If there’s one thing European B2B investors love, it’s a SaaS startup. Venture capitalists plugged €5bn into the sector in 2019 — and 2020 has already seen some big rounds from the likes of sustainability and performance rating platform EcoVadis and web optimisation service Contentsquare.

SaaS also has a growing customer base — a recent report from EY shows that three quarters of executives are keen to adopt more digital tools, predicting a rosy outlook for B2B software startups.

But there’s still that time-old challenge to overcome for founders: raising capital from investors. 

So, what are B2B investors looking for? What areas are they focusing on? And how can founders get on their radar?

We spoke to three top investors from companies attending this year’s B2B Rocks event — Eric Burdier, cofounder and chairman at Axeleo, Tamara Steffens, general manager and managing director at M12 and Alex Kayyal, partner and head of international at Salesforce Ventures — for their top tips.

Axeleo Capital

B2B investor Axeleo Capital. Eric Burdier, cofounder and chairman at Axeleo.
Eric Burdier, cofounder and chairman at Axeleo.

This France-based VC was founded in 2013, doubles up as an accelerator and acquired the B2B Rocks conference in 2018. Its team of 16 helps entrepreneurs and its portfolio of over 25 startups grow their businesses in a wide range of sectors — from cybersecurity to fintech.

It’s currently raising a new fund to invest in seed-stage proptech startups across Europe. Dubbed ‘Axeleo Proptech 1’, it has €35m committed so far — and is aiming to close at €50m. It’s backed by the French state as well as big corporates like Allianz France. Startups cooking up real estate software solutions should get on their radar.

What kind of startups are you most interested in at the moment?

We look for SaaS startups in both the enterprise technology and the proptech industries, and we invest €500,000 to €3m from post-seed to Series A. 

The digital transformation is a basic trend of the last forty years and recent events, especially the coronavirus pandemic, have accelerated this movement. We invest in companies that help all businesses be more agile, resilient and sustainable.

Which B2B verticals do you think will fare especially well in the post-Covid world?

Enterprise software is at the core of the digital transformation of large companies. With the pandemic, the main corporates had to make digitalisation their top priority. Cybersecurity startups are very highly sought after in the market. After a first wave of (re)-equipment to allow remote work, companies need to rethink all their processes to address their customers and their staff.

“Traditional ways of making B2B sales are really shaken.”

We pay special attention to startups which have a go-to-market strategy driven by inbound marketing and growth hacking. Traditional ways of making B2B sales are really shaken.

How can B2B/SaaS founders get in front of you?

They can connect with us at virtual events such as B2B Rocks #REBOUND. Otherwise, they can apply on our website or reach out to the team on LinkedIn. We have a straight-forward process that will allow founders to find out pretty quickly whether the discussion with us will go further or not. 

Landing a corporate client can be a huge slog for startups. What advice do you have for B2B startups trying to get their first deals?

Closing a first deal with a corporate can be very time-consuming. Corporates and startups do not have the same time scale, and negotiation can take years even if you’re told it will take a few months only. Founders must be able to see the big picture and assess the real interest of the corporate to pursue the implementation of the product and to pay for it.

Never work for free; sell pilots and proof of concepts. Evaluate how much decision-making power your client has; innovation teams in corporates need to have real support both from the operational team (the ones that will use the product) and top management (the ones that will make the decision).

“Never work for free; sell pilots and proof of concepts.”

Don’t let the corporate influence your roadmap with specific features — to scale you will need to develop some useful features for several corporates. 

Find high-level introductions and find a champion ready to defend the product internally, and able to give you transparency about the real intention of the corporate. 

What do B2B/SaaS founders need to focus on to grow right now?

  • Build a top-notch team and do not hesitate to split the cake with late C-levels (even if that changes the founders’ stake).
  • Keep thinking ahead and strategically. Being too opportunistic will prevent you from staying focused on your value proposition and may confuse your teams. 
  • Don’t get isolated: talk with other founders about the challenges you’re facing, challenge your ideas with your teams, seek advice, and speak to your business angels. 

Tell us some common mistakes you see when B2B/SaaS companies pitch to you.

  • Focusing on product feature vs customer gain
  • The desire to raise too much money too early
  • Lacking knowledge of competition’s products 

M12 (Microsoft’s Venture Fund)

B2B investor M12, Tamara Steffens general manager and managing director M12
Tamara Steffens, general manager and managing director of M12

The venture capital arm of Microsoft (formerly known as Microsoft Ventures), M12 has its heart set on early-stage B2B companies. Founded in 2016 in San Francisco, the VC has since set up shop in various other locations, including London and Tel Aviv with a team stretching from India to America.

Its notable European investments include London-based identity verification platform Onfido and Tel Aviv-based city data insights company Zencity. The VC’s latest fund size remains undisclosed.

What kind of startups are you most interested in at the moment?

We remain focused on investing in game-changing enterprise software companies. I spent most of my career building productivity, communication and mobile businesses, so that is always a core interest for me. It’s fascinating to see how quickly product innovation has occurred in all three of those areas over the past several months. Necessity is the mother of invention.

Which B2B verticals do you think will fare especially well in the post-Covid world?

I think that the verticals experiencing tailwinds now will continue to fare well post-Covid. The pandemic has been a forcing function for businesses to prioritise essential technology investments. As Microsoft’s CEO Satya Nadella said, “We’ve seen two years’ worth of digital transformation in two months.” Cloud infrastructure, remote teamwork and learning, cybersecurity, ecommerce and customer service, automation and developer tools, and of course, healthcare and virtual patient care will continue to ride this wave of immediate and critical relevance.

How can B2B/SaaS founders get in front of you?

We have an investor reviewing all of the pitch decks and company information submitted to our site. It’s the easiest way to send through all of the information that we need to get a full picture of your startup, and to assess how we can meaningfully help.

Landing a corporate client can be a huge slog for startups. What’s one piece of advice you have for B2B startups trying to get their first deals?

Be prepared. Show up to the conversation fully briefed on your potential client’s goals, and how your value proposition supports that ambition.

“Shift the focus from your product’s accolades to what you can achieve together.”

Read financial reports and statements, spend time on their website, and leverage any internal connections you have to pressure-test your pitch. Shift the focus from your product’s accolades to what you can achieve together.

What’s one essential thing that B2B/SaaS founders need to focus on to grow right now?

B2B founders need to focus on increasing their digital engagement with customers. This may sound like table stakes, but the true measure of success here is around creativity. As webinar fatigue weighs in, what’s your next digital play to capture attention?

Screens are now my primary source of entertainment — my food ordering system, my office and desktop. How are you going to break through all of that noise?

Tell us some common mistakes you see when B2B/SaaS companies pitch to you.

My colleague Priyanka Mitra authored a great blog called Pitching and Projecting Confidence during Covid. She provides some really useful advice for the times, like practising with the specific video conferencing technology in advance of the big pitch, or anticipating Covid-related questions. Maybe the pandemic hasn’t impacted your balance sheet or sales pipeline—that’s great! But in a time of building relationships remotely, don’t pass on the opportunity to demonstrate your self-awareness, and share how you’ve grown as a leader, or how your team has become more resilient.

Salesforce Ventures

B2B investor Salesforce Ventures, Alex Kayyal partner and head of international at Salesforce Ventures.
Alex Kayyal, partner and head of international at Salesforce Ventures

Salesforce Ventures, the corporate venture arm of software giant Salesforce, was founded in 2009. 

The VC firm focuses on enterprise cloud companies and has some huge firms in its portfolio, including unicorns like London-based B2B software security platform Snyk and the Berlin-headquartered insurtech wefox. Its latest fund is its €125m European Trailblazer Fund, but it has other active funds geographically bound to countries like Canada and Australia.

What kind of startups are you most interested in at the moment?

Our team is focused on investing in innovative software companies globally. Over the past decade, we have invested more than $2.5bn and have partnered with some of the most category-defining cloud companies, including Synk, Onfido, Gong, Snowflake, Zoom and many more. As a company, we have constantly redefined what customer relationship management (CRM) means, and as our product portfolio has grown across sales, service, marketing, analytics, platform and commerce, so too has our investment aperture. 

We are one of the few global venture firms with an office in London, and are able to support entrepreneurs from Series A to pre-IPO growth rounds.

Which B2B verticals do you think will fare especially well in the post-Covid world?

Covid-19 has accelerated digital transformation and created a greater need for verticals like security and collaboration. It’s also proved that there is a faster race to cloud adoption than ever before as digital becomes an imperative across every organisation. 

Some of our recent investments speak to the areas we think will see an acceleration going forward, including Hopin (online events), Privitar (data privacy), Process Street (remote collaboration), Contentful (API for content management), Upstream (cybersecurity) and Zencity (government engagement platform).

How can B2B/SaaS founders get in front of you?

We are adjusting to remote investing and backing entrepreneurs we haven’t met in person before. It’s been an adjustment but we continue to be active and deploy capital.

The best way to meet us is through a warm introduction, and if that’s not possible then send us an email, message us on Twitter or ping us on LinkedIn.

Landing a corporate client can be a huge slog for startups. What’s one piece of advice you have for B2B startups trying to get their first deals?

Build a relationship of trust with your customers. Be clear about what problem you solve and do everything you can to deliver value. In the earliest stages of landing your first few customers, it’s okay if your approach to customer success does not yet scale. Learn and continue to iterate while delighting your customers.

Tell us some common mistakes you see when B2B/SaaS companies pitch to you.

It can be surprisingly hard to accurately and concisely portray what your product does and what problem you’re trying to solve. The crisper you can be early and upfront in a pitch, the better. It will lead to a more engaging discussion on both sides. Product marketing is certainly more of an art than a science.

“The crisper you can be early and upfront in a pitch, the better.”

Also, as an entrepreneur, make sure you decide to raise funding from an investor that is aligned with your vision. These are long-term relationships that typically can’t be undone, so choose wisely.

 

For more great advice from leading B2B and SaaS leaders, check out the list of star speakers at the virtual conference B2B Rocks #REBOUND by Axeleo, running September 7-11.

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