Sapphire Ventures Embraces Growth Stage Software Investment in US, Europe, and Israel

As a growth-stage software investor with Sapphire Ventures, I'm always asking myself "why now?" - seeking innovative solutions that tackle new problems or create new markets, rather than simply duplicating existing ones.

  • 1. At least 50% of pitches involve AI, impacting all verticals, but SaaS is not dead.
  • 2. The non-AI part of a product should tackle a new problem area; AI is not a differentiator alone.
  • 3. Reie Dom is a general partner at Sapphire Ventures, a growth stage software B2B focused investor.
  • 4. Sapphire Ventures manages over $10 billion in capital and has invested in companies like LinkedIn, DocuSign, and monday.com.
  • 5. Reie Dom started her career as an investment banker at Goldman Sachs, advising companies on M&A, IPOs, and financing.
  • 6. She transitioned to investing to have "skin in the game" and help advise companies from a board level.
  • 7. When evaluating investments, Sapphire looks for a good market size with an emerging or next-generation leader.
  • 8. Category leaders often suck the air out of a market by attracting the best employees, investors, and customers.
  • 9. Reie Dom also considers "why now?" – what's changing or inflecting in the market that might create accelerated growth.
  • 10. The velocity of product improvements and go-to-market changes is crucial in startups.
  • 11. Companies should aim to hit "escape velocity" by growing fast to avoid the laws of gravity in private SaaS.
  • 12. Velocity in decision-making across product and go-to-market is important for success.
  • 13. The latest marketing conditions are highly saturated with enterprise software companies, making it hard for new founders to stand out.
  • 14. Founders should tackle a new problem area or a vertical that hasn't been touched before, differentiating their offering from competitors.
  • 15. AI is not a differentiator but can be used as a technology enabler in creative ways.
  • 16. Investors look for an approach of non-AI technology and integrations around the AI component.
  • 17. Reie Dom invested in monday.com due to the founders' conviction, vision, and belief in their success.
  • 18. True founder conviction is a signal for investment, even if many aspects still need to be figured out.
  • 19. Sapphire Ventures invests in people they like and admire, focusing on questions that matter to entrepreneurs.
  • 20. VCs should adapt to the entrepreneur and founder, acting as resources rather than trying to operate the business themselves.
  • 21. Entrepreneurs want investors who are bought into their vision and have true passion for their companies.
  • 22. Winning an investment deal relies on passion, conviction, and ensuring a VC is truly bought in.
  • 23. Usage-based pricing models versus seat-based pricing models are relevant topics for discussion between founders and investors.
  • 24. VCs should provide insights from their portfolio and expertise to help entrepreneurs make informed decisions.

Source: EO via YouTube

❓ What do you think? What drives your investment decisions: the product, the market, the founder, or something else entirely? Feel free to share your thoughts in the comments!