TO VENTURE OR NOT TO VENTURE?

About 5 years ago I was approached by a couple of venture funds in London with a view to joining them. I had never really set out to be part of the venture capital community, despite having done investments, both personally as an angel and through my role at Cisco, and having always loved the intellectual challenge and thrill of it. I thought my window of joining this industry was long gone. But I decided to take the plunge and I have now been part of this wonderful world for 4.5 years, and can certainly say that I can’t see how lack of progress and lack of learning opportunities can ever kick in!

The first taste of what the venture capitalist role entails came at Accel Partners in London. It was a true privilege to see the inner workings of a 35 year old, tier 1 international fund. Accel Partners in Europe is a multi-stage, sector agnostic fund. Even though I had a short stay at Accel, I took so many learnings from that experience, on what it takes to build a great brand and a lot of the processes followed and mindset required. Despite that though, I felt that I didn’t even scratch the surface of what it means to be an investor. I didn’t truly understand what makes me tick, how to help founders and the companies on their journey and I didn’t get a chance to see the journey of fundraising for the fund either.

As I considered my next stop in this new and fascinating industry, I wanted to get some more exposure to all the skill sets mentioned above and more and I was welcomed in the arms of Notion. Notion is a 9 year old, specialised fund, looking at enterprise technology companies across Europe, primarily at Series A. A seasoned team of exceptional operators putting their years of learning into practice to help companies as they go through the stages of scaling their sales and marketing functions, expanding their channels and growing through internationalisation. The Notion team gave me the opportunity over the last 3.5 years to experience and contribute to the Fund III and Opps Fund I fundraising processes, showed trust in letting me get involved in some of the biggest and most exciting deals they have invested in and nurtured me with their support and wisdom. They have built an amazing team and an equally amazing group of portfolio companies which are well positioned to dominate their categories.

Even though I’ve been extremely happy working with the team and in my work, as Notion started planning the future direction of the firm and the upcoming Fund IV plans, I found myself asking the questions I asked several years ago of why am I in this industry, what drives me to do each investment and what do I want to experience in the next 10–15 years of my life in this industry (yes yes, I know, I said I never really had 5–10 year plans before but the nature of this industry forces you to think in such long windows really…)

As I played back the learnings I’ve had in venture and asked those questions, I realised that although I’m still a newbie in venture terms, I have started to zero in on some of the parameters that drive me and keep me on this path, and it boiled down to a couple of key ones. First of all, like several of my Notion colleagues, I am founder and pain-point driven in my investments. A lot of VCs say this and I realise more and more why, I am not fussed about whether the company has a ton of metrics or is scaling internationally already at the time I get conviction to do the deal. I fall in-love with the passion and desire to disrupt industries, solve big problems and create new products. I love to live the thrill of drilling into the market opportunity and going on the journey with the founding team to build a great organisation and product, come what may! Whilst Notion’s Series A focus allows a lot of this (as their companies are often still relatively immature at point of entry), it is early seed stage investing that I’m passionate about. Secondly, I want to have the opportunity to live the challenges and joys of building a firm at an earlier time in its development and have the responsibility and ownership of building it from the ground up. Notion has already gone through this phase, and very successfully so I might add.

GOING ALL IN!

As I was playing all this through my mind, an exciting new opportunity came up. The team at Kindred was looking to add another GP as it was further developing its strategy and planning for Fund II. Kindred is a seed focused fund based out of London but investing across Europe, aiming to be Europe’s best seed investor. The team is early on in their journey, investing out of Fund I, whose close was announced earlier this year and believe in what the Kindred team beautifully defined as equitable venture.

I’ve known and worked with the members of the Kindred team for several years; Mark has been my mentor since my return to the UK many years before even considering venture, I’ve been looking at deal opportunities with Russell as an angel for years and through my venture journey and have worked with Leila and Tracy through our firms’ joint investments in Paddle and Five.ai over the years. Through my conversations with them about the role they wanted to fill, I realised that their focus on seed stage companies, the stage of the fund and the vision on how the team would operate going forward were spot on with what I wanted to do going forward. So I decided to join them and continue to iterate and improve, aiming to reach that elusive product-market-fit in the venture world. I will be working with the Notion team over the next few months and join Kindred in September 2018.

It’s been an extremely difficult decision for me to leave Notion; leave some of my founders behind (though in safe hands!) and leave an amazing team and family with all the fun and hard work we experienced together along the way. I learned a huge amount from them and will always look up to them. And I sure hope to continue working with them and send them great deal flow from our portfolio in the future. At the same time, I am extremely excited to start my next part of the journey with Kindred and their amazing founders. I am grateful for the opportunity and trust given to me by both the Notion and Kindred teams and all of the entrepreneurs.

I am so excited and looking forward to the next chapter!

The conversation woke me up for sure and got me excited to learn more about his business. Coming back to London I was talking to one of my colleagues about it and he was, funnily, trying to get in touch with Christian as he had heard great things about him and Paddle as well. Serendipity you say? Perhaps….Fast forward 18 months, and after a lot of “dating”, we are thrilled that Christian and the Paddle team have accepted our “marriage” proposal to join them on their next stage of their journey!

The painful functionality and data silos of today

I frequently find myself pointing out that venture capital is often too conservative. As VCs we should be investing in companies that are building the technologies for the future, investing in markets and companies that will peak in 5–10 years (or even more) and yet most times we actually invest in companies that are solving current market challenges with less futuristic technologies and products. At Notion, we have certainly invested in companies building for the future, like Five.ai, Kisanhub and Unbabel to name but a few, but as my colleague Chris Tottman always says, we also focus on entrepreneurs that identify a big current market pain and ideally a team that has lived that pain first hand. Such founders, if they tackle the challenge right and build the right product for it, can build amazing and massive companies. The team at Paddle is a great example of this.

Before founding Paddle, Christian had to tackle a lot of the challenges his company now solves as he was developing and selling software. As companies think about selling their software products, they have to address checkout and payment processes, managing VAT and sales tax, managing multiple currencies and FX, especially as they think about selling cross-border, managing their customer base, licensing etc etc…Listing out all the functionalities they have to deal with alone is exhausting. All of these capabilities are provided by individual service providers, sometimes in simple and beautiful APIs (as in the case of Stripe for payments, GoCardless for direct debit and CurrencyCloud for global payments) though in complete silos from each other or in very clunky and old school solutions in the example of most existing Tax and VAT solutions.

The operating system for software companies

Paddle aims to address these product inefficiencies by becoming the operating system for software companies; or as they so bluntly put it, they want to kill the software stack! Paddle’s vision is to enable companies to focus on their product — spend time building and selling, rather than dealing with operational activities and overcoming inefficiencies to run the business. That is a vision we definitely subscribe to. They have built an integrated management platform for developers and product teams to cover payments and billing, checkout flow, marketing and CRM including campaigns, support and updates. The teams get a consolidated reporting dashboard and companies get improved increased sales and ROI and their customers’ customers get a better experience. They believe that a lot of the capabilities on payment, billing, tax etc will continue to be commoditised, as it is already happening and so owning the customer journey and dataset is the long-term differentiation. They are focused on enabling companies to abstract the business infrastructure and manage data across the whole commerce workflow.

The team’s product vision plays very well into this trend, Tom Tunguz has recently written about the next shift in SaaS being an evolution from displacer of legacy tech to a disruptor of systems of record, as SaaS companies capitalise on their workflow roots, the data they will aggregate from this usage will provide unique insights around workflows and performance that the preceding static systems of record cannot furnish. Paddle is perfectly placed to affect such a change and has been consistently moving in this direction as the product evolves. Paddle differentiates against incumbents by targeting the SMB space. However, they are moving upstream and they can attract companies that use multiple best of breed products given that they can provide an end to end data understanding of their end customers and with only one API integration. What a beauty!

With a strong team foundation for the future

Christian started Paddle at a very young age and has led the company through an impressive growth path, with a global customer base from the start and admirable metrics across the board. He has now built a very charismatic and strong leadership team around him to support him on this next phase of the company growth, which is projected to be massive to say the least :-). Their thoughtful approach to building their product is equally reflected in how they’ve been composing the team and their go-to-market.

I am very much a founder-driven investor, in the sense that I look for those founders that get me excited about their journey and of course are willing to take me along for the ride. The more time I spend with the rest of the team I can also see that passion and drive in the rest of the organisation to build a great company. Finally having the chance to work alongside Mark Evans (who I’ve long considered a mentor) and the Kindred team, Harry Briggs and the BGF team and Oleksandr Kosovan, the CEO of MacPaw is definitely a bonus!

Posted by Chrysanthos Chrysanthou, Partner at Notion Capital

Originally published at notion.vc.

At Notion we invest in the entrepreneurs and companies disrupting and modernising massive markets and complex business problems. One market that has seen little innovation to-date is the learning and development space, not just in it’s traditional (dare I say, boring) sense but in the multitude of heights, that new platforms and user behaviours could take it to. So when I found myself having coffee with Smartup.io’s @SmartUp.io CEO and co-founder Frank Meehan Frank Meehan, discussing all that’s possible in this space with what they were building, I was sold!

So we are very excited to be supporting Smartup.io’s journey with their recent $5.5M investment round, along with Hong Leong Group, the tireless team behind Founder Forum group and a selection of world class angel investors.

We are interacting, sharing, learning and evolving all throughout our personal lives, why not in our working lives?

It’s been said time and time again that millennials are taking over the workplace (and Generation Z is not far behind); they are tech savvy and are demanding a better connected and more transparent and mobile working environment. We have witnessed the consumerisation of IT take place over the last few years with mobile penetration in the enterprise; better user experiences in enterprise products; and collaboration platforms taking over our daily work life. And yet little had been done to modernise learning and knowledge sharing within large organisations.

Having worked at big corporates for many years, I’ve experienced first hand, the limited and archaic approaches to employee onboarding and engagement, let alone ongoing learning and development. Anything from in-person (and very dull) training courses, including box files to take home, and dated video-on-demand. But one thing is for sure; I always had significant budget at my disposal, but I never felt compelled to use what was on offer.

Companies understand the increasing competition they face in the war for talent across the world and are continuing to allocate budget towards it. The cost of acquiring a new employee though is so much higher than retraining or repositioning an existing employee and this is surely the biggest challenge many enterprises face. We live in an era of automation and many jobs will be increasingly replaced by machines, so being a knowledge worker won’t cut it anymore, we all need to constantly learn and evolve. We used to study once in our lives, high school, perhaps an undergrad degree and some even a master’s degree, and we were done with our learning by the age of 30 or so. We never allocated much time to education for the rest of our lives. In the future we must all keep our skills and expertise up to date throughout our life just to stay relevant, it will no longer be a one-time activity.

There is a massive global workforce of approximately 3 billion people who will all increasingly need to learn and adjust. Service providers, like LinkedIn, definitely understand the opportunity of bringing people’s expertise together with learning, the acquisition of Lynda for $1.5B (whether that was a good move or not, time will tell) was an example of that. The market is already acknowledging the opportunity with slew of new entrants in Degreed, Pathgather, Grovo, Edcast and very many others in the works to address it.

Platforms have to match users’ expectations

One thing is clear, employees will no longer accept a subpar user experience. Especially when you’re dealing with a product that you use constantly to learn, share and engage with your peers at work, both during work hours and on your own free time.

The Smartup product originally started as a consumer facing mobile app (which still exists as a free product on the app stores), catering to startup founders, innovators etc. So design and user experience have always been top of mind for the team to ensure they have that engagement from their users. Over time the platform has continued to evolve to add more and more sharing, social engaging capabilities, a robust web version and rock solid security features to ensure it adheres to the strictest requirements of enterprise IT departments. To top that up the team has developed it’s own beautiful content management system to enable functions within the enterprise, as well as partners, to create their own content and fuel the conversations and knowledge exchange within their organisation.

The platform is becoming a full-fledged enterprise platform while at the same time staying true to its consumer user experience DNA.

Employers are realising the need and acting on it

The demand from enterprise clients has been overwhelming. Customers are realising that they have endless content and knowledge internally, within their document management and LMS systems and most importantly within their employee base. With a platform like Smartup they saw the endless possibilities available to them to capture and share that knowledge within their workforce and beyond. Content on the platform currently ranges from compliance, sales and product training material to HR onboarding processes and innovation initiatives within their organisations. Organisations are also looking to use it for partner and customer facing processes and material.

And the talented Smartup team is executing tirelessly

Last but definitely not least, the primary reason we get excited about investing in companies is the team. Smartup was founded by Frank Meehan and Brent Hoberman brenthoberman and is supported by the Founders Forum strong network and team. The team has a wealth of building successful consumer facing products. They have surrounded themselves with a hungry young talented team on the product and technical side and seasoned global executives on the marketing and sales functions.

We are only seeing the beginning of what is to be a rapidly changing global workforce landscape and workplace environment. We believe platforms like Smartup are the way forward to enable employers to better capture and utilise their knowledge base and most importantly for employees to reach their full potential. We are looking forward to provide every bit of our energy and expertise to Smartup’s efforts to power this market.

At Notion we have been keeping an eye on the automotive industry for a while now as we believe it’s a market that, as it transitions from selling cars to offering mobility as a service, will cause broader tectonic shifts into our overall way of life, and not just in terms of transportation. We started our venture in this massive transition by joining FIVE.AI’s journey earlier this year.

So when the rumors started a couple of weeks ago that Apple might have taken an interest in McLaren we decided to take a look at why McLaren might make an interesting acquisition target, and what this means for tech companies trying to partner with more traditional auto manufacturers. And to be clear, we’re still not sure if we are looking at an acquisition, strategic investment, a partnership, or just unfounded gossip.

The British automotive company was founded in 1965 by Bruce McLaren as a motor racing team. It has since then grown into a conglomerate with $475M in revenues and has diversified into other precision manufacturing areas. The group is now broken down into:

McLaren Applied Technologies

McLaren Automotive

McLaren Racing

Absolute Taste (A thriving luxury catering business…)

McLaren Technology Centre

While a few of these might represent an interesting acquisition target, the one to focus on is McLaren Applied Technologies (previous McLaren Electronic Systems); in my view the crown jewel. The Applied Technology team which creates control and data systems has applied its research across healthcare and energy amongst other sectors but their true expertise lies of course in automotive and especially in the highest levels of motorsport. Their high-rate real time telemetry systems were first used for sports cars at Le Mans in 1991 and in F1 in 1993. They now provide the powertrain control and principal data logging tools for all competitors in those championships which are capable of dealing with large volumes of time-series data generated from various sensors in real time (including F1, Nascar, IndyCar etc). Some of their flagship products, like vTAG and ATLAS, focus on the viewing, analysis, recording and management of data primarily in the field of body dynamics (body roll, damper height, body flex etc). The team also developed an extensive and impressive collection of sensors. All of this allows teams to analyze data in real time, run simulations, and optimize their vehicles accordingly.

It is easy to understand why Apple might be interested in a team that has developed such high quality hardware and software technologies that have successfully been embedded into racing cars, performing while being subjected to the most extreme conditions. Especially the modeling and simulation expertise on the team would be a highly sought after talent pool. This would allow anyone managing an autonomous vehicle fleet, the ability to track, analyze, and control virtually all aspects of vehicles in motion, in real time. This is a set of capabilities which Apple (rumoured to be building its own vehicle), and most pure tech players have yet to develop, and acquiring/partnering with someone like McLaren could help them significantly speed up their product roadmap. The traditional vehicle OEMs would have developed in-house expertise for some of these capabilities over the years, but for someone building a vehicle themselves, Apple will need to have this in house as well to complete another piece of its full-stack puzzle.

While working at Living PlanIT I had the pleasure of engaging extensively with the Mclaren Applied Technologies team as one of our partners and seen their impressive operations and quality of their work. (I also had the pleasure to also visit their amazing technology centre in Woking on several occasions — a must visit for F1 fans). So no wonder they’re a target for any serious player in the autonomous vehicle space.

As this point, it’s hard to tell if these rumors are substantiated, nothing but gossips, or serious acquisition talks that fall through without ever going public. What is clear is that pure tech players will struggle to build a car on their own. We’ve seen Google and Apple push back their release dates and cycle through a few project leaders. Up until now, analysts have focused on traditional OEM’s lead in terms of manufacturing and infrastructure as opposed to tech player’s owning the state of the art in terms of machine learning. Players have tried to compensate with investments (Tesla Giga-Factory) and acquisitions (GM-Cruise), but one area that has been ignored is high performance data capture. Regular winners at LeMan and F1 have used, and enriched, systems like those produced by McLaren Applied Technology. Just a GM’s acquisition of Cruise triggered an applied ML for automotive acquisition race, an Apple-McLaren announcement could do the same for high performance data capture systems.

It’s about the high performance data capture (and a little about the auto manufacturing… was originally published in Notion Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.