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Continuing our spotlight on vertical SaaS, we bring you a deeper dive on one of the companies we covered in our post yesterday: Zenoti. Zenoti's journey in the vertical SaaS space offers valuable insights into the future of industry-specific cloud solutions. Founded in 2010, this Bellevue, WA, based company became India's first vertical SaaS unicorn in 2020, securing $160 million in Series D funding led by Advent International. Focusing on the beauty and wellness industry, Zenoti has demonstrated the power of deep sector expertise in building successful SaaS platforms. As of December 2020, their software served over 12,000 businesses across 50 countries, processing more than $6 billion in payments annually. Zenoti's client roster includes major brands like European Wax Center, Hand & Stone, and Toni&Guy, showcasing its appeal to industry leaders. The company's comprehensive approach addresses various aspects of salon and spa management, from appointment scheduling to inventory control. In 2021, Zenoti acquired SuperSalon, indicating a trend towards consolidation in the vertical SaaS market. With total funding of $250 million across four rounds, Zenoti has attracted investments from notable firms like Tiger Global Management and Steadview Capital. Key takeaways for companies, investors, and acquirers: 1. Niche expertise pays off: Deep understanding of sector-specific challenges can lead to globally scalable solutions. 2. Ecosystem approach: Comprehensive platforms addressing multiple industry needs may be more successful than point solutions. 3. Emerging market potential: Vertical SaaS unicorns can emerge from markets outside traditional tech hubs. 4. Cross-border applicability: Well-designed vertical SaaS solutions can transcend geographical boundaries. 5. Consolidation opportunities: As markets mature, strategic acquisitions can expand market share and capabilities. 6. Investor appeal: Vertical SaaS companies solving critical industry problems can attract significant funding. Zenoti's success highlights the potential for vertical SaaS companies to achieve global scale by solving universal industry needs, even when originating from emerging tech markets. It underscores the importance of deep industry knowledge, comprehensive solutions, and strategic growth in the vertical SaaS space. Stay tuned for more deep-dives on vertical SaaS in the coming days! #verticalSaaS #startups #india #venturecapital #privateequity

Inspired by Luke Sophinos's posts on Vertical SaaS, we are sharing our perspectives on this very interesting space: for investors, customers, and for Private Equity acquirers. We like tracking this space in the US and in India (two markets with a lot of activity for us at HKMC). Vertical SaaS (vSaaS) provides cloud-based solutions tailored for specific industries, unlike horizontal SaaS which offers broad functionality across sectors. Vertical SaaS features industry-specific tools, specialized workflows, deep integration with standard tools, and targeted analytics. The allure of vSaaS lies in its ability to provide specialized tools, industry expertise, and potential for market leadership within specific sectors. In the US market, vSaaS companies have shown impressive growth: 1. Life Sciences: Veeva Systems - $2.05 billion revenue in FY 2023, up 26% YoY. 2. Construction: Procore Technologies - $720 million revenue in 2022, up 40% YoY. 3. Real Estate: AppFolio - $471.9 million revenue in 2022, up 31% YoY. 4. Healthcare: athenahealth - Acquired for $17 billion in 2022. 5. Education: Instructure - Q4 2022 revenue $121.4 million, up 12% YoY. 6. Hospitality: Toast - Q4 2022 revenue $769 million, up 50% YoY. In the Indian market: 1. Healthcare: Innovaccer - $3.2 billion valuation in 2021. 2. Logistics: FarEye - $100 million Series E funding in 2021. 3. Beauty and Wellness: Zenoti - First vertical SaaS unicorn from India. 4. Restaurants: Posist Technologies - $5 million funding in 2021. 5. Dental Care: CareStack™ - Dental Practice Management - $22.5 million Series C funding in 2022. 6. E-commerce: Unicommerce - Serves over 10,000 customers in India and Middle East. Investors are attracted to vertical SaaS due to higher customer retention rates and lower acquisition costs. OpenView's 2022 SaaS Benchmarks Report shows vSaaS companies have a median net revenue retention of 110% vs. 106% for horizontal SaaS. Private equity firms have shown strong interest: - Thoma Bravo acquired Bottomline Technologies for $2.6 billion in 2022. - Vista Equity Partners acquired Duck Creek Technologies for $2.6 billion in 2023. vSaaS appeals to: - Customers: Tailored solutions and deep industry expertise. - Investors: Strong growth potential and higher retention rates. - Acquirers: Consolidation opportunities and market dominance potential. Vertical SaaS is poised for significant growth and innovation, driven by increasing demand for industry-specific solutions and advancements in AI and machine learning that will enable more sophisticated, predictive capabilities tailored to each sector. As the market matures, expect to see further consolidation through mergers and acquisitions, as well as the emergence of new players addressing previously underserved niche industries, ultimately leading to a more diverse and specialized SaaS ecosystem. #verticalSaaS #startups #privateequity #india #USA #venturecapital

Every ecosystem has certain key connectors that truly propel the quality and quantity of discourse forward. We believe Max Pog to be one of them, for startups and investors looking to connect across borders. We are keenly looking forward to his activity, and that of many from his extended network, at this event on Wednesday August 28, 2024! Looking forward to seeing friends and making new ones. #angelinvestors #venturecapital #startup #global

𝐎𝐮𝐫 𝐍𝐞𝐱𝐭 𝐂𝐡𝐚𝐩𝐭𝐞𝐫: 𝐂𝐡𝐚𝐧𝐧𝐞𝐥𝐢𝐧𝐠 𝐭𝐡𝐞 𝐒𝐲𝐦𝐛𝐢𝐨𝐬𝐢𝐬 𝐨𝐟 𝐇𝐮𝐦𝐚𝐧 𝐈𝐧𝐬𝐢𝐠𝐡𝐭 & 𝐀𝐈 𝐈𝐧𝐭𝐞𝐥𝐥𝐢𝐠𝐞𝐧𝐜𝐞 With great enthusiasm and commitment, we bring you a sneak peek of our first-of-many AI assistants! It is being designed to radically change how venture capitalists (VCs) prepare and pitch to build relationships and secure commitments from limited partners (LPs). We continue to believe very strongly that human AND machine are greater than human OR machine. At the core of our upcoming AI Assistant lies over 40 years of team's combined experience in venture capital and startup building, scaling, and successful exits. We are fusing deep LP insights, insider GP perspectives, entrepreneur-centric understanding, and comprehensive industry trend analysis with cutting-edge AI capabilities. 𝐊𝐞𝐲 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐬 𝐏𝐫𝐞𝐯𝐢𝐞𝐰 - Precision-Engineered Pitch Refinement: Tailored feedback on pitch decks, focusing on critical elements like industry focus and startup stage. - Dynamic Investor Persona Modeling: Simulates diverse investor archetypes to prepare for varied pitch scenarios. - Real-Time Delivery Analytics: Offers instant insights into pitch delivery for immediate adjustments. - Data-Driven Narrative Construction: Ensures pitches are compelling and grounded in current market data. - Strategic Network Visualization: Highlights our ecosystem connections, reinforcing pitch credibility. - Iterative Performance Optimization: Tracks performance across pitches for continuous improvement. - Compliance-Focused Guidance: Provides advice on legal considerations for sound pitches. - Immersive Learning Environment: Offers scenario-based training to enhance performance under pressure. 𝐓𝐡𝐞 𝐃𝐚𝐰𝐧 𝐨𝐟 𝐚 𝐍𝐞𝐰 𝐕𝐂 𝐄𝐫𝐚 This human-AI symbiosis isn't just elevating pitch preparation - it's reimagining venture capital fund development. We are crafting investment narratives that are both compelling and prescient, offering insights that anticipate market shifts. Stay tuned for our official release in the near future - the augmented intelligence (r)evolution is just beginning. #aiagents #cognition #venturecapital #emergingmanagers #startups

All-star team, years of work, a singular mission: globally accessible lung health This partnership of Swaasa® - By Salcit Technologies with Google marks a pioneering and truly accelerant step towards the company's mission. Not only are they India's first government-approved Software-as-a-Medical-Device (SaMD), but they are also the aggregator of arguably the world's largest physician-annotated cough database. Their 'Shazam for cough sounds' platform has already evaluated 300,000+ cough samples in India, and is now poised to go global with their solution. With COPD, TB, and other respiratory solutions affecting over 500 Million people globally, we need to be doing so much more to help, and Swaasa is a beacon of hope in this direction. Congrats to Narayana Rao Sripada Manmohan Jain Venkat Yechuri and the whole Swaasa team on this milestone, and wishing them all the very best and more in the journey ahead. 🚀 It's been a privilege to play a role in their journey. #healthtech #startups #ai #healthcare #google

From space tech in the skies to deep tech all around us, our perspectives continue, with our focus today on a snapshot of the ecosystem in India. India's deep tech sector has seen remarkable growth, with over 3,000 startups as of 2023, a 53% increase from 2021. These ventures focus on AI/ML, IoT, big data, and blockchain, driving innovation across multiple sectors. The government's National Deep Tech Startup Policy, launched in 2022, aims to foster 10,000 deep tech startups by 2030, backed by a ₹1,000 crore ($121 million) fund. This initiative underscores India's commitment to becoming a global deep tech hub. Funding for Indian deep tech startups reached $2.3 billion in 2023, a 40% year-over-year increase. Specialized VC firms play a crucial role, providing not just capital but domain expertise and longer runways for tech development: - Speciale Invest (spacetech, robotics) - pi Ventures (AI, ML, IoT) - Endiya Partners (healthtech, enterprise software) - Bharat Innovation Fund (healthcare, agriculture, sustainability) - Axilor Ventures (dedicated deep tech program) Academic institutions contribute significantly, with Indian Institute of Technology, Madras's research park hosting 200+ deep tech startups and Indian Institute of Science (IISc) Bengaluru's incubator supporting 40+ ventures. Notable deep tech startups founded in the past 6 years include: - AgniKul Cosmos (2017): Developing small satellite launch vehicles - Myelin Foundry (2019): AI-driven video streaming technology - ASTROME SPACE TECHNOLOGIES (2018): High-speed wireless comms. - Log9 Materials (2018): Graphene-based energy solutions - Ethereal Machines (2018): 5-axis 3D printing and CNC machining - Bellatrix Aerospace (2018): Electric propulsion systems for satellites - Cropin (2019): AI and data-driven farm management solutions - Niramai Health Analytix (2018): AI-based breast cancer screening - Vecmocon Technologies (2020): Electric vehicle drivetrain solutions - Astrogate Labs (2019): Optical communication for small satellites Major themes include sustainable technologies, health tech, space tech, and advanced manufacturing. The sector's future focuses on increased academia-industry collaboration, global expansion, and addressing talent shortages. Challenges persist, including limited domestic market readiness. However, initiatives like the Indo-US AI Initiative (2023) aim to foster international collaboration. Patent filings in deep tech surged 80% between 2019 and 2023, indicating a robust innovation pipeline. This growth in IP reflects the maturing ecosystem and increasing global competitiveness of Indian deep tech startups. Looking ahead, India is leveraging strengths in space tech, advanced materials, and AI in healthcare and agriculture. The combination of govt support, specialized funding, academic research, and entrepreneurial talent positions India as an emerging powerhouse in the global deep tech landscape. #india #startups #deeptech #ventureCapital

In the vastness of space, Silicon Valley's boundless ambition and talent find their perfect match. We present our research on how today's tech giants and scrappy startups are shaping the future of our cosmic journey. Silicon Valley's space tech industry has evolved significantly, beginning in the 1950s and 1960s with contributions from companies like Fairchild - now part of ON Semiconductor and HP, which provided essential components for NASA - National Aeronautics and Space Administration. This foundation laid the groundwork for the region to emerge as a global leader in space tech innovation. Early 2000s to 2010s: Foundations of Modern Space Tech - SpaceX was pivotal, achieving the first privately funded orbital launch in 2008. This spurred other startups like Planet Labs Inc. and Rocket Lab, focusing on small satellites and cost-effective launches. - Venture capital poured into the space sector, with Sequoia Capital**, Andreessen Horowitz, and Founders Fund playing crucial roles in funding these early innovators. 2010s to 2024: Expansion and Diversification - Satellite Technology and Earth Observation: Spire and BlackSky became leaders, backed by Bessemer Venture Partners and RRE Ventures. Orbital Insight, supported by GV (Google Ventures) and Sequoia Capital, advanced AI and machine learning for satellite imagery. - Launch Systems: Astra and Relativity Space focused on scalable, low-cost rocket solutions, with Relativity Space pioneering 3D-printed rockets. Their efforts attracted investment from Y Combinator and Bessemer Venture Partners. - Spectral Imaging: Capella Space, a leader in radar imaging for Earth observation, was backed by DCVC and Canaan. - Space Hardware: Redwire Space focused on microgravity manufacturing, supported by New Enterprise Associates (NEA) and Space Angels. 2019-2024: New Entrants and Technological Frontiers - Varda Space Industries, specializing in manufacturing in space, secured funding from Lux Capital and General Catalyst to advance microgravity production. - Mynaric entered the market with laser communication technologies for space-based internet, attracting investment from Tencent and Seraphim Capital Management. - Launcher focused on small satellite launch vehicles and received backing from Techstars and Main Sequence. - Axiom Space, with plans to build the first commercial space station, secured significant investment from C5 Capital and @Boeing AEI HorizonX. As Silicon Valley ventures deeper into space, we're witnessing the dawn of a new frontier where technology and ambition redefine our future. The innovations from this region aren't just advancing industries—they're laying the groundwork for humanity's next giant leap. ✨ #spacetech #startups #deeptech #venturecapital

We start off this week with our reflection on a very insightful post from Wendy Lu and Gordon Ritter at Emergence Capital. They write about the famed S-curve, this time evident in AI Innovation. Indeed, we believe that the AI sector, mirroring past tech cycles, is starting to hit an inflection point. Models trained on public data are starting to plateau out, paving the way to models trained on proprietary enterprise data. This plateau, far from signaling stagnation, marks the cusp of a new innovation wave—one that savvy investors and entrepreneurs are poised to ride. The next frontier in AI isn't (necessarily) about bigger models; it's about smarter data. Companies leveraging proprietary datasets are seeing productivity gains of up to 25%, particularly in data-intensive industries. This trend is the logical evolution of the enterprise BI boom of the past few decades, but with far greater transformative potential. Domain-specific AI, powered by proprietary data and expert knowledge, is outperforming generic models by significant margins. This convergence of specialized data and AI presents a golden opportunity for those who can harness it effectively. For startups, the message is clear: unique data isn't just an asset—it's the cornerstone of sustainable competitive advantage. For investors, the focus should be on ventures that not only possess valuable data but demonstrate a clear strategy for extracting insights from it. Cohere, Scale AI, Glean, DataRobot, Algolia, and SambaNova Systems are just some of the companies leading this powerful evolution. Watch this space to witness the growth of the next generation of enterprise AI companies. We certainly are. #genAI #enterpriseSaaS #scurve #startups #venturecapital

This past week at HKMC has been full of interactions with inspiring startup founders, from India, Ireland, US, Switzerland, and Korea, to list just a few countries. Inspired, we raise a philosophical toast to the entrepreneurial class🥂 As another week draws to a close, we raise our glasses to you—the visionaries who never truly clock out. Your journey resembles not a straight line, but a winding path of triumphs and setbacks, each shaping your ultimate success. From bustling metropolises to remote villages, you form a tapestry of diversity: street-smart hustlers and Ivy League graduates, seasoned executives and wide-eyed teenagers. United by ambition and resilience, your backgrounds may differ, but your spirit remains unwaveringly bold. We see you navigating the complex terrain of entrepreneurship—burning the midnight oil, juggling spreadsheets and strategy sessions. Your blend of rigorous analysis, intuitive leaps, and that delightful naïveté—the audacity to question "why not?"—continues to astound and spark revolutions in thought and industry alike. To the world, you are the catalysts of progress. To us, you embody the very essence of human potential. As you head into this weekend, know that we stand with you, across oceans and time zones, recognizing both your visible successes and unseen struggles. So whether you're brainstorming in Silicon Valley garages, innovating in Nairobi's tech hubs, collaborating in Berlin's co-working spaces, or coding in Bangalore's startups—press on through every peak and valley. Your perseverance reshapes our global reality. With profound admiration, we toast to you—the entrepreneurs of the world. May your audacious dreams and unwavering resolve continue to forge our collective future, this weekend and beyond. Onward, brilliantly and boldly, through calm and squall alike. #startups #entrepreneurs

We continue our deep-dive into the startup ecosystem in India. We find that many Indian startups are focusing on five major themes: fintech, healthcare, AI, edtech, and sustainability. We believe this is due to India's rapid digital adoption, financial inclusion challenges, healthcare access needs, educational gaps, and urbanization pressures. Investors like Sequoia Capital, Accel, and Khosla Ventures, alongside India-based firms like Blume Ventures and Chiratae Ventures, are backing these ventures, recognizing their potential to address India's unique challenges. Let's dive in: 1. Fintech: Driven by the need for financial inclusion, startups like VidyutTech (EV finance) and Jupiter (digital banking) are innovating within this space. Sequoia, Accel, and Blume Ventures have recognized the potential of these companies, given the large unbanked population and the push towards a cashless economy. 2. Healthcare: Startups such as NeoDocs (YC S21) (at-home diagnostics) and Loop (comprehensive health insurance) are focusing on making healthcare accessible and affordable across India. This sector is attracting significant investment from Khosla Ventures and Chiratae Ventures, reflecting the urgent need to address healthcare disparities in both urban and rural areas. 3. AI and Technology: Sarvam (Gen AI) and Scrut Automation (compliance automation) are examples of startups leveraging AI to solve local problems. Investors like Lightspeed India and Kalaari Capital are backing these ventures, highlighting the role of AI in enhancing efficiency and innovation in various sectors. 4. Edtech: With a growing young population, edtech startups like Cuemath (math learning) and Eduvanz (education financing) are bridging educational gaps. Sequoia and Tiger Global Management, along with Indian investors like Aarin Capital, are driving this growth, recognizing the potential to scale quality education in underserved areas. 5. Sustainability and Mobility: Startups such as Fashinza (sustainable fashion supply chain) and Bounce (EV rentals) are addressing the need for sustainable solutions. Investors like Accel and SAIF Partners (now Elevation Capital) are supporting these efforts, reflecting the growing demand for environmentally responsible business models in India’s rapidly urbanizing environment. These themes demonstrate how Indian startups are strategically focusing on sectors with the highest potential for impact, supported by both global and local investors who see the long-term value in addressing these critical areas. #india #startups #venturecapital #fintech #edtech #sustainability #ai #healthcare