Daniel Keiper-Knorr: We have one company in the portfolio in the Essex base. It’s an area that’s not so much in fashion with the recent VC industry, but still you can find super talented teams. The market is still large and growing. In the recent phase, three to five years is probably all about analytics. Nowadays, in the coming two years, it’s going to be all about data quality because all the AI and ML stuff will never work if the data quality is not there. It’s not just about quantity, quality is just as important.
For example, take the whole mobile installment download business for apps, games, entertainment, and utility. You have all those things downloaded there. They’re all coming to the top end of the funnel of all those analytics program and they didn’t process the dirty data. This is completely worthless. You make sure that the data is clean. With this clean data, you can extract insights that are truly useful to really grow a business.
Sramana Mitra: What percent of your portfolio is B2B SaaS?
Daniel Keiper-Knorr: Probably a third to a half at least.
Sramana Mitra: What percent of the rest is B2B still?
Daniel Keiper-Knorr: We just recently detected the investment topic of industrial tech like startup software for industrial appliances which is not necessarily fast because these are large enterprise contracts where one contract pays $500,000 ARR to on million dollars ARR and you do two of those contracts a year. This isn’t the classical SaaS model.
Sramana Mitra: There are a lot of enterprises in Silicon Valley.
Daniel Keiper-Knorr: Of course. You should put it all together. The compartment of B2B and SaaS, that’s technically two-thirds of the portfolio.
Sramana Mitra: What are the trends in Europe in that domain? Whether it’s B2B, SaaS, and subscription-based enterprise software. If you were to highlight, what is Europe’s unfair advantage today in that domain?
Daniel Keiper-Knorr: I would say that’s clearly in the space of AI and ML. Of course, they all have their individual space. I think it’s a space where Europe can have an edge globally. The competition is awakened especially when you look to the Far East – China, Japan, and Korea. Europe can be really first when it comes to startups that cater to what makes the European economy work. Typically, European economies are run by manufacturing and financial services. There’s not that many large consumer brands.
Consumer in the US is a much more important thing also due to the fact that it’s such a large common market. There’s one language and one currency. More or less, they have a similar mindset whereas in Europe, you have to deal with 15 languages, several currencies, and taxation rules. To B2B and SaaS, this does not make such a big difference but in consumer, it does make a difference. You have to address every single countries’ consumer base.
It comes down to such simple things like when you live in Austria and you call customer service of whatever product. There’s someone picking up the line not speaking your dialect. That feels strange. If it’s a German native-speaking person that comes from the other end of German speaking area. It totally fits.
Another important fact is that the European entrepreneurs are engineers. We experienced this ourselves. We sold our company back then. We strongly believe in European engineering talent. What it lacks in direct comparison to, especially, the US is market-centric thinking. This is what we see as our task in working together with the tech entrepreneur and educating them on how to bring the product to the market and apply design thinking out of the perspective of the user and consumer.