The state of European SaaS, the EU ecosystem & the story of a great SaaS investor ... interview with Philippe Botteri Accel Partners

After an interesting panel with the title "Why are there not more European unicorns" which was also much about BlaBlaCar at Web Summit 2015 there was an opportunity a week later to have a chat with Philippe Botteri about the state of the ecosystem, the European software as a service space and exiting SaaS companies.

All about Philippe Botteri and how he became a leading SaaS investor

Arnbjörn Eggerz: Mr. Botteri, it is a pleasure to welcome you to this interview about SaaS. You hardly need any introduction, but it is very interesting for entrepreneurs and readers to understand the bio and background of great investors. Thus, can you describe how you became a venture capitalist?

Philippe Botteri in the officePhilippe Botteri: I was born and raised in France and did an engineering degree. Then I joined McKinsey in 1998. That was the time of the first dot com boom and I had the chance to work for start-ups as the firm was working with start-ups at that time.

Arnbjörn Eggerz: And how did you come from McKinsey to the Valley and to SaaS?

Philippe Botteri: I did a few projects for start-ups in London and when the bubble burst I shifted a bit my focus to work more on software and SaaS companies. I actual wrote one of the first McKinsey white paper on SaaS - the word SaaS did not exist in Europe at the time, we were using the term ASP "Application Service Provider".
In 2003 I moved to the Silicon Valley office of McKinsey, continued to work on software and on SaaS companies and stayed there for a few years. Then I joined Bessemer Venture Partners in 2006 to help them build their SaaS practice.

Arnbjörn Eggerz: These were the pioneer times of SaaS. As it is a rare occasion to have someone who was part of it, can you share some anecdotes?

Philippe Botteri: Yes sure. It was at the time when, you know, people were still wondering if SaaS would last and whether it had a future or not. And that was when I started my blog "Cracking-the-code" to write on SaaS and issues early stage SaaS companies were facing...

Arnbjörn Eggerz: ... exactly, we are long time readers ...

Philippe Botteri: ... and I remember one of my first blog post was: "why I disagree with Tony Zingale on the future of SaaS. Tony Zingale was the President and CEO of Mercury Interactive then. I went to a conference where he gave a keynote on the future of software. His entire keynote was about why SaaS was a fad and would not last. I did not agree. And interestingly a few years later he became the CEO of Jive, which then moved its entire model to SaaS.

Arnbjörn Eggerz: What was crucial in helping Bessemer and what lead you to Accel?

Philippe Botteri: At Bessemer I basically worked a lot on designing new metrics for SaaS companies, KPIs that worked better for SaaS. I actually invented the CAC-ratio, a metric looking at the payback on customer acquisition costs. And in the process I made several investments in companies that corresponded then to a SaaS model like Eloqua or Cornerstone On Demand. I also had an eye on Europe at that time so I invested in Criteo, which was Ad Tech, it was not SaaS, but I was interested in that as well.
And then in 2011, I was contacted by Accel and had the chance to move back to Europe. The ecosystem in Europe was really starting to emerge, and I thought "what a good time for me to come back". I really liked the team at Accel as well as their global platform. A global platform is very important in venture if you want to support global technology leaders.

Arnbjörn Eggerz: And since you came back to Europe what has been your focus?

Philippe Botteri: Since I joined Accel, I continued to look for SaaS companies and, made several investments including SaaS startups like Docusign, PeopleDoc, and Algolia...

Arnbjörn Eggerz: Algolia, sure.

Philippe Botteri: or recently Doctolib. I am also investing in marketplaces and invested in BlaBlaCar as well.

Arnbjörn Eggerz: Thanks for sharing your interesting professional background that is closely interwoven with SaaS. Would you be so nice to introduce Accel, the focus there and some of their landmark investments?

Philippe Botteri: Sure, as I probably already said, Accel is doing a lot in software, big data and cloud computing. As you know we are investors in companies like, Dropbox, Slack, Atlassian, Qlik and Cloudera. In short we have done a lot on the software side and SaaS is really one area we really like.

Arnbjörn Eggerz: And what about Accel's investment approach and stage focus?

Philippe Botteri: From an investment size standpoint, we can invest anything from a million dollar to a hundred million dollar in a company, so it can be very early stage or very late stage and if we invest early we can follow our money as the company grows.

Arnbjörn Eggerz: One example of recent deal there ...

Philippe Botteri: On the late stage side, we invested $100m a few months ago in Xero, an online SaaS accounting solution for SMBs. More recently, we led a $20m round in Doctolib, a SaaS booking management solution for doctors.

Arnbjörn Eggerz: And what would you say is your differentiation from other VCs who are also active in SaaS, e.g. Dawn Capital, I just talked to?

Philippe Botteri: Our key differentiation is that we are a global platform. We have offices in the U.S. -Silicon Valley - in London, from where we cover all of Europe, and in India to cover Asia. So, we are one of the very few early stage firms with a truly global network.

Arnbjörn Eggerz: With that global network approach, do you have an office in Berlin and if not why?

Philippe Botteri: We do not have an office in Berlin. London is the only office we have in Europe, but from London we cover all of Europe.

Arnbjörn Eggerz: But would it not make sense to be in continental Europe - and then of course in Berlin. Can you share what is behind your "one Europe office" strategy?

Philippe Botteri: Well, the difference between Europe and Silicon Valley is that in the U.S. 70% or 80% of what is happing is in Silicon Valley and then you have New York, which is another 20-30% and the rest is kind of ...

Arnbjörn Eggerz: ... and the rest is widely spread out. This is one of the facts many forget when comparing the U.S. and EU innovation system.

Philippe Botteri: Exactly ... the rest is spread throughout the country. In contrast, Europe is very different. Europe is really a collection of different hubs ...

Arnbjörn Eggerz: yes, that is a good description of the European reality ...

Philippe Botteri: ... which means, you have 10 to 12 hubs and you never know exactly where the next big thing or company is going to come from. That can be London, it can be Berlin ...

Arnbjörn Eggerz: good that you count in Berlin, at least one German city.

Philippe Botteri: Berlin, sure!

Arnbjörn Eggerz: Paris?

Philippe Botteri: Paris, too ... it can be also Munich,

Arnbjörn Eggerz: This is good to hear and will make a lot of people here very happy.

Philippe Botteri: But ... it can also be Spain. We see a lot happening in Madrid and Barcelona. One of the SaaS investments we made recently was in CartoDB which originated from Spain. And we are of course very active in Israel Tel Aviv.

Arnbjörn Eggerz: Sure, this does not come as a surprise for me. We also collaborate with Israeli partners.

Philippe Botteri: So you see, there are hubs pretty much everywhere. Not to forget the North: In the Nordics you have Helsinki, where we invested in Supercell. Then Stockholm or Amsterdam ...
We invested in ForgeRock, Spotify, and Catawiki ... just to give examples.

Arnbjörn Eggerz: So in sum the strategical reason is the easy access to all hubs from London to everywhere?

Philippe Botteri: Yes, you have to be in Europe everywhere. And for us it means, we either would need to have ten offices [both laugh] or one. I am not sure, if it makes a lot of sense to add Berlin/Germany only, but we have German speaking people in our team and Germany is of course a country that we are tracking and covering actively.

What influenced Philippe Botteri and what about cultural roots?

Arnbjörn Eggerz: Thanks a lot for this snapshot view of a global fund into Europe and into your bio. Just two questions to get to know the personal side of Philippe Botteri better. I read and heard in a lot of interviews that the interviewers are emphasizing that you have been in the Navy. So I wonder, is this influencing you investment decisions to some degree?

Philippe Botteri: Well, I did my military service in the French navy, so I spent a bit under a year over there. At that time, the military service was mandatory in France. My engineering school in France was affiliated with the military and I did my first year in the army. We started with a soldier's field/boot camp training for a few weeks and after that I choose which army I wanted to go to. I selected the Navy and was deployed on a on a scientific ship in New Caledonia. The ship was rewriting the maps of the islands in the area.

Arnbjörn Eggerz: You recall it very well, so it means it had some impact on you and your investment style?

Philippe Botteri: Mmm, this was a long time ago and very different from investing ...
[Both laugh]

Arnbjörn Eggerz: Ok thanks. Second one: Is there one French thing, one characteristic, you realized you wanted to keep in America at all costs?

Philippe Botteri: ... you mean one thing that we have in France and that I would like the U.S. to have as well?

Arnbjörn Eggerz: exactly

Philippe Botteri: [silence] That is a good question. Uuummm ... [silence]. Mmm ... let me think about it ... I tell you later, can we come back to it?

Arnbjörn Eggerz: Sure, no problem.

About innovation in the European ecosystem

Arnbjörn Eggerz: You already described the hub structure and development of the ecosystem in Europe. I think, all agree that the EU ecosystem did a jump leap so no need to discuss this. As you work in different ecosystems, I wonder what are today the issues in order to take the next step forward? What are they key problem of the European ecosystem today and the key advantages?

Philippe Botteri: Don't you find it interesting that people in Europe love to - in fact they only want to - speak about the problems in Europe.
If I look at the European ecosystem a few years back, everyone was saying Europe is not able to generate - billion dollar outcomes, right now we call them unicorns...

Arnbjörn Eggerz: Yes, now many ask the question is why are there not more in Europe ... ?

Philippe Botteri: ... and you know what, a few years later Europe had many of them. Europe has demonstrated its ability to generate unicorns. Just in our portfolio in the last few months we had Supercell, which is a very nice multibillion dollar exit, we had Avito which was another multibillion dollar exit, and we had Showroomprivé, which was listed in France.
I think the European ecosystem in general has really demonstrated its ability to generate really big outcomes. Whereon top of the successful exits, we are also seeing a lot of activity on the financing side right now. A lot of companies are getting funded, a lot of innovation is happening and all the different parts of the ecosystem I have mentioned earlier, are really, really booming. If you look a few years back I think the ecosystem has really grown a lot and today, we can say with certainty that Europe really has made its mark as a core tech region.

Arnbjörn Eggerz: Sure, but let me play the role of the devil's advocate. You brought a lot of startup examples from your portfolio which is a frequent VC way of arguing, but case based.
But another way of arguing is to take a systemic and aggregated view: Take Peter Thiel's argument who criticizes the exclusiv focus on the globalization of the American innovation model, e.g. all the accelerators with all the IT things, in contrast to innovating.
Thus question is, could Europe even do better, when we focus on some particular European innovation that is not necessarily coming from the internet sector?

Philippe Botteri: Interesting, can you provide more background to your question for me to give a complete answer?

Arnbjörn Eggerz: In short, the European innovation system demonstrated its strength in manufacturing, mechanical things or machinery tools also with a lot of political effort.
America differs here: while it lost a lot of jobs to other countries in these sectors, they invented and built the infrastructure technologies of the internet.
Thus the first question is it sufficient and should we mainly focus on a (necessary) catch up, which means to a certain degree to copy, and I do not complain about this aspect.
Which brings about the second question, if we could even do better e.g. finding empty spaces and niches, when focusing more on the innovation coming from our innovation system and financing it.

Philippe Botteri: Yes, but I would not agree with your point. If you look at the tech champions that Europe has created on the technology side: these are companies which have invented things, not just U.S. copycats.

Arnbjörn Eggerz: What would be a significant example for your argument?

Philippe Botteri,Accel, talking about unicorns and BlaBlaCar at WebsummitPhilippe Botteri: Look at BlaBlaCar for example. They invented the long distance ride sharing model in Europe and today are the undisputed leader in this space. No one else is doing it at scale. They are not in the US, but it is actually not a business model which is probably best for the U.S. market. Maybe it will still work there, but it is much better suited for countries where the cost of driving is higher and where you have a much better intra-city transportation. When you are offering a long distance service like BlaBlaCar, your users, when they actually arrive in the destination city, need to be able to take a tube or bus to do the last mile.
In the U.S., if you want to drive for example from Silicon Valley to Los Angeles, it is very different to drive from Oakland to Hollywood versus Menlo Park to Huntington Beach and the last mile is not easy to complete with public transport. BlaBlaCar is a unique model invented in Europe.

Arnbjörn Eggerz: But is the model not more based on cultural and socioeconomic context like infrastructure than new technology?

Philippe Botteri: Two other examples: Look at Criteo, they were the first one to invent retargeting and they are the global leader in this market.
Then look at the private sale model and all the companies there. The model was invented in France by companies like Showroomprive and VentePrive and then copied in the U.S. by Gilt.
And Spotify was the first company to offer a free music streaming service – way before Apple did.

What is happening in European SaaS from an investor's perspective?

Arnbjörn Eggerz: Thanks for this insights into the European ecosystem. Spot on European SaaS: On the technology side e.g. multitenancy, server technology or latency requirements, both are at par, still SaaS seems to be far ahead in the U.S.. You know both sides of the SaaS Atlantic: So what is the state of European SaaS? Is there a number one problem for European SaaS companies? And is there any particular difference today compared to the U.S.?

Philippe Botteri: Sure. The big difference for a SaaS company between the U.S. and Europe is that if you start your SaaS company in the U.S. you need to sell domestically first.

Arnbjörn Eggerz: Exactly local market first, as this is easier for startups to manage. But is it different in Europe?

Philippe Botteri: If you are a European SaaS company, you have your R&D in Europe, which I think is great. Because you have a lot of great engineers in Europe and cost is actually cheaper than finding and paying talent in Silicon Valley. You have great teams in Estonia, in Paris, in London, in Spain or in Berlin for example. So on the R&D side, it is great to have your SaaS company in Europe, but if you want to achieve leadership in software you need to be a leader in the U.S. market. Thus, for SaaS companies emerging from Europe, the first step they have to do is to open up a sales and marketing offices in the U.S., which means hiring great VPs for sales and marketing.

Arnbjörn Eggerz: which is a real challenge for European start-ups and companies ....

Philippe Botteri: I think is the most critical step that your SaaS startup has to do. This is a challenge. On the other side, the benefit that SaaS companies coming out of Europe have is that they think global very early, because they have to go to the U.S.. But they are also in Europe, so they can achieve global scale quickly, whereas it takes time for US SaaS companies to move to Europe

Arnbjörn Eggerz: So you think the European disadvantage translates into "go global early"?

Philippe Botteri: Yes, European SaaS companies go global early, which means greater potential.

Arnbjörn Eggerz: and it is also faster, or?

Philippe Botteri: Yes the potential is to become global and bigger faster. So the challenge is making that leap to go to the U.S., but the benefit is that you are a global company from the start. This is how I would compare it. Each continent has benefits and drawbacks.

Arnbjörn Eggerz: Thanks for this comparison. Every investor has her or his key SaaS metrics they love most out of many they can pick. So what are your top three key metrics on SaaS? How do you measure SaaS success when a company approaches you or for these you have invested in?

Philippe Botteri: As you know I have done a lot of work around SaaS metrics ...

Arnbjörn Eggerz: I know, therefore I ask you [laughs].

Philippe Botteri: ... and for me it is not three, it is five [laughs].
Actually I have ... let me think ... I am having another three. So eight. But if you want to keep to the core five, it is the CMRR, which is a the contracting monthly recurring revenue, it is the churn rate, it is CAC, which is the customer acquisition costs ratio, LTV which is the customer Iife time value and the cash, which is the monthly cash burn of the company. For me this are the five key thing that I look at and monitor.

Arnbjörn Eggerz: And what is the SaaS topic, area of application or sector that excites you the most at the moment?

Philippe Botteri: Well, the thing which is really exciting to me - and I am actually doing some research preparing a blog post on that –is really the emergence of SaaS in Europe. When I moved back to Europe from the U.S. in 2011, one of the question I had in mind – was how much SaaS I could do in Europe, because there was not enough happening in the market to just focus on SaaS investment at the time.

Arnbjörn Eggerz: Exactly. Everybody was talking about SaaS, but adoption and execution was slow while now it is picking up.

Philippe Botteri: So I did a few SaaS deals, but I could not do only SaaS, thus I diversified in marketplaces as well, which is another area that I also like. But in the past 18 to 24 month Europe has awakened and I have seen more and more SaaS companies emerging. To illustrate this, in the past 18 month we have been investing in 5 SaaS deals in Europe.

Arnbjörn Eggerz: Can you name these investments into European SaaS or give examples?

Philippe Botteri: Sure. We have invested in Peopledoc which is a SaaS company from France, Qubit in London, CartoDB in Spain, Algolia in France and Doctolib in France. We are seeing a lot more in the SaaS space. Just yesterday I saw a very interesting seed company. We did not invest, but it was very intriguing.
SaaS is actually a lot of what we are looking at now. That was not the case a few years ago and I find it super exciting.

Arnbjörn Eggerz: Actually your answer is fully confirming our experience.
Therefore I want to frame this development better to understand the opportunities and threads with the eyes of an investor.
For this I state two observations: In the U.S. the next topic is vertical SaaS. Keeping your aspect of software leadership in mind, there is also the fact confirmed by day to day interaction that in Europe many legacy software problems have not been solved yet moving to SaaS. We have a replication of the old e.g. EPR process just transferred into the cloud, but they not become more efficient or innovative which migth explain a adaption of 20%.
So in your point of view will new SaaS solutions follow an evolutionary path in Europe like at a moment, with the first wave we are still in, then horizontal SaaS solutions and then emerging vertical SaaS or do you expected a leap?

Philippe Botteri: The reality is that you cannot fall behind in technology. It does not make sense to start selling products that were successful in the U.S. three years ago, because the market need is what is state of the art today, not what it was yesterday.
I do not think that Europe is lagging behind. I think and I will say that Europe in SaaS is actually at the forefront of innovation.

Arnbjörn Eggerz: Very interesting statement. So what are the innovative areas in SaaS you are looking at?

Philippe Botteri: The big trends we are looking at are around mobile driven SaaS applications for the Enterprise, API driven cloud infrastructure, analytics and SMEs services.

Arnbjörn Eggerz: Mr. Botteri, thank you very much for your valuable time, a great interview and sharing your view on software as a service and the European ecosystem. I wish you happy unicorn exiting.

Philippe Botteri: Great to see more people are interested in SaaS. Alright, and thank you.

Arnbjörn Eggerz: Thank you very much.


Phillipe Botteri's blog Cracking the code

Accel Partners

Background Information on companies


BlaBlaCar is a car-sharing website that connects drivers with empty seats and paying passengers to offset distance travel costs.
Backed by Accel Partners and Index Ventures and ISAI, it operates in nineteen countries across Europe, Russia, Turkey, Mexico and India. The site and free mobile apps provide a range of features to create a secure, trust-based community and easy connections between drivers and passengers. In Germany it bought e.g. bought
BlaBlaCar is based in Paris with offices in London, Madrid, Milan, Hamburg, Budapest, Warsaw, Moscow, Istanbul, Munich, Mexico City and New Delhi.
With a recent round and total funding of 336 Mio. according to Crunchbase it is one of the top European unicorns.

CartoDB (Spain)
CartoDB is the next generation location intelligence and data visualization engine that enables the transformation of location data into insights. CartoDB cloud-based platform enables the connection and mapping of data, creation of data-driven customized visualizations, and development of geospatial applications, to discover and extract insights to understand the world and make better, faster decisions.
In Sept 2015 they received an $23 million Series B investment. Accel Partners lead the round, with previous investors Earlybird VC and Kibo Ventures also participating in the deal. Salesforce's venture arm, Salesforce Ventures.

Peopledoc (France)
PeopleDoc started as Novapost in 2007 on the campus of the HEC Business School in Paris with a pioneering idea a personal digital vault for every consumer in which they should be able to receive, store and share securely daily life administrative documents in.
The need for such a solution was most felt in HR. Thus in 2009, the cofounders were to design a product specifically for HR ingraining the great existing features and enlarging them
In the past six years, PeopleDoc has grown exponentially in revenue and in number of customers in both Europe and the US. In 2014, Accel Partners led a 17.5 M$ series B funding along with Alven Capital et Kernel Investissements. To create a full HR Service Delivery suite, PeopleDoc brought to market our Employee Portal and Case Management solution and Employee Onboarding solution

Qubit (UK/London)
Qubit offers a blank canvas for businesses to deliver their big ideas. Whether it's acting on data science or creating highly targeted personalization, the solution ensure marketers are able to meet the demands of today's consumer.
The Qubit marketing hub integrates analytics, segmentation, A/B testing, and web personalization with the Visitor Cloud and is built around the needs of omnichannel businesses, This architecture creates a real-time data supply chain that fuels web optimization and digital innovation throughout your whole business.
Founded in 2010 by four ex-Googlers, Qubit is headquartered in London with offices in New York, San Francisco, and Paris. Among their customers are leading ecommerce businesses including TOPSHOP, Uniqlo, John Lewis, bebe, Jimmy Choo and Staples.
The startup is backed by over $36 million in Series B funding from Accel Partners, Balderton Capital, and Salesforce Ventures. The Series B of USD 26M took place in Sept. 2014.

Algolia (France)
Founded in 2012, Algolia is a privately held company created by veterans in the fields of algorithms, search engines and text mining.
The SaaS startup helps users deliver an intuitive search-as-you-type experience on their websites and mobile apps. Basically, it makes finding things easier. It is a customer-focused, dev-centric company dedicated to changing the way people think about search.

With a staff of ca. 36 people in Paris and San Francisco it received a recent investment of $18.3M Series A led by Accel Partners with participation from existing investors including Alven Capital, Point Nine Capital, Storm Ventures, as well as Lead Edge Capital, co-founder and CEO of Parse (acq. Facebook) Ilya Sukhar, co-founder and CTO of Docker Solomon Hykes, internet entrepreneur Kevin Rose and co-founder and former CTO of Splunk Erik Swan. The company states that the funding will be used for product development, international expansion and hiring to accelerate the company's already impressive momentum.

Doctolib (France)
Doctolib is the #1 online and mobile booking platform and management software provider for doctors in Europe with more than 2 000 000 patients each month.
For patients, Doctolib is a free online service to find a nearby health practitioner and book doctor or dentist appointments 24/24 and 7/7 within a few clicks.
For doctors, Doctolib is a full-range service to improve bookings management, reduce no show and bring new patients to your office.
Doctolib was founded in 2013 and received an overall investment of $26.35M in 3 Rounds from 7 Investors The most recent funding was a $20M Series B in October 2015 with the participation of Accel.

Picture Credits:

Accel Partners press picture, Web Summit CC Attribution 2.0,, own picture

A. Eggerz is entrepreneur and managing director of Iceventure.

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