Featured
Crypto InfraEnterprise SoftwareOpen SourceVenture Capital

boldstart 2021 recap & what’s ? in enterprise 2022

Posted on by Ed Sim

2021 Recap

Sending ? and ? from the boldstart team at the end of a challenging 2021. With COVID raging at the beginning and end of the year, it is all the more amazing what our portfolio companies have accomplished the last twelve months. We are truly ?? to our founders, limited partners, co-investors, and friends for another year of growth and learning.

boldstart kicked off 2021 by announcing the closing of $230M of funds, $155M fund V and $75M opportunities ii, to continue supporting developer first & SaaS founders from Day 1 to scale(?).

We added 3 team members:

Ellen Chisa, Founder-in-Residence and former co-founder of Dark

Ab Gupta, Operating Partner and former VP Strategy & Ops at Kustomer

Ernest Addison, Associate and formerly at Audax group.

And our portfolio continued to grow:

  1. ? Day one lead/co-lead in 14 founding teams: (most still in stealth) representing ??, ??, ??, ??, ??, ??, ??. Continued investments in developer first, SaaS, and crypto infrastructure companies.
  2. ? ? Day one to scale: Huge congrats on milestone valuations realized for dev first security company Snyk ($8.6B) and fellow security startups BigID ($1.25B) and Security Scorecard (almost ?), crypto infra startups Blockdaemon ($1.255B) and Fireblocks ($8B, investment via MStateLabs our enterprise blockchain lab), and YipitData (new ?).
  3. ? Day one to follow on funding: Over $1.7B in follow on funding for the portfolio including those above and Superhuman, Replicated, Dooly, Env0, SpectroCloud, Cape Privacy, Hypr, and 3 others which closed new rounds but will announce early 2022.
  4. ?? Day one to exit: Huge congrats to FortressIQ on its sale to Automation Anywhere. We are ?? to have partnered since day one as FortressIQ created the market for process discovery and automation and scaled to dozens of enterprise customers.
  5. ? ️From idea to product launch: New company launches out of stealth include developer first startups Jit Security (orchestration for dev first security), Slim (container optimization), Atomic Jar (integration testing shifted ⬅️), Cloudquery (OSS cloud asset inventory SQL), CodeSee (code visualization), Liveblocks (API for collaboration), and SaaS co UtilizeCore (service mgmt automation).
  6. ??‍? More amazing angels/advisors added to the boldstart family: We continued doubling down on our enterprise angel/advisor network bringing diversity and some of the best builders and doers in product, engineering, and sales to help our founders accelerate their path to product market fit with folks from Airtable, Notion, Twilio, UiPath,Tableau, Elastic, Coinbase, Hashicorp, and more…

What’s ? in Enterprise 2022

  1. The next big thing in 2022 is blockchain is the new “dev tool” as many long time enterprise founders rush to explore and build newcos in crypto infra and enterprise investors fund any company with “enterprise + crypto.” Despite the number of companies that don’t make it, there will be a handful of foundational companies started in 2022 that will create returns that far exceed the money lost.
  2. VC funding will hit another record year in 2022 but don’t be fooled as while the total will be higher than 2021, the numbers will be skewed towards the perceived highest quality and fastest growing companies. In 2022, there will continue to be separation from the haves and have nots and this further increases the importance for funding outstanding and dynamic management teams who are also recruiting machines.
  3. Rise of orphaned companies — Speed bumps will surface for overcapitalized companies who raised too much ? too early and who tried to stay on the trajectory of super fast growth to be one of the top companies but fell short — lots of pain will surface in 2022 from these companies that overspent and don’t have much to show for it.
  4. A number of open source projects will become a DAOs (decentralized autonomous organization) instead of pursuing the classic venture backed model.

If you’re interested in staying on top of current trends on a weekly basis, please subscribe to my substack, What’s ? in Enterprise IT/VC.

?? again for all of your support, and here’s to a healthy and prosperous 2022!

Featured
Enterprise SoftwareInfrastructureOpen SourceSecurityVenture Capital

boldstart 2018 recap and what’s hot in enterprise 2019

Posted on by Ed Sim

2018 Recap

Welcome to our annual boldstart recap and enterprise predictions letter. We had another solid year filled with learning, growth, laughter, and new projects and partners. Thanks to all of the amazing founders, advisors, co-investors, corporate partners, and others that helped make 2018 an amazing year. We are truly grateful for your support.

boldstart 2018People often ask us why firstcheck.vc or what is first check and our response is that the seed landscape is so confusing, and what founders need is an investor with courage and conviction to lead their rounds and support them from day 1. This initial round could be $500k or it could be $3mm. We are purpose-built to not only invest pre-product but also to help accelerate your path to product-market fit with our decades of entrepreneurial and investing experience along with our active CXO advisory board.

To that point, we are most excited when our founders are able to go from slide deck to product-market fit and Series A and beyond. This year was a banner year as boldstart portfolio cos raised over $150mm of follow on capital from some of the top Series A and B investors (highlights below).

    1. First check leads in 5 founding teams, all in stealth. Some of these themes include privacy/ML, next gen CMS, intelligent automation, and developer productivity.
    1. First check to Series B — congrats to BigID on its $30mm Series B led by Scale Venture Partners, Kustomer on its $25mm Series B led by Redpoint, and Snyk on its $22mm Series B led by Accel and GV. Truly amazing that all of these companies went from slide deck to B in approximately 3 1/2 years.
    1. First check to Series A — congrats to Fortress IQ on its $12mm Series A led by Lightspeed and a stealth co on their $13.5mm Series A led by Bessemer Venture Partners. Once again, we led each of these rounds at slide deck stage and helped land the first handful of customers to accelerate path to product market fit and their Series A rounds.
    1. First check to seed — congrats to Blockdaemon on their seed round led by Comcast Ventures and Wallaroo Labs on its seed led by RRE Ventures. In each of these cases, we led much smaller rounds before they raised proper seed funding.
    1. Smallstep, Clay, Dark, and Windmill emerged out of stealth. All are developer first companies respectively in zero trust security, automation, and developer productivity.
  1. Rebel exit to Salesforce. Dev-first API for interactive emails — will be a great fit with the Salesforce marketing cloud.

7. New CXO advisors join — Tony Saldanha (P&G Next Gen Svces, Transformant), Farhan Shah(Allstate, CTO, Head of Platform Eng), Munu Gandhi (VP Infrastructure, AON), Virginia Lyons (CISO, Williams Sonoma) and GTM advisors — Natalie Diggins (Neustar, ex-VP Cloud Platform/DevOps), Francesca Krihely (MongoDB, Dir. ABM/Demand Gen), Richard Crowley (Slack, Ops Architect), Misha Brukman (JanusGraph, co-founder). This means more collaboration with the Fortune 500 and more go-to-market experience as our portfolio companies navigate their path to first customers. In 2019, we’ll be doubling down on this effort as we are hiring a GM for our CXO Advisory Board & Network (job description here).

AWS Reinvent Survivor Dinner with founders, Fortune 500 execs, and VCs

9. Ongoing press coverage of boldstart themes: every Fortune 500 is a tech company, developer first, and security including Fortune, Techcrunch, Wall Street Journal, Business Insider, SaaStr podcast, and more…

Fortune December 2019 Investor Roundtable

No matter what economic cycle we go through, Fortune 500 companies need to invest in software.”
Ed Sim, Boldstart Ventures

Enterprise Tech in 2019

Amara’s Law: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”

While the cloud wars, AI, automation, and digital transformation dominated the enterprise headlines in 2018, we have to remember that we are still early in the cycle. In our enterprise world, a large Fortune 500 can’t just flip a switch and close data centers and move to the cloud wholesale. There are other considerations like people, process, culture (see Dean Delvechhio’s, CIO Guardian Life,keynote at AWS), dreaded legacy technology and debt embedded in mainframes, COBOL, and other stuff they don’t want to mess with. Consider 2019 another year of blocking and tackling as the Fortune 500 continues their march to the cloud.

    1. Still in second inning for enterprise move to cloud: Regardless of what economic cycle we endure, the Fortune 500 march to a cloud-native architecture will continue. For the more advanced enterprises who have migrated to the cloud, this will be a year of net new technology and building applications. Along these lines, we are starting to hear serverless more and more from the Fortune 500 and see this trend reflected in the sales pipeline at iopipe which has gone from mostly startups to larger companies. While developers can now spin up applications faster than ever before, one of the downsides is the complexity of managing these distributed applications and technologies. Watch for startups solving this problem with a focus on observability, reliability, security and automation.
    1. Privacy engineering rules: We can’t go a week without a new data breach or privacy violation; Marriott, Google, Facebook and more. Large enterprises are also complaining about keeping up with so many different regulations like GDPR and the California Consumer Privacy Act (CCPA). Other states are also creating legislation around privacy of a consumer’s data and expect 2019 to be the year that the US creates a national standard. This will be a boon to startups as this encompasses finding PII, securing data, and incorporating privacy by design. This is hitting every market from security to data infrastructure to cloud. Designing software with a privacy-first mentality becomes a core theme in 2019. This will be similar to how AI became embedded in most applications in 2018. BigIDand Dropout Labs address some of these areas, and we are actively looking for new opportunities.
    1. Year of HQ2 and Distributed Teams: It was a banner year for non-Silicon Valley cities as NYC and Northern Virginia were selected as Amazon’s HQ2. Google also unveiled plans to double its NYC employee base to 14k. In startup board rooms all across the United States, founders and investors are asking how do we keep scaling our teams? We will see many more startups created with fully distributed teams from the beginning or layer in an HQ2 as it becomes even more expensive and difficult to scale in the prime geographies. Rather than be seen as a negative to funding and scaling a business, this will be seen as a huge positive!
    1. Balanced growth vs. growth at all costs: No conversation about 2019 will be complete without considering the uncertain economic, financial and geopolitical environment in which we are currently living. The 10 year bull market where every company’s revenue chart is up and to the right is over. Many startups were funded on growth alone and this is the year that efficient growth plays a huge part in determining who the next winners will be. Startups should also make sure they are well funded for 24 months and have contingency plans to put on the brakes in case another nuclear winter occurs. Look at 2001 and 2008’s Lehman collapse and Sequoia RIP Good Times deck for lessons learned.
    1. Seed funds back to basics in 2019: We highlighted the barbelling of VC in the year-end 2017 update and see this continuing in 2019. Either you’re a mega fund or an early stage fund, being caught in the middle is a place you don’t want to be. On the seed side, we are seeing more firms focus on smaller and more concentrated portfolios instead of a spray and pray mentality. Consider this a back to basics approach the way VC used to be in the Arthur Rock days. There is so much money out there at the seed stage and specializing, focusing, and concentrating paves a path to success. This is what boldstart is all about, leading that first check round, rolling up our sleeves, and leveraging our Fortune 500 CXO network to accelerate the path to product-market fit.
    1. Enterprises buy new technology, stop selling them: When speaking with IT Execs in 2018, I repeatedly heard the common refrain of “I wish startups would stop spamming me” and “my voicemail is filled with vendors.” When we asked how they find new technology, their answer was clear; research on the web, word of mouth, and their teams, i.e. what are devs using. The script for selling and catering to the enterprise is flipping to the point that these large organizations will find you instead of being sold to. This has huge implications for how startups build their products and go-to-market teams with a focus on ease of use, dev evangelism, content marketing, a tilt towards inside vs field sales, and much more. This “bottom-up” strategy, especially for developer first and product-led growth companies, will continue in 2019. Winning the hearts and minds of developers matters and building the GTM around conversion and upsells will be key.
    1. Low code, no code: There are 31 million developers on Github and more added in 2018 than the first six years combined. That stat is simply astonishing, and this theme is all about bringing on the next 31 million devs or what we call “citizen developers.” Much of the technology today has been built around abstraction making it easier and easier for devs to go from code to production. Many of today’s applications are actually a polyglot of APIs, third party packages, and services like Twilio, Auth0, and others allowing developers to rapidly assemble new scalable applications.This trend of allowing less experienced developers or even business analysts to build apps in a day will continue and unlock the next wave of “new devs. While they may not be building mission critical applications, this will certainly remove the bottleneck for many business departments to do it themselves without waiting for engineering. See a recent Business Insider article with more of my thoughts. Manifold and Dark are inline with this theme with a dev services marketplace and an IDE to build an application in a day.
    1. RPA moves to intelligent automation and more software, less services: Companies like UIPath and Automation Anywhere had banner years for growth in 2018 and will do so again in 2019. That being said, RPA while automated is still not intelligent so expect 2019 to see more ML and NLP layered into these processes. One other opportunity is that 1/2 to 2/3 of every automation project at the Fortune 500 is still spent on services and not software. 2019 will be the year we see further segmentation in the multi-billion dollar automation market and opportunities for startups to bring new solutions characterized by shorter deployment times, ease of use, and less maintenance. Enter portfolio companies Catalytic and Clay as examples with a respective focus on people friendly and dev-friendly automation. FortressIQ is also one to watch as it uses machine vision and NLP to mine business processes to help determine how work is being done and what to automate.
  1. Blockchain = supply chain: The crypto markets were white hot in early 2018 until they weren’t. Many of the smartest entrepreneurs were leaving their companies to start a new blockchain or crypto company. Many of those went back to doing other things. For those who have the fortitude, 2019 will be the best year to build an enterprise blockchain company with all of the hype removed. That being said, blockchain will not solve all of the world’s problems but we believe use cases in supply chain and data governance will be two big areas in the future. Mstate and blockdaemonwill be well positioned for this opportunity.

Thanks again for all of your support, and here’s to a healthy and prosperous 2019!!!

Sincerely,

Ed, Eliot, Jeff and Max

also posted on Medium

Featured
Enterprise Software

On SaaStr Episode 190 discussing the 0 to 1 enterprise stage and first customers

Posted on by Ed Sim

\I had the pleasure of speaking with Harry Stebbings for the second time on the SaaStr podcast released today. On this episode we took a different tact, focusing more on the zero — 1 enterprise stage and how to get your first referenceable customers vs. scaling post Series B. Please listen here if interested in how to grow and gain your first Fortune 500 customers — show notes below.

SaaStr 190: Why SaaS Founders Should Not Sell Their Products in The Early Days, How Founders Can Build Relationships with Enterprise CIOs and The Right Way To Think About Discounting and Pilots with Ed Sim, Founding Partner @ Boldstart Ventures


In Today’s Episode You Will Learn:
• How Ed made his way into the world of VC from one very meaningful high school lecture that changed his life and career path?
• What does Ed mean when he says “founders should not sell their product to enterprise in the early days”. Starting from the ground up, what can founders do to begin that relationship building process with enterprise buyers and CIOs? What can a startup do to establish that trust in the mind of large buyers? How much of a role does VC backing provide in comforting enterprise buyers?
• What would Ed advise founders contemplating the debate of going SMB up to enterprise or enterprise to SMB? What role should product play in this decision-making process? What are the leading indicators in testing the product that founders should observe for and guide their direction? Where does Ed most often see founders make mistakes here?
• How does Ed think about discounting? Would he agree with a previous guest that “discounting is now table stakes”? Rather than the financial element, what does Ed believe the founder should really be looking to get from the buyer in terms of commitment? How does Ed approach and asses pilots? To what extent should they be free or paid? What can be done to set the benchmarks for success and ensure closing?

  1. What does Ed know now that he wishes he had known in the beginning?
  2. Quality or quantity of logos?
  3. What would Ed most like to change in the world of SaaS?
Featured
Enterprise Software

Be Bold or Go Home – Fortune 500 Innovation

Posted on by Ed Sim
Click image for this evolving story

We at boldstart ventures have regular dialogue with Fortune 500 IT and business executives who are at the forefront of creating more agile organizations. Along those lines, I’ve been exploring new storytelling mediums and have put together a few different Series on Medium (best on mobile) sharing some of our thoughts on how CIOs should think like VCs and move earlier stage to partner with startups. Read here for the full story…

Enterprise SoftwareInfrastructure

The Enterprise Strikes Back

Posted on by Ed Sim

Consumer companies are the ones that drive the headlines, that generate the most clicks on Techcrunch, and are top of mind for many in the tech industry. So I’d like to celebrate this brief point in time where the enterprise strikes back. While one of the darlings of the last 10 years, Facebook, is getting pummeled, the enterprise market is back in the spotlight.

Look at the Dropbox IPO which priced above its initial value and came out white hot at the end of one of the worst weeks in stock market performance. Couple that with Mulesoft being bought for 21x TTM revenue (see Tomasz Tunguz analysis) at $6.5 billion and Pivotal’s recent S-1 filing and you can see why the enterprise market has everyone’s attention again. However, I’ve been around the markets long enough to know that this too shall pass.

The real story in my mind is about what’s next. It’s true that Salesforce and Workday have created some of the biggest returns in recent enterprise memory. And with that, VC money poured into every category imaginable as every VC and entrepreneur scrambled to create a new system of record…until there were no more new systems of record to be created. My view is that we will see many more of these application layer companies go public in the next couple of years and that will be awesome for sure. There will also still be some amazing companies that raise their Series C, D and beyond funding rounds with scaling metrics. There will also be the few new SaaS app founders who have incredible domain expertise reinventing pieces of the old guard public SaaS companies.

However as a first check investor in enterprise startups, the companies that truly get my attention are more of the infrastructure layer companies like Mulesoft and Pivotal. We are at the beginning stages of one of the biggest IT shifts in history as legacy workloads in the enterprise continue to move to a cloud-native architecture. Being in NYC working with many of the 52 Fortune 500 companies who are undergoing their own migrations and challenges makes us even more excited about what’s ahead. The problem is that as an investor in infrastructure, it’s quite scary to enter a world where AWS commoditizes every bit of infrastructure and elephants like Microsoft and Google are not far behind. Despite that, it’s also hard to ignore the following facts:

  1. Enormous spend and growth for public cloud and app infrastructure, middleware and developer software of $50b (Gartner, Pivotal S-1)
  2. Rise of multi-cloud
  3. Fortune 1000 digital transformation journeys still in early innings
  4. Most legacy workloads are still locked on-prem and not moved to any cloud infrastructure
  5. Every large enterprise is a software company which means developer productivity is paramount
  6. Infrastructure market moves way too fast and more software needed to help manage this chaos
  7. New architectures = new attack vectors and security needs to be reimagined
  8. Serverless technologies…

and many more threads which can create new billion dollar outcomes. Key here is tying this all to a business problem to solve and not just having infrastructure for infrastructure’s sake.

SaaS to Infrastructure, Salesforce and Mulesoft

Salesforce clearly sees the future and it’s in moving a layer deeper into the infrastructure stack, and combining the world of application with back-end and cloud with on-prem. The irony is that the company that led the “no software” movement is the one that bought Mulesoft, a company where 1/2 of its revenue is from software installed on-premise. What Salesforce clearly understands is that in the world of enterprise, integration becomes king as organizations constantly look to get disparate applications, databases and other systems to talk to each other.

“Every digital transformation starts and ends with the customer,” Salesforce CEO Marc Benioff said in a statement. “Together, Salesforce and MuleSoft will enable customers to connect all of the information throughout their enterprise across all public and private clouds and data sources — radically enhancing innovation.”

It’s a digital transformation journey, one that every Fortune 1000 is undergoing. In a world where Gartner predicts that 75% of new applications supporting digital businesses will be built not bought by 2020″, you can see why Mulesoft’s integration platform helps Salesforce future proof itself and embed itself in a future where developers rule.

The Pivotal Story and Digital Transformation

If you are looking for a story about how large enterprises digitally transform themselves into agile software organizations (to the extent they can), then I suggest reading Pivotal’s recently filed S-1 on Friday. Their ascent over the last 5 years mirrors many of the trends we are hearing about on a daily basis; cloud in all forms — public, private, hybrid, and multi; agility; rise of developers; monolithic apps to microservices, containers, continuous integration/deployment, abstraction of ops and infrastructure, and every Fortune 500 is a software company in disguise. Their growth to over $509mm of revenue from $281mm 2 years ago is a case in point. What Pivotal understood early is that there is no digital transformation and agile application development without infrastructure spend. Benioff clearly understands this which is why he paid such a high multiple for Mulesoft.

For those that don’t know what Pivotal does, here is what they do in a nutshell:

PCF accelerates and streamlines software development by reducing the complexity of building, deploying and operating modern applications. PCF integrates an expansive set of critical, modern software technologies to provide a turnkey cloud-native platform. PCF combines leading open-source software with our robust proprietary software to meet the exacting enterprise-grade requirements of large organizations, including the ability to operate and manage software across private and public cloud environments, such as Amazon Web Services, Microsoft Azure, Google Cloud Platform, VMware vSphere and OpenStack. PCF is sold on a subscription basis.

I’ve been fortunate to have a chance to watch closely through my first check into Greenplum many moons ago which ultimately sold to EMC and spun back out as Pivotal (along with some VMWare assets). I also remember the journey the founders were taking on when they decided to sell into P&L units at Fortune 500s charged with making a more agile company. Instead of selling infrastructure to IT, they were able to sell a vision of how P&L units could deliver on their goals faster. Difficult in the beginning, but proved out over time. These P&L units were the one’s charged with creating the bank of the future, the hotel of the future, the insurance company of the future, all centered around a better customer experience driven off of one platform that allowed developers to be more productive and delivered on any cloud.

My only fear about all of this enterprise infrastructure excitement is that like the SaaS markets of yesteryear, this attention will attract way too much venture capital, driving up prices, and reducing opportunities to create meaningful exits. It’s great that enterprise infrastructure is top of mind, but part of me prefers for it to stay in the background, stealthily delivering amazing results.

Previously published on HackerNoon on Medium

Enterprise SoftwareOpen SourceSecurityVenture Capital

Snyk, from first check to leader in dev-friendly open source security

Posted on by Ed Sim

We are thrilled to announce our investment in Snyk, which is a developer-first security solution that helps companies use open source code and stay secure. We couldn’t be more excited to be leading this new round of capital again with Canaan Partners and including Heavybit, FundFire, and Peter Mckay (Co-CEO of Veeam) (see Techcrunch for more coverage).

Our initial journey goes way back as we were investors in Guy Podjarny’s previous company, Blaze.io, which sold to Akamai in 2012. For the next few years we collaborated on several co-investments and what ultimately attracted us to Guy’s new company (along with co-founders Danny Grander and Assaf Hefetz), was their bold vision to create a new platform for securing open source components with a dev-first focus. At the time we seeded Snyk in late 2015, open source library usage was growing significantly and solutions were either security first which slowed down dev or dev first but not with enough security built in. With the movement towards continuous integration and deployment, it was clear a new solution was needed.

In a little over two years, Snyk has gone from “founder market fit” to “product market fit” and this new round will allow the company to build out is product offering and expand its Fortune 500 customer base.

With over 120,000 developers using the platform, 100,000 projects protected, 350,000 downloads per month, and notable partnerships with Heroku, JFrog and Microsoft Sonar, Snyk has proven it can get developers to fully adopt a security solution, and the importance of having the strongest database of known vulnerabilities in open source

Funding rounds are always a great opportunity to look back and see how the company’s initial thesis has held up and what has improved or changed. See below for Snyk’s initial vision from late 2015, much of which remains the same today; developer velocity increasing, security isn’t dev-friendly, how do you bridge the gap, esp. in open source world where much of it is third party code.

There have clearly been some tweaks to the model since then, but what is most exciting for us is watching Snyk go from idea and vision in a non-existent market to one where the question of how developers are securing open source components is becoming mainstream. And given some high profile security breaches like Equifax in Sept. 2017 where it was due to unpatched open source vulnerabilities, you can see why the interest in solutions like Snyk’s are gaining rapid adoption.

While the need for dev-friendly open source security may seem obvious today, especially with the stats above, how did we frame our initial investment? Here‘s what got us excited back then, much of which has come to fruition in the 2 years since:

  1. Solving a huge pain point in an emerging but potentially massive market — we were witnessing the move to continuous integration and deployment spreading to the enterprise combined with the growth of open source and third party components; the thinking was that if you could make it dev-friendly then it could be a massive business
  2. Dev first business model with budget from security — we love bottom up, organic models but always question where the bigger budgets are coming from, and what we saw in Snyk was an opportunity to go bottom up with developers and then access the security budget for bigger dollars.
  3. Founder-market fit — GuyPod previously was Chief Architect at Sanctum/Watchfire Security, developers of one of the first web-app firewalls, ultimately sold to IBM. Danny Grander had significant security engineering experience starting in the IDF where he met Guy and into Skybox Security and as CTO of Gita Technologies. Assaf had a Sr Research role at Skycure which Symantec bought last year. This team had the technical and product skills and understanding to go after this opportunity.
  4. Repeat founders — we are always thrilled when founders we backed previously give us thefirst shot to invest in their new company. In this case, we had backed Guy before when he co-founded Blaze.io which was sold to Akamai. He eventually became CTO of the Web Experience Unit at Akamai.
  5. We like to work with founders well before they leave their current roleand start a new company. In Guy’s case we had regular dialogue over a couple year timeframe to both brainstorm and also vet the idea with our Fortune 500 relationships. We also introduced Guy to fellow founders like Tom Preston-Werner from Github (see blog post on Snyk) to help refine the story.
  6. Time to value — incredibly easy to get up and running, authenticate via github, bitbucket and Snyk starts scanning, monitoring, and suggesting fixes
  7. We love being able to help accelerate time from “founder-market fit” to “product-market fit” to which we accomplished by helping Snyk secure some of their early on-prem Fortune 500 customers.
  8. We are purpose built to double and triple-down in our portfolio as they hit milestones and scale their GTM team.

Once again, we couldn’t be more excited about leading this new round of funding and look forward to continued success for the team.

Also on Medium

 

Enterprise SoftwareVenture Capital

boldstart in 2017, enterprise tech in 2018

Posted on by Ed Sim

2017 Recap

2017 was another year of growing, learning, investing and partnering with amazing founders. Once again, we are grateful to have the opportunity to work with so many amazing founders, advisors, co-investors, and other collaborators to bring the boldstart family together.

Before diving into yet another year and list of predictions for enterprise in 2018, we’d like to recap a few thoughts and moments from 2017.

  1. We were first check leads in 8 founding teams including Wallaroo Labs, MState (fka hyperfab), blockdaemon, and 5 in stealth.
  2. Thematically our new investments include 4 targeting the “Rise of the Developer,” 3 in “Intelligent Automation,” and 1 in “Decentralized Computing;” geographically 4 are in NYC, 3 in Bay Area, and 1 in LA (more on our themes)
  3. 6 portfolio companies raised Series A financings including Manifold, Hypr, and 4 unannounced, 1 raised a Series B (unannounced), and Security Scorecard raised a $28mm Series C.
  4. 2 exits including yhat (sold to Alteryx — AYX NYSE) and init.ai, one an early investment in a data science platform and the other on NLP for developers.
  5. We co-founded MState (fka hyperfab, read Coindesk article) with Rob Bailey to help bring enterprise company building expertise and Fortune 500 connections to the blockchain community. Our partners include IBM and one unannounced Fortune 50.
  6. We built out our CXO advisory board and further cemented our Fortune 500 relationships to help our portfolio cos scale from “founder-market” fit to product market fit in an accelerated timeframe (meet our advisors). This resulted in tons of collaboration with large enterprises ranging from product feedback to pilots and customer relationships.

Enterprise Tech in 2018:

“The Law of Accelerating Returns” by Ray Kurzweil is truer than ever before: the rate of change in a wide variety of evolutionary systems (including but not limited to the growth of technologies) tends to increase exponentially.

1_T2mgRWcGugiSXs_kRsRQVg

In other words, today is the slowest rate of technological change you will ever experience in your life and doing nothing is worse than doing something. Keep this in the back of your mind as you think about the biggest transformation in enterprise tech; the re-platforming of corporate America from legacy to cloud/hybrid cloud and monolithic software apps to microservices driven development. With this pace of change accelerating, everyone will have to move earlier in the food chain; corporates will need to work with earlier stage startups (we are experiencing that phenomenon in our portfolio) and VCs will have to go earlier to invest in those founders before they take off.

  1. NYC has deep enterprise tech: the NYC you imagine that is full of ad tech and media is not the NYC that we see. Some of our latest investments in NYC include founders building companies in serverless, open source data streaming, decentralized biometric security, splunk for customer data, and developer productivity for dynamic code testing. There will be more deep enterprise tech startups founded, funded, launched, and scaled out of NYC in 2018. The talent base is improving, the customers are here, and the west coast VCs are paying attention. A sidebar is that NYC is and will continue to be one of the best places to launch any crypto-related company with Consensys as a base, the large number of fin tech entrepreneurs in NYC, and also with IBM in close proximity, one of the leaders in the enterprise blockchain. That is why we are also so excited about Mstate.
  2. Continued barbelling of VC will continue in 2018:. Either we see lots of smaller or seed funds at one end of the barbell or mega funds on the other end. It’s increasingly becoming tough to be caught in the middle to maintain ownership in your winners, and we will see more established VCs like Sequoia raise mega funds to counter the Softbank Vision effect. As for us, we are continuing to double down on our old school VC model, first check in, leading or co-leading, and rolling up our sleeves.
  3. CIOs are the new VCs: this is the year that Chief Information Officers start acting more like VCs. Corporate America is pressured to decrease costs and improve customer interactions and every Fortune 500 is a technology company. Expect this trend to continue and what this means is that CIOs will take a portfolio approach, make some bets, and double down on their winners. There will be lots of room for startups to wedge their way into large corporates and they will have every opportunity to turn pilots into production. This speed of adoption of new tech will accelerate at the largest enterprises, and they will be reliant on early stage startups to do so.
  4. Rise of the developer in the Fortune 1000: According to Gartner 75% of app development supporting digital business will be built, not bought. There are more devs, more corporates who need more dev tools and services, and we are seeing continued adoption in the largest companies. Tied to this will be a need for a hybrid, cloud/on-prem deployment and we are excited about portfolio companies like replicated that play to this future.
  5. GDPR is the next Y2K: GDPR kicks off in May 2018, and we are convinced it is going to be a massive problem and will sneak up on many enterprises.GDPR is all encompassing and focuses on protecting a customer’s PII (personally identifiable information) and hits every segment of the data pipeline from how developers access data as they create new apps to finding and monitoring all of a company’s PII to eventually allowing end users the right to be forgotten. This will be a huge boon in data and security spend in 2018 directly tied to this.
  6. Enterprise blockchain will prove itself: Cryptocurrencies are hot but the tech powering this, blockchain gets less attention. 2018 will be the year that many Fortune 500s that are piloting this tech will bring applications into production. There’s been lots of buzz for the need for a shared, distributed ledger but 2018 is the year we see production level use cases in the wild.
  7. Rise of Chief Data Officers: As the value of an organization’s data continues to rise, we will see many more Fortune 500s create the Chief Data Officer position. This is a trend that kicked off over the last 2 years and will only accelerate in 2018. This role is crucial as companies look to consolidate to a data lake (cloud or hybrid cloud) to prep for a future driven by AI and machine learning. Investment opportunities will abound as data ops becomes the new dev ops and the need for pipelining software to go from raw data to prepped data increases. This Chief Data Officer will also be responsible to manage the impact of GDPR (see above).
  8. AI is not a market, AI is embedded in every application: AI is not a market, it’s an enabling technology just like Java, wireless, and blockchain are. We said this in our predictions last year for 2017 (AI is table stakes) and this will accelerate in 2018. Some call this “ambient AI” and I just call it software. The real enterprise use cases that will continue to scale is the automation of the back office and the move away from robotic process automation (RPA) to Intelligent Automation (cognitive layer) and the continued move from AI in the back office and moving to the front office in every industry.
  9. Move to cloud accelerates, serverless hits early majority: We are still at the tip of the iceberg as enterprises move from legacy to cloud or hyrbrid/cloud. AWS has dominant market share but multi-cloud becomes a must-have for most Fortune 1000 organizations. This includes choosing best of breed by cloud vendor (Google for tensorflow, AWS for s3 and serverless, etc) and also distributing workloads over multiple clouds. With this, serverless and event-driven workloads will continue to proliferate as companies move beyond AWS Lambda and start using Google Cloud Functions and other solutions.
  10. Dev Sec Ops is the hot topic in security: With the velocity of software development and the reuse of software components, building in security at developer level becomes a must have. Securing open source dependencies like our portfolio co Snyk, managing service to service authentication and policy, encrypting traffic and more become hot areas in 2018.
  11. Quantum dabbling: We will hear about more and more enterprises explore the use of quantum. In 2017, new languages were created from companies like Microsoft and IBM to take classical algorithms and help repurpose for quantum, and this will accelerate in 2018 as the Fortune 500s start building out skunkworks teams to explore use cases. We are still a few years away from having a quantum computer perform calculations faster than a classical machine but once that happens, there will be tremendous opportunity for startup activity.

Previously posted on Medium

Decentralized Computing

All Platforms Need a Killer App – Cryptokitties is the one for blockchain

Posted on by Ed Sim

I’ve always loved investing in companies that can become platforms but not investing in platforms. What does that mean? Well, to be succinct, it’s quite hard to sell a platform. You need to show users/customers how your platform can solve problems. Every platform needs a killer app to demonstrate the power of the platform – show don’t tell. Going back to webmethods, it was how DHL used WIDL (precursor to XML) to embed tracking information in other websites. For twilio, it’s first big opportunity was becoming the SMS provider for Uber. For the blockchain, it’s bitcoin and for ethereum and smart contracts, it’s Cryptokitties. Yes, cryptokitties.

It’s taking over the ethereum blockchain and despite all of the ideas for enterprise smart contracts and tracking assets on the blockchain, cryptokitties is the first killer app (outside of the currencies) showing end users how they can create unique assets on the blockchain and create, share, track, trade and sell digital goods. To date, estimates have transaction volume of over $10mm and individual kitties selling for over $100k. Yes, those numbers sound insane but my point is that decentralized apps like this open the world to the power of the ethereum blockchain.

According to the crytokittie site:

CryptoKitties is one of the world’s first games to be built on blockchain technology—the same breakthrough that makes things like Bitcoin and Ethereum possible. Bitcoin and ether are cryptocurrencies but CryptoKitties are cryptocollectibles. You can buy, sell, or trade your CryptoKitty like it was a traditional collectible, secure in the knowledge that blockchain will track ownership securely.

To get onboarded, we need to start with a Metamask.io plugin to connect our browser to the ethereum blockchain and the world of distributed apps. It’s pretty simple and once you get up and running, you need to add some Ethereum to your account via Coinbase or direct transfer. Once you have Ether in your account, you can buy a kittie and enter the world of blockchain without even knowing it.

So despite all of our discussion on putting car titles, real estate titles, and other unique assets on the blockchain, cryptokitties, a fun and addictive game, is the one application showing how powerful the blockchain can be for asset tracking and ownership. And it’s not so far a leap to think about what other enterprise digital assets can be similarly put on the blockchain.

Enterprise SoftwareSaaS

Blurring lines in enterprise SaaS; the race to own customer data

Posted on by Ed Sim

I’ve written before about the competitive nature of SaaS and the amount of entrants in every category.

Lately after every conversation, I feel like the world is being divided into two camps and there is a massive battle going on in terms of who is going to own them and how. To oversimplify, I’ll call it pre-customer and post-customer domination. And there are companies looking to blur both of those categories as well.

It’s pretty hard to create a new system of record these days as Salesforce, Marketo, Gainsight and the like are building tighter lock-in around their products. That’s not to say it can’t be done as those companies have larger fish to fry, mainly huge enterprise customers and $1mm + deals. Opportunities abound in the SME (small, medium enterprise), and we’ve seeded a number of founders going after that space.

Read More

Enterprise SoftwareInfrastructureSaaS

Why I love and fear AWS

Posted on by Ed Sim

The AWS launch of Amazon Connect (see techcrunch article) got me thinking about the current state of play in SaaS. Amazon Connect is a call center in a box, the same tech it uses in-house for their current platform. With that release, companies like Talkdesk and others have much to fear. While I see partnerships with companies like zendesk, salesforce and freshdesk to integrate voice with chat and email, I also firmly believe that it is just a matter of time before AWS continues to extend outward and deploy their own chat/email customer support system to go after their partners. Trust me, it will happen.

I fully acknowledge and love AWS for the opportunity to fund so many amazing founders who are fully leveraging the power of the cloud platform and services. What I also greatly fear is that Amazon and AWS have proven that they are amazing at taking markets that become hyper competitive and just blowing them up overnight with the lowest cost and good enough offering. AWS has also proven that it will continue to move upstream in the stack from the pure infrastructure layer to the application layer.

Here are a few examples:

  1. Amazon Quicksight (launched 10/15) –  fast, easy to use business analytics at 1/10 the cost of traditional BI Solutions
  2. Amazon Chime (launched 2/17) – frustration-free online meetings with exceptional audio and video quality – companies like gotomeeting (Citrix) made a smart move selling to LogMeIn
  3. Amazon Workdocs (1/15) – fully managed, secure enterprise storage and sharing service, users can comment on files, share, etc – box, dropbox watch out

Read More