, we are in this situation where there are just too many vendors and too few can be sustained.” -- Dave DeWalt, former CEO of FireEye.

• The case for SMEs. All things being equal, as an investor, I tend to prefer proper enterprise tech to SME tech. But my friend Simon Schminke of Creandum makes a strong case for why the SME market is an interesting place to invest as well. 

• Three types of technical debt. NY-based VC firm FirstMark wrote a great peice on three types of technical debt: deliberate, accidental, and rot. 

• Is B2U the new B2B? Mike Reynolds of InnovateMap argues that the future of B2B sales is direct engagement with individual user/buyers as opposed to organizations. He calls it B2U. 

• The feds are coming for crypto. SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo wrote an op-ed in the WSJ on their intention to regulate crypto-currencies: "Distributed ledger technology may in fact be the next great disruptive and productivity-enhancing economic development. If history is any guide, DLT is likely to be followed by many more life-changing innovations. But we will not allow it or any other advancement to disrupt our commitment to fair and sound markets."

• Not so lean anymore. David Mytton of Server Density on why scaling a SaaS company today is not the lean exercise it was a few years ago. 

• Killer VC podcasts. Two great podcast conversations with awesome VCs were released this week. Notation's conversation with Haystack's Semil Shah is a must-listen, as is this discussion with A16Z's Chris Dixon.