Why we’re doubling down on B2B software

12 May 2021

By Eyal Rabinovich

by Marieke Christmann & Richard Court

Business to business software is the biggest opportunity set in the market today. European B2B software companies are riding a wave of capital, Covid-induced culture change and the curve of history towards digital automation. This is why we’ve matched this sector with our largest specialist investor team yet to serve this market. Alongside the Health, Deep Tech, Fintech and Consumer teams, our newly engineered B2B Software team seeks to back the best Seed to Series B companies, whether they’re intent on changing the world or solving critical problems and dominating a niche.

VC funding of European B2B companies, Series A to C, rose 149% in the last five years, driven by an expanding and maturing investment ecosystem (McKinsey). SaaS, the core subset of B2B software, continues to expand its customer base: a recent report from EY shows that three quarters of executives are keen to adopt more digital tools, accelerated in part by the demands – and opportunities – of remote working culture. In addition, the sector itself continues to evolve and SaaS now sits alongside PaaS (Platform as a Service), IaaS (Infrastructure as a Service) and B2B marketplaces, so our team is designed to cover the full spectrum.

Track record

We’re building on a decade-long heritage of B2B investing. In the last year our long-standing portfolio companies Zynstra, Calastone and HAS Technology all successfully exited, highlighting the value of patient capital and the ability for institutional and retail investors to play a meaningful role in supporting the next generation of UK B2B software business. Looking ahead, several portfolio companies approach their next round of funding and we continue to support a range of B2B companies as they grow and adapt to both local and global opportunities.

Experience

Our Venture Partners are rooted in this sector. These serial unicorn builders have been working with CEOs and their teams before and during the pandemic. As one of them, Pete Daffern, ex President of Netsuite, has said, “tech’s just getting going. There are 100 times more ideas than there are people to fulfil them. And this will be the situation for the next 20 years.”

Full spectrum investing

We want to invest in companies that have a specific niche in the market and can dominate that sector by innovating and beating the competition. But we also want to invest in huge platform players that can scale to multiple billions, in the way that Shopify has dominated ecommerce. Our new team formalises our diverse, collective experience. It’s a clear one-stop-shop for all entrepreneurs and leaders in the ecosystem. If we’ve learned one thing through the past year it’s the phenomenal ability of B2B software entrepreneurs to pivot and thrive through adversity. Providing the key link to a flow of capital into this thriving, dominating sector is a logical and exciting next step for us, and it’s a space in which Octopus Ventures expects to play a leading role in years to come.