Just over three years ago I didn’t know much about venture capital. I’ve spent my career working for technology companies but hadn’t got close to VC’s other than announcing our funding rounds to the press. So I was surprised when in November 2013 I got a call from a head-hunter and within a few months had joined the investment team at Notion Capital as a VC. Notion is a leading, London-based, venture capital firm focused on B2B SaaS, led by the partners, former entrepreneurs and operators themselves with several successful exits behind them, so a wealth of experience to draw on.
Three years later I’ve certainly learned a lot. Throughout that period we invested in 22 B2B SaaS companies across five countries, we saw over two and a half thousand companies, of which I personally must have seen around 450. I was involved in deal origination, that is finding the companies, which meant building out my network of angel investors, venture capital firms, and accelerators across Europe and beyond. I also supported deal evaluation, attending hundreds of formal pitches, go-to-market workshops, customer calls and running our technical due diligence process.
So what did I learn? Often when asked what they look for, VC’s repeat the same answer Product, Market and Team. But what does that mean? The product you invest in at seed stage or even Series A is unlikely to have achieved product market fit and will certainly not be the same product that exits with those lofty valuations. So the team build the product for the market. The former being internal and the latter external if you want to draw boundaries with the product bridging the two. So we have this thing called a market and these people called a team. Let’s look at each.
The Jedi Masters…
The team and primarily the founders from an investor perspective are critical to the short and long term success of the business. Can they corral investors, get people to buy in to their vision, attract top talent, convince those early adopters and strategic partners to get on board? Do they have that killer instinct to go after the big vision and the operational prowess to do it step by step, carefully sequenced or, more likely, rapidly iterated until they find the fit? Can they be confident, strong leaders, drive the business but also listen, take on board feedback from the market, from their customers, from their team and from their investors?
It’s a certain type of ‘DNA’, both individual and baked in to the core team and it’s as much an art as it is a science.
In a Market (not so) far far away…
The market then is outside of the business. It is where the customers are that will buy the product, use the product and hopefully love the product. It is where the company will make a big dent, create change, drive efficiency or innovation, disrupt incumbents and make a name for itself.
The market is ever changing, it always seems to be a $1bn market when pitching investors, but it isn’t just about the market size, it’s about the market narrative. How is the market shifting, who are the incumbents, where is the blue ocean, where are those artificial glass floors bedded in to the market by the strategies, operating costs and pricing of the incumbents, how can you out manoeuvre them? Who are the competitors, is this a market of few or a market of many, how can you defend your business in this market and what moats and walls can you build.
VCs look for big interesting markets to enter, create or disrupt and they look for teams that are the right fit to take their products in to those markets. Neither of the above can really be measured by numbers, traction, spreadsheets or reports but they are the biggest drivers of investment decisions in my opinion.
Returning to the Dark side…
Aside: It’s funny how entrepreneurs often reference VCs as the dark side and vice versa, the truth is both sides are hard, success is rare, and on both sides knowledge, skills and analysis need to be carefully balanced with instinct, intuition and iteration. So we could call it the ‘other side’ but given our objectives are, or should be at least, fairly well aligned I won’t labour the point!
I have been lucky to work with some great companies over recent years, one of which has been Wercker. An early stage company in the developer tools space that demonstrated just the properties I’ve discussed above. A massive and dynamic market, a highly technical yet beautifully designed developer product and a super-smart founder & engineering team. I had the privilege of working closely with them throughout the investment process and as a board member for two years.
The business is in the space of developer automation. Software Development is one of the most exciting markets right now. Many businesses are becoming software businesses, a large part of a companies competitiveness is about the software they build and use to operate their business in all areas from sales and marketing, to product development, operations, HR and beyond.
The Shifting Landscape
Continuous Deployment and technologies such as containers, where Docker is leading the way, are enabling businesses to utilise new architectures and paradigms to develop, build and deploy software more efficiently and effectively, increasing developer velocity leading to business agility in an area that has become rapidly complex at increased scale. Wercker is well positioned to enable organisations from startups to enterprise level take advantage of this shifting landscape. [find out more at wercker.com]
Having come from a Software Engineering background, working as a developer in my early career and then helping take technology companies to market I was very excited when the CEO, Mies, asked me to join the team back in November 2015. With the support and backing of Notion, I’ve now joined wercker as Chief Commercial Officer, responsible for Growth, Marketing, Customer Success and Revenue and will be hiring this team over the coming months, building on an exceptional core product already used by thousands of companies across the globe.
I’m excited to be back on the frontline and working with a company that has continued to impress me in a market that hasn’t failed to excite recently with huge volumes of capital deployed and companies like Atlassian joining the ranks of the unicorns. Thanks to team Notion for all their support and to our founders and co-investors; I wish you all the best running your respective businesses. And to my new colleagues, fellow werckers, it’s good to be on board and I look forward to working more closely with you all as we continue to build the business together.