Ari is a SaaS entrepreneur, a YC alumni and part of the investment team at London-based Dawn Capital.

Ari is a SaaS entrepreneur, a YC alumni and part of the investment team at London-based Dawn Capital.

Before switching to Venture Capital, he co-founded two companies: Fabricly — an e-commerce clothing marketplace — and World on Hanger — a SaaS sales and workflow management system.

He joined Dawn Capital in 2013 and he’s now involved in several companies including EVRYTHNG and Neo4j among others. He took some time to tell us what he thinks about the SaaS industry — like Philippe Botteri, Christoph Janz, Nicolas Debock, Raffi Kamber and Jason Lemkin did.

Dawn Capital

Office: London.

Investment focus: investments from $1M to $10M in Fintech and B2B Software.

Investment thesis: businesses that have found their product/market fit, have crossed the $1m ARR threshold and are ready to begin really scaling.

Assets Under Management: > $200M

European SaaS portfolio: Automile, Collibra, Conversocial, Evrythng, Leaddesk, Mimecast, Neo4j, Showpad, Sticky.

Insights from Ari Helgason:

Why do you invest in SaaS?

At Dawn we’ve seen SaaS businesses going from $1m to $10m, $10m to $50m to $100m+ in ARR. We understand how those businesses work. Personally, I’ve built a SaaS business and it’s a beautifully predictable business model when you get the machine working. We’re still at the very beginning of the shift to SaaS from on-premise software, particularly in the enterprise, and there’s a lot of room for growth. Many SaaS businesses are building very cool technologies that are hard to replicate, thus making them very defensible from an investment perspective.

What makes a good VC for a SaaS startup?

You pick an investor for a long-term partnership, so personality and alignment regarding the vision are very important. More specifically, as a SaaS founder you want to work with someone who really understands the business model, understands what it takes to build a SaaS business. You’ll get the most actionable, specific help from VCs who have been involved in SaaS before.

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

We’re going to see the emergence of some really big mobile-first or even mobile-only SaaS businesses. This will be similar to the transition from on-premise to cloud software. That shift began in the late 1990s, but it’s still on-going. The first wave of enterprise mobile software replicates functionality from existing software, what is really interesting is what happens when people rethink the whole process with a view to what is specific to mobile. We’re just at the beginning of that shift and it’s a big theme for us.

The second trend is the API economy. More and more functionalities that software developers need are being made available via API by specialist software companies. This is a typical case of increased specialisation. This type of company is particularly interesting to invest in because they can grow very fast: they often charge on a usage basis and revenues grow in a nonlinear way, while retaining much of the predictability of traditional SaaS. There are lot of interesting companies coming out of Europe in this area.

Do you consider yourself to be in competition with U.S. VCs for SaaS startups?

It’s more collaborative than that. As the U.S. market has become more competitive, U.S. VCs are looking more and more at Europe. This is where having a SaaS focus really helps. Founders and other investors value our experience in building SaaS and Fintech businesses. We’ve also co-invested with plenty of U.S. investors in the past, and they are usually helpful to the companies as they seek to make inroads into the U.S. market.

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

Deepmind. I’m a massive AI nerd and they’re working on some phenomenal technology over there.

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