Why we invested in Funnel.io (and how the way you market is about to change forever)
I’m excited to announce that we have led a $10M investment in Funnel. Funnel has built a marketing automation platform that helps companies gather their marketing data from every source they use enabling real time, intelligent analysis across their marketing spend. The company was built by a small team of tech veterans in Stockholm and, after around two years of activity is already processing over $1Bn of marketing transaction data on an annual basis.
A big part of why we invest in any company is driven by our thinking on key technology trends and Funnel is an excellent example of this.
Design-led and subscription Enterprise Software
Over the last ten years, two of the main drivers in enterprise software have been the continued shift to Software as a Service and the growing use of a user-centric design ethos to building enterprise applications (moving from tools that human operators had to fit around to ones that are as easy and delightful to use as a consumer application).
These trends have been a huge boon to the industry, customers and, of course, investors. Simplistically they have replaced the monolithic systems of old (often built on legacy Oracle, SAP, IBM or Microsoft platforms) where a single backbone was hosted on-premise at a customer’s site and painstakingly customized into a multitude of different systems (CRM, ERP, Marketing, HR, Financial and so on….) by internal IT departments and large services firms. Instead, the modern enterprise is typified by a family of apps, each doing something very specific, each hosted off-site, in the cloud and each standardized and easy to use and each often from different vendors (think a combination of Gmail, Workday, Salesforce and more).
There are huge advantages in this new architecture. The new applications are cheaper and more off-the-shelf than their historic counterparts. They are easier to use and require less support. The specialisation of each software company in each area means also that each application is just very good at what it does. Workday, for example, spends all day every day thinking about how to ensure your human resources are organised, run, reported on and supported — unsurprisingly they’ve gotten very, very good at it.
The challenge of silos and Systems of Intelligence
But there is also a huge challenge at the core of this new architecture: the development of huge silos. Each one of these systems, internal and external, grows into a massive repository of data. People get excited by the opportunity of harnessing this data and using it to increase the efficiency of internal processes and compete better externally, often thinking of techniques like those that Artificial Intelligence brings us. But intelligence is only ever as good as the data it can learn from and if that data is held in multiple, fragmented locations the so-called Systems of Intelligence one can build will be necessarily limited in their insight and effectiveness.
And this is where Funnel comes in. Much like other Systems of Intelligence, Funnel sits as a layer in between a plethora of existing enterprise applications — in this case focused on a company’s advertising (and in time, broader marketing) function. A specially designed platform allows the team to guarantee compatibility with any advertising system and further technology normalises, organises and marshals the data into a singular form that can be used as a starting point for analytics and intelligence gathering. The company is agnostic as to whether you do this on their own platform or through others but the large number of customers who use Funnel’s built-in tools says a lot about how limited many big data analysis tools actually are today.
And intelligence leads to action — knowing what your business is doing, second by second rather than month by month means new strategies can be suggested and tested, analysed and launched rapidly and even automatically, improving the company’s ability to compete both against competitors but also its historic self. Funnel literally enables programmatic self-improvement in marketing — a staggeringly powerful opportunity for any business.
Backing a Team
However, for all the analysis on why we think a company has a great product in a promising market, venture investing is fundamentally a people business. We know that all the great positioning in the world is no use if there isn’t a team who can seize the opportunity and make it work, absorbing the inevitable bumps and pivots along the way. And that’s why we feel so privileged to be working with Fredrik, Per and their team. Most of them have worked together before, many hailing from a growing Keybroker ‘mafia’, and in just a couple of years have built a platform that is used every minute of every day at some of the world’s best online businesses including Farfetch, Made.com, Daniel Wellington, iZettle, Crowdcube and more. The team have also done this before — Fredrik was a founder of Autoquake, one of the largest online used car retailers in Europe at its peak — and have already started pushing globally with a new office in Boston.
Most of all what Funnel have really done is build a product that people love. We first heard about the company through our friends at Industrifonden and then really got excited when we kept finding people we knew — many in our own portfolio — were avid, hooked users of the product, keen to tell us how much they used it and how efficient it made their processes. Once we realised just how excited people were about this, we simply had to find a way to work with the team, leading to this eventual investment in the company.
As my partner James Wise recently noted, it all comes down to three questions. Why that market? Why now? Why them. We think Funnel more than answers these and we look forward to working with them on the journey ahead.