Berlin-based VC firm Point Nine, backer of European giants like Delivery Hero, Revolut and Typeform, has raised a new fund — of €99,999,999.99.
“We love the number nine,” says Ricardo Sequerra Amram, partner at Point Nine.
This, the firm’s fifth fund, will see the team continuing to back mostly business-to-business (B2B) marketplaces and B2B software-as-a-service (SaaS) startups. Its portfolio so far counts 140 companies, including French search platform Algolia, Polish homework app Brainly, blockchain analysis company Chainalysis, content management platform Contentful and video tool Loom.
So far so similar.
But it now has two new partners; Sequerra Amram and his long-time colleague (and former flatmate) Louis Coppey have been promoted. They join Point Nine’s founders, Pawel Chudzinski and Christoph Janz, as equal partners, despite having a decade less experience.
“We are mega, mega humbled to be equal partners with two of the best VCs in Europe,” says Coppey.
The equal partnership is an unusual model (Kindred is one notable other European VC firm which has adopted it). It means that all of the partners receive an equal amount of ‘carry’ — the profit made on investments — and is a generous move from the firm’s founders.
So why have they done it?
Inspired by Benchmark
Chudzinski and Janz have long been keen to follow in the footsteps of Benchmark, the US fund which has an equal partnership and has backed the likes of Airtable, Snap, Tinder, Twitter and Uber, says Coppey. “They’re such big fans of the Benchmark model; it reduces the amount of politics, and aligns levels of incentive.”
The reasoning is that partners aren’t solely interested in helping out the companies which they sourced or sit on the board of (in many firms, the investors who led a deal get a bigger slice of that startup’s profit pie). Founders are less likely to be ‘orphaned’ if the partner who invested in them moves on — and the whole fund is therefore likely to perform better.
When you work with one of us, you work with all of us.
“It enables us to tell entrepreneurs that we work as a total team — when you work with one of us, you work with all of us. Our incentives are aligned,” adds Sequerra Amram.
It takes some commitment from the partners who join, though — both in terms of their career (it’s a long-term game) and financially (as general partners in VC firms usually stump up at least 1% of the fund).
“We can’t disclose much about levels of commitment, but we have strong skin in the game,” says Sequerra Amram. “But not equal.”
In the future, Point Nine hopes to bring onboard a fifth partner too.
The ideal candidate would tick some different boxes from the current partners, who are German, French, Polish, Portuguese, from startup, banking and investing backgrounds — and all male.
“We’re trying to increase the level of diversity, so having a female partner would be important, and also someone primarily focused on B2B, who can extend our understanding of B2B,” says Coppey. “But what matters the most is sharing our common values.”
Shit but cool
The eccentric fund size and move to give equal ownership in the fund to two younger investors is pretty characteristic of Point Nine.
Just look at its website.
“Yeah it’s shit, but it’s cool,” says Coppey. “We don’t think we need to take ourselves too seriously to do this job very seriously.”
We don’t think we need to take ourselves too seriously to do this job very seriously.
Being a “serious” VC, as far as the Point Nine team sees it, involves being nice, working hard and continuously learning.
“Ask questions. Always be curious. Never be too assertive,” says Coppey.
“And never think that you’re done,” adds Sequerra Amram.
In practice, that means building as much expertise as possible in the areas Point Nine focuses on — B2B software and B2B marketplaces. That experience is shared with the portfolio — and anyone else who’s paying attention to their Twitter or Medium profiles.
“We tend to speak out loud, and share a lot of learnings from working with companies, through blogging and tweeting,” says Coppey. Recent topics: ‘Why founders should hire a product manager after raising a seed round’; ‘Seven hacks for building and scaling B2B marketplaces’; ‘Building a sales engine: nailing growth at Series A’.
But taking VC “seriously” also means admitting when something is outside your expertise. “The culture of Point Nine is such that... we’re not afraid to say to the entrepreneur, I don’t know — and find someone else to help them solve their challenges,” says Coppey.
On that front, it helps that Point Nine now has a pretty giant network of B2B SaaS and B2B marketplace operators in its portfolio alone.
It runs a lot of online and (pre-Covid) offline events for the portfolio, to get them sharing insights with one another. On top of that, there’s a crew of venture partners including Kolja Hebenstreit, cofounder of Delivery Hero and Renaud Visage, cofounder and CTO of Eventbrite on hand to offer support.
It seems to be working out well.
The firm has a net promoter score of 80-90, says Coppey, based on anonymous founder surveys.
It also, apparently, has had no challenges fundraising. Raising the latest fund was “a very short process,” says Coppey, refusing to say just how short.
Point Nine’s seed to Series A conversion rate (the percentage of its portfolio which goes on to raise a Series A within 36 months), is “one of the best in Europe”, says Sequerra Amram. It’s now at around 55% and rising.
It helps too that software is still eating the world.
“It’s very easy to say that SaaS is boring and AI is the new cool, and blockchain is the new cool, but if you look at penetration of software — and for cloud specifically — the market is set to grow 50% by 2025… We’re still in the early days of SaaS.”
Point Nine is one of the most active investors in B2B marketplaces like restaurant app Rekki and logistics booking engine Cargo One, and thinks the sector has heaps of room to grow. “It could be 10 times bigger than business-to-consumer marketplaces,” says Coppey.
Sequerra Amram is also paying close attention to vertical SaaS — software designed for particular industries. “There’s a big opportunity for founders with unique insights to create software that is specific for that industry; it’s a great way to go against the giant behemoths of horizontal software, like Salesforce.”
Other startups are taking on those big players in horizontal software. “There are a lot of tools going after the Adobe suite,” says Coppey; Canva, Figma, PlayPlay, Gravity Sketch and Shapr3D are all good examples. “The market is getting bigger, plus if you come along with easier to use software, you might also expand the number of users.”
Microsoft better also watch out: Grid, Airtable, DashDash are all after Excel’s customers, while Pitch is coming for Powerpoint.
“Another space is the verticalisation of APIs,” adds Sequerra Amram, where new technology players open up data currently trapped in inflexible (and expensive) legacy software. “We’ve seen some interesting APIs in the banking space, like TrueLayer and Railsbank.”
With such demonstrable expertise, Point Nine could’ve raised an even bigger fund. But the team didn’t want to — and doesn’t need more capital. “Having a fund below €100m is important to us,” says Coppey; huge seed funds just don’t make sense.
Plus, he adds: “It’s better to be the best rather than the biggest.”