To best serve entrepreneurs, we organise ourselves into specialist teams. Our B2B Software team is the largest and this corresponds to the ocean of opportunity in the sector. To cover the full spectrum, the team takes two approaches: one aims at the startups destined for unicorn status, the other backs the more specific niche-dominators. Richard Court leads the second of these and here describes why it’s so important that we back the B2B Software companies you might not have heard of.
Billion-dollar SaaS valuations continually hit the headlines; but what of the other 99% of B2B software companies, and what do they offer to investors?
While many of the entrepreneurs building amazing businesses in the sector are fired by limitless global ambition, there are others with more specific goals, working beneath the glare of the headlines. As investors, we want to find the people and the ideas that will help change the world. The ‘world’, in this case can indeed be the global marketplace, or – and this is where our specialist team comes in – a niche or a sector that’s ripe for disruption.
At Octopus Ventures we’ve consciously organised ourselves into teams with the capabilities to look deep into Health, Fintech, Deep tech, Consumer and B2B Software. Despite modestly putting ourselves last in that list, we in B2B Software make up the largest team. This is deliberate. B2B Software, as I’ve suggested above, is a broad spectrum and we have correspondingly broad expertise to serve the full array of companies. While we have some individuals hunting for those global game-changers, we also have a dedicated team aiming to spot the companies with management teams of different mindsets, with different ambitions and different desires in terms of the capital they raise. Not all horses are in the race to become unicorns.
Smaller companies, solving big problems
The Safeguarding Company (“TSC”) is an example of a team making a huge difference in its sector. Founded by two former senior police officers with extensive experience of school governance, the company provides a platform for recording and managing all safeguarding concerns in educational settings. TSC’s ambitions may be modest by Silicon Valley standards, but they are one of the leaders in their sector (safeguarding case management) and represent for us a great team to back: UK-based, applying phenomenal depth of knowledge to their customers’ critical needs and offering our investors the potential to earn great returns.
Perfect Ward is another example of a company you may not have heard of, making a radical difference to their sector. Perfect Ward provides a digital platform that makes quality inspections within a healthcare setting easy (“a joy” in their customers’ words) and more efficient, giving staff more time to care in hospitals, care homes and other health settings. Key to their success has been to design the product with the end user – nurses – in mind, and their feedback is overwhelmingly positive. Their focus is to continue scaling efficiently whilst delivering software loved by their customers.
Companies with a particular focus, a particular angle, brilliantly applied are what we’re talking about here. They sit among the bigger SaaS community and are no less exciting, or productive to the sector as a whole.
We often remind ourselves that the most talented entrepreneurs will always have a choice as to where they source their capital. This applies particularly to the kind of companies we’re talking about here: they don’t necessarily need venture capital. They could after all bootstrap their way through the early stages of growth, and beyond. Sometimes management teams imagine that taking investors’ money comes with extra scrutiny. We receive regular positive feedback from founders that it’s this very scrutiny that helps them build a better business. It’s not just capital we provide; it’s talent-building and sourcing, an extensive network and community and the invaluable advice of our investment team and Venture Partners. Our close attention is always designed to be constructive and collaborative to help build the best possible company.
Our message to any B2B software company considering taking VC investment would be, jump in. We know it can feel daunting, but we want to be helpful, constructive, collaborative and ultimately add value to a fantastic team and the business they’re building. We have deep pockets and know what “patient capital” really means – through our extensive experience of backing other software companies at the same stage, we’re familiar with what it takes to build a company in a specific niche.
B2B Software companies with high growth aspirations, management teams with passion and expertise in their sectors, who know where every pound they raise needs to go, are the backbone of the SaaS sector. This is why we’ve deployed our largest and most diverse team to back the very best of them.