Of course, there are a few I really should have invested in.
97% of the businesses I’ve met, I haven’t invested in. This is often for the same reasons, but these are the three most common:
Often a founder simply can’t represent the supply and demand sides of the business and so, as an investor, it can be hard to engage with.
The more technical founders get deep into the tech, but don’t communicate the benefits and don’t think enough about the application of tech.
Sometimes I just don’t understand it, and that’s a problem, even if it is a great idea. If I can’t understand, the market won’t understand it. If I come out of a meeting scratching my head and thinking to myself, “that seemed really interesting, but could I play that back to my team?”, that’s a red flag. If you can’t arm people with the clarity, then sometimes your message just won’t spread.
Getting things down into a clear and concise story is hard, but incredibly important.
Of course, from those 1,000, there are a few I really should have invested in.
Anti-portfolio is the term people use to describe the opportunities they missed out on. Either I didn’t fight hard enough, didn’t want to pay up for, or simply passed because I didn’t believe in it.
There’s a company called Grapeshot, which was an adtech proposition, analysing content on websites for better targeting. They were sold to Oracle for $300m. I was already quite negative on adtech, and felt that their product was just a feature. But as it turned out they were different with a fundamentally different approach to a common problem.
Another is Mapillary. This company is based in Malmo, with a very smart CEO and team, and they are building a cloud sourced version of Google Streetview. Their commercial progress was limited, but the valuation was high and we didn’t manage to put enough value on the depth of the tech.
But these mistakes are something we as a firm learn from and it really helped us shape our strategy to move forward, for example, moving beyond pure SaaS to SaaS + Marketplaces or SaaS + Payments or SaaS + Hardware. We know we want to stay focused on enterprise tech, and on B2B, but the market is evolving and so are we. Our roots are in SaaS but we are challenging ourselves to look at emerging models.
Five AI is a good example of a business I may not have invested in if I hadn’t learned my lessons about the importance of deep tech skills and capability. They are creating tremendous strategic value through the team they are building, which consists of high-quality engineers, data scientists, AI experts and multiple PHDs.
What are you excited about investing in?
SaaS still has a long way to go and I’m really interested in vertical SaaS and solutions with a narrow focus, deep into an industry, reaching markets and workflows where SaaS has still not delivered. There’s a lot to like about a vertical SaaS platform, where you can layer in payments and marketplaces and be the operating system for the industry, such as Mews Systems.
SaaS used to be about replacing on premise software, but now it’s about software combined with massive amounts of data, so I’m looking forward to seeing solutions that augment or replace human activities or intelligence.
Lastly, hardware / software model with computer power being delivered at the edge. There is so much that can be done in this area, with examples such as Five AI or Scortex, which is combining computer vision with SaaS and AI to automate and improve the quality on manufacturing lines.
There certainly is a lot to be excited about and the calibre of the companies we see and the founders we meet just keep getting better and better!