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Meet Alex Kayyal, Europe Head at Salesforce Ventures

March 22, 2016

This is our last interview of a VC investing in European SaaS on eFounders blogs.

This is our last interview of a VC investing in European SaaS on eFounders blog. We’re closing this series with Alex Kayyal, Europe Head at Salesforce Ventures, after interviewing 8 famous VCs. Like us [check our intro to this series], Alex thinks European SaaS is booming 🚀!

Prior to joining Salesforce, he’s had many lives: from banking with Merrill Lynch to establishing a venture growth firm for Hermes Growth Partners and founding his own startup. In 2015, Alex joined Salesforce Ventures to lead their European investments.

Salesforce Ventures

Created in 2009

Offices: London, San Francisco, Tokyo

Investment thesis: We invest in the next generation of enterprise technology that is strategic to both Salesforce and our customers.

Investment focus: Series A, B and C stage

Assets Under Management: As we invest from our balance sheet, we don’t have an AUM. However, we’ve committed to invest $100M in European enterprise startups over the next few years.

European SaaS Portfolio: Qubit, NewVoiceMedia, CartoDB, Augment, Cloud 9 IDE, CloudLock, Datahug

Insights from Alex Kayyal

Why do you invest in SaaS?

In many ways Salesforce pioneered enterprise cloud computing when we were founded in 1999, so naturally, we love other SaaS companies.

We’ve grown from a small startup to a Fortune 500 company, all while maintaining our entrepreneurial spirit and customer focus. If you think about it, cloud computing didn’t exist before Salesforce. On top of that, one of the many reasons we’ve been so successful as a company I believe is that we’ve created the largest ecosystem of enterprise partners via the Salesforce AppExchange. Our investment program, which was started in 2009, has helped accelerate the success of those partners. Fast forward to today and Salesforce Ventures has backed over 150 enterprise and SaaS companies globally. Our ecosystem is thriving every day and making our customers more successful, and that’s ultimately why we invest in SaaS.

Importantly, SaaS has really taken hold in the market and has now become a thematic focus for an increasing number of investors in Europe. VCs are attracted to these businesses because of the predictable business model with a recurring revenue base. When combined with large markets, unique products and healthy metrics, the result can be a very compelling business.

Overall this is great news for entrepreneurs looking to disrupt the enterprise space. Cloud today still represents less than 5% of total IT spending, so there is tremendous room for growth in the market. We’re doing our part to accelerate that development with Salesforce Ventures.

What makes a good VC for a SaaS startup?

In my experience, the best entrepreneurs are always incredibly thoughtful and purposeful about who they want on their cap table. My best advice is for startups to think of this decision as a long-term partnership. It’s critical to have investors alongside you that share your vision, strategy and ambitions. Part of that is recognizing that different investors can serve different purposes. One of the reasons we like co-investing with other institutional investors is that we can focus on different areas of value creation. As a strategic investor, we look to add value to our portfolio companies in ways that are unique to us. Examples include giving our portfolio companies access to our product executives and customers, as well as providing advice on best practices based on our own experience. That complementarity with other investors has worked very well for our portfolio CEOs.

From a specific SaaS perspective, I’d recommend startups weigh the following factors: prior SaaS expertise, access to other SaaS entrepreneurs in the portfolio, access and relationships in the US market and familiarity with your space.

What investment trend do you foresee for 2020 in the SaaS industry?

There’s an important shift happening as all business operations move to the cloud. In parallel, we’re seeing intelligence redefine enterprise applications, particularly with the use of machine learning and AI. This will herald in a new era of enterprise mobility and messaging where context is omnipresent.

I also believe more great enterprise companies will continue to come from Europe.

Do you consider yourself to be in competition with US VCs for SaaS startups?

Absolutely not. As mentioned our model is complimentary to traditional VCs, both in the US and Europe. Our strategy has been and will continue to be to co-invest with other value-add investors on both sides of the pond.

Part of our journey in building the cloud ecosystem is working with the best investors and we’re delighted to have worked with so many great firms.

What’s the n°1 startup that you’d like to have in your portfolio?

We have been very fortunate to back an amazing portfolio of enterprise cloud startups and are proud of the companies in which we have invested.

Follow Alex Kayyal on Twitter here.

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