SaaS businesses in Europe have been getting a lot of attention from investors in recent years. Venture investment in the region’s SaaS companies is growing quickly. According to a 2019 Accel Euroscape report, from 2016 to 2019, it rose from $2 billion to $5 billion, growing much faster than in the US, which grew from $15 billion to $20 billion.
Today we are looking at Oxx which is a venture capital fund of $130m+ that invests in fast-growing European software businesses.
Jointly headquartered in London and Stockholm, Oxx is a dedicated SaaS-focussed fund, investing broadly across software applications and infrastructure. Some of the companies in its portfolio include the likes of Peak (AI-powered decision intelligence), Funnel (automated marketing performance reporting and intelligence for businesses) and Codility (technical recruitment platform).
As opposed to investors with a rigid Silicon Valley SaaS mindset – which Oxx believes heavily favours hyper growth ahead of sustainable business – they are particularly passionate about the concept of a more patient and sustainable form of capital.
We recently had the chance to catch up with Richard Anton, Co-founder and General Partner at Oxx. If you get as excited as us about SaaS businesses and where Europe is headed, you might want to read on.
Hello Richard, thank you for being with us today. Would you be so kind as to share with us your journey in the venture capital industry and as co-founder of Oxx?
I’ve been a venture capital investor for 25 years. I was also previously Chairman of the British Venture Capital Association (BVCA). I spent 18 years at Amadeus Capital Partners investing primarily in B2B software.
Through Amadeus I met my friend and Oxx Co-founder Mikael Johnsson, and we worked together there for four years. We were two of a very small number of investors specialising in SaaS at the time, so it was a natural fit. We co-founded Oxx in 2017 to back Europe’s best B2B SaaS companies at the scale-up stage.
Our whole team are SaaS geeks, and our specialised SaaS expertise has been important to the hyper-relevant network and support we offer our founders – but our culture of always being in your corner and rolling up our sleeves is what really sets us apart.
Oxx is jointly headquartered in London, England and Stockholm, Sweden. What are the benefits of setting up a company in these two environments and what does it mean for your operations in Europe?
London and Stockholm are fantastic centres of innovation. However, borders have been largely erased over the last year – i.e., you are no longer limited to hiring talent who can get to your office every day, and your customers don’t have to be based in your city either.
We’re seeing great companies come from all over Europe. The pandemic has forced every company to learn how to buy, sell and operate remotely effectively, which is an enormous opportunity for companies that lack global presence.
So, Oxx is a VC team that invests in B2B SaaS businesses. What is your opinion of the current state of European SaaS? Any findings on the impacts of the pandemic?
We are in the golden age of SaaS right now. In 2011, Marc Andreessen famously said ‘software is eating the world’ – a decade later, software still has so much more left to eat!
The pandemic has rapidly accelerated digital transformation and cloud adoption. Forced to adapt quickly to new remote working practices, businesses everywhere were crying out for new cloud-based communication and collaboration solutions. Cloud adoption was already accelerating, but the pandemic supercharged that growth.
This rapid growth may slow down over time, but the shift towards cloud technologies, and to SaaS as a delivery model, shows no sign of stopping.
Richard, we’ve been told you are personally committed to improving diversity, equity, and inclusion in the venture capital industry. How do you leverage your commitment to make an impact? And how does this translate into the investments you make at Oxx?
As investors, we have the incredible opportunity to influence positive change in the companies we work with and through this in society more broadly. Improving diversity, equity, and inclusion in the venture capital industry through the work of organisations like Future VC will result in more capital and support for underrepresented founders.
For example, we shouldn’t be okay with funding for female–led startups decreasing in 2020, despite venture funding overall reaching record highs. As investors in scale-up stage companies, we see very few companies led by women reaching our stage because there’s such a significant gap in funding for female-led companies at the Seed/early Series A stage. So, support earlier in the pipeline is crucial, particularly mentoring, and warm introductions to other VCs.
Mikael and I started Oxx with an intentional culture of authenticity and support, and the founders we back often tell us we win on culture. Therefore, we’ve been aligned with the companies we back when it comes to thinking about diversity, equity, and inclusion.
The best companies are forward thinking, and that includes their stance on social issues, and their understanding that organisational health is crucial to scaling successfully. Our approach to investee companies is to offer support wherever we’re needed, including the tools and resources to create more equitable and healthier organisations.
Let’s say I am a startup founder looking to get started with a SaaS business. What kind of operational support you and your team could provide me with? Any practical examples?
We invest with extreme selectivity and absolute conviction in a small number of companies, so every company we back has our time and attention if they need it. We invest at the scale-up stage, where companies have found product-market fit and likely have much of their foundational structure and organisation in place already.
The best support an investor can offer should be bespoke and tailored to what the company needs. Cookie cutter formulas just don’t work because every company’s journey is different. Of course, we introduce key recruits, customers, and future investors, but our extensive SaaS expertise means we can offer nuanced strategic support.
After finding product-market fit the secret sauce to rocket ship growth is finding go-to-market fit, which means building a repeatable, scalable growth engine. We’re experts at helping B2B SaaS companies nail their go-to-market fit and unlock the kind of growth that builds category-defining global SaaS leaders.
Where do you see the European SaaS sector in five years? Any trends we should be watching out for?
The pandemic has massively sped up digital transformation and created an incredible environment for SaaS to thrive. SaaS will continue to go from strength to strength and there are so many sectors of interest.
One area we’re excited about is data refinery, which is the process of integrating data between disparate applications. Enterprises have moved from buying monolithic software packages to numerous cloud-based applications, creating isolated data islands. Companies like Snowflake, Zapier and Oxx portfolio company Funnel have proven the potential here.
We’re also excited about the proliferation of open-source software, which allows companies to develop applications faster and more reliably. For example, we recently backed Gravitee.io, an open source API management platform, earlier this year.