Female Foundry Week 113: SaaS still in vogue? From Beta to Better. Trophies. Accolades. Rewards. Family Offices eye AI. Monthly Fundraising Roundup: May.
Welcome to The Week 113, 2024 Edition of the Female Foundry newsletter!
Female Foundry - where investors and female founders meet.
In the news
London-based Exactly.ai, founded by Tonia Samsonova, raises a $4.3m Seed round led by Speedinvest to develop GenAI for artists; Sweden’s medtech startup Natural Cycles, co-founded by Dr. Elina Berglund Scherwitzl raises a $55m Series C round led by Lauxera Capital Partners; Norway’s AI startup Iris.ai, co-founded by Anita Schjøll Abildgaard and Maria Ritola raises €7.54m round led by Silverline Capital to accelerate scientific research; Berlin-based Faircado, co-founded by Evoléna D'Estmael raises €3m Pre-Seed round led by World Fund to accelerate AI-powered resale shopping for the circular economy; Italian SaaS startup ZeFi, co-founded by Aurora Maggio raises a €1.6m Seed round led by 360 Capital, for its ML-powered behavioral analytics; Estonian sustainability tech startup Esgrid, co-founded by Katrin Isotamm and Oksana Tolmatshova secures €500k Pre-Seed round led by EstBan for value chain sustainability tools; Rotterdam-based communications security startup Q*Bird, co-founded by Ingrid Romijn, raises €2.5m Seed round from QDNL Participations and Cottonwood Technology Fund to secure businesses against cyber threats.
Spotlight
SaaS still in vogue?
On Thursday this week, Salesforce - the epitome of a SaaS company - saw its shares tumble 20% in the worst stock market day since 2004 that wiped over $50bn off its value. - That’s after the company had already lowered guidance for the current quarter, citing cooling demand from its customers who were taking ‘more time’ to complete their orders. Around the same time this week, shares of a process automation software provider - UiPath - tanked 30% following a disappointing earnings report.
There are signs everywhere that despite a noted rebound in overall venture funding over the past couple of months, the long-time VC favourite - enterprise SaaS, seems to be losing its lustre.
The Bessemer Cloud Index, which includes many of the most prominent public SaaS businesses, has been underperforming for most of the past 12 months, lagging behind the Nasdaq and S&P 500 and is now in negative territory for 2024 - it saw a particularly steep decline happening in May.
On a broader scale, so far this year, SaaS and enterprise software companies have raised a mere $4.7bn in seed- through growth-stage funding. That puts 2024 on track to come in far below last year’s $17.4bn funding tally — which was itself the lowest total in five years. The trend however, does not seem to deter all investors. A $1bn Series E round raised by the 4-year-old cyber startup Wiz earlier this month, co-led by Andreessen Horowitz, Lightspeed Venture Partners, and Thrive Capital, set a $12bn valuation for the company. Silicon Valley-based Glean, also raised a $200m Series D round in February. However, while funding for SaaS hasn’t evaporated, there are for sure far fewer megadeals in SaaS - in the past 12 months, 21 deals of $100m+ have closed. By comparison, during the peak 2021 — the number of deals stood at 147.
While AI provides new optimisation and product expansion opportunities for SaaS heavyweights, Q3 will show whether they are successfully implemented and if investors regain their enthusiasm for the space.
Fundraising
From Beta to Better.
I caught up with a founder I hadn't seen for eight months this week. She proudly told me, that since I last saw her, she had doubled her monthly revenue and 'had managed to do so' still using a Beta-version of her product - allowing to extend her runway for another 4 months. Sounds impressive? It’s a trap! Beta is meant to be a short phase of your product development, catered to gathering more granular feedback at scale from your early enthusiastic users. It’s like you are a pilot on a runway, speeding up before a take-off! This phase is meant to be transitional. Many public users find beta products frustrating; if you leave them waiting for an extended value proposition too long—or even worse, without communicating planned product upgrades—they will assume Beta IS your final product. Enthusiasts are your champions. Treat them as well as you want to treat your target users. Also, staying in a Beta phase for too long does not send a positive signal to investors either, who want to see a strong indication of product-market fit. ‘Fit’ with your target market, not with your beta users.
Trophies. Accolades. Rewards.
Startup awards are mushrooming. - I am regularly asked to be a judge, a jury, or a critic in startup competitions these days. Don’t get me wrong - those who know me well also know that I love speaking with founders, and I understand firsthand how valuable feedback can be for startups - especially at the early stage. Recognition in general is great - in a rocky startup journey they can boost your confidence and put you on the track of self-belief. However, I often find myself politely declining to participate or even be close to startup competitions.
How can one legitimately compare the potential impact of a startup turning waste into hydrogen with one developing software to optimise electricity grids in order to fit them into 'Best in Sustainability' or 'Innovator of the Year' (you name it) category? Those who push to see a common denominator here are usually event organisers or sponsors. - The LinkedIn profile headline that says ‘the winner of’ - for me reads as a potential red flag. I struggle to see value of most startup competitions for VCs and founders. For a founder, unless there's a significant cash prize, is this accolade really worth your precious time (and emotional effort)? If you’re participating in it to get ‘noticed’ by investors - VCs are paid to find great companies. If your startup is genuinely innovative, you will be seen!
Analysis
Family Offices eye AI.
The newly-released Global Family Offices report, which surveyed 320 family offices representing families with an average net worth of $2.6bn and a combined worth of $600bn, found that over the past year, family offices have increased their appetite for active management, particularly in direct investments in AI. A whopping 78% of family offices globally plan to invest in generative AI in the next two to three years. The percentage is even greater in the US—where the global AI revolution has been led by homegrown tech companies—with a staggering 83% of family offices reporting a likelihood to invest. High interest in allocating capital to AI is followed by healthtech (70%) and automation and robotics (67%). Great potential there.
Community
Monthly Fundraising Roundup: May
May has proven to be a very strong fundraising month! Female founders in the Female Foundry community in Europe announced a whopping €189m of capital raised in May—up by €62m from €131m in April 2023. Congratulations!
Hiring
This week hiring:
Planet A Foods ➯ Supply Chain Manager - Internship | Telness Tech ➯ Delivery Lead | cylib ➯ Project Manager.
Founder & Investor Meetups
Tuesday, June 4, London ➯ GenAI@Fintech and beyond | Wednesday, June 5, London ➯ Zinc x UKRI Catalyst Showcase, Vienna ➯ Lead Today. Shape Tomorrow.
Meet me at
This week you can meet me in Berlin at ➯ SuperVenture.
Enjoy the week ahead - see you in Berlin and here next week!
Agata
Written by Agata Leliwa Nowicka, an investor, a startup adviser, a two-time entrepreneur, and a founder of Female Foundry based in London.
Suggestions? Drop me an email.
♡
Thank you to Alice for the fundraising research.
Check femalefoundry.co for more fundraising tools and investor content. View other Female Foundry articles.