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In 2019, we launched session.vc as a founder-led investment platform designed to take a more hands-on approach than traditional venture capital firms. Having spent more than 20 years building startups and serving as board members of high-growth ventures, session.vc was a natural evolution for us. Our approach is centered on an owner-operator mindset, where we are ourselves the largest investors in our funds.
Our first fund supports fourteen founder teams, several of which have gone on to secure Seed / Series A follow-on rounds. We continue to work closely with these companies, actively supporting their continued growth.
With our latest fund, we are making a deliberate break from the traditional power law game of VC investing, to partner with a growing number of entrepreneurs, who are questioning the conventional venture funding path, which relies on permanent fundraising.
"The mantra of these founders is to raise less and build more."
Many have achieved initial product market fit and significant traction with minimal cash burn. For them raising capital has become an option, not a requirement. The reason they speak with us is not an urgent financing need. They are looking for an experienced partner, with a track record of successfully scaling business operations and delivering exits - a value proposition which few can offer and where we believe we can make a real difference.
Building a broad portfolio of passive investments has always been alien to our owner-operator DNA. Leaving the conventional venture capital factory line will allow us to be more concentrated and devote our full time and attention to a handful of companies, which are in control of their destiny.
If you're a founder seeking active, experienced support to scale your business, let's connect. We love to build!
During the start phase, typically below 3 million ARR (Annual Recurring Revenue), startups must prioritize achieving a high degree of product market fit. Keeping pricing simple and maintaining an experimental mindset is key. Startups should focus on gathering user feedback and iterating their products based on that feedback. Achieving product market fit is not a binary process but rather a continuous journey of understanding customer needs, iterating, and validating assumptions. Startups must avoid making pricing decisions that hinder data collection and learning.
With a small customer base, early-stage startups have the advantage of being more experimental in their approach without worrying about complex transitions or migration issues.
Additionally, startups should gain clarity on the pricing model and the metrics they should attach prices to (e.g. number of users, number of API calls, …) . By experimenting and collecting data and feedback from early customers, startups can refine their pricing approach and be better equipped for the next phase. Getting to the right metric is more important than the level of price. To get to the right level startups should increase their pricing until the market feedback tells "you’ve gone to far".
As startups progress beyond the start phase, entering the build phase (between 3 million and 10 million ARR), their focus shifts to go-to-market-fit. This means building a repeatable and scalable sales processes is key. To do this it becomes essential to have a well-defined pricing model in place to equip the expanding sales team and maintain consistency in the pricing strategy. Otherwise founders will lose control.
This phase presents an opportunity for startups to engage in price discovery. By gradually increasing prices and monitoring the impact on the sales pipeline, startups can identify the optimal price point that balances efficiency and the impact on customer acquisition. This process allows startups to find the sweet spot where they can generate revenue while keeping the pipeline healthy.
Keep in mind that you still want to build scale and for that you don't want to be maximum extractive, meaning you don’t charge the highest possible price.
Over time, it is crucial to develop market power, which refers to a startup's ability to charge prices and capture market share. Market power is a result of competitive positioning and evolves over time. While startups focus on product market fit, they must also consider the long-term goal of building market power, as it determines their ability to capture value in the form of prices and volume. Keep in mind that there is always a trade-off between price and volume. And as mentioned, especially in early-stage, you want to ensure that the balance is right and that you get enough significant customer feedback.
For those who want to dive even deeper into the topic, Andreas and his team have created this awesome website: https://www.principlesofpricing.com/
About Andreas Panayiotou
Our special guest, Andreas Panayiotou, Director of Pricing & Monetisation at Notion Capital, is a proven expert in SaaS pricing and has been supporting exceptional founders on their extraordinary journeys to build efficient high-growth businesses. He also supports the wider European B2B cloud ecosystem on pricing and monetization. Prior to Notion Capital Andreas set-up and led the pricing strategy function for Clarivate and led consulting engagements for Simon-Kucher & Partners.
Im aktuellen VC Lunch unterhalten sich Jeremias Meier (Partner bei session.vc& Gründer von bexio AG) und Julius Göllner (Gründer der ARRtist& Founding Partner bei eNugget Ventures) über ihre Erfahrungen in #B2BSoftware und über ihre Ansichten bezüglich der Entwicklung. Ein spannender Austausch, in dem wertvolle Tipps zu B2B-Sales für pre-seed Startups genannt werden und der Einfluss von Künstlicher Intelligenz auf B2B Software diskutiert wird.
Every B2B SaaS startup should consider PLG. This doesn't mean that PLG is necessarily the right strategy. Depending on the stage of your company, product type and target customers/market, different strategies can make sense.
A good framework to reflect on how and if PLG is suitable is the Moat Framework. You can read more about it here.
In the beginning, every startup needs to find its product market fit and learn how to sell the product to its customers. This is an important task for every founder. By selling yourself as a founder, you not only learn a lot about sales, but also, and more importantly, a lot about your customers and can quickly integrate learnings into your product roadmap. It can make sense to start with a Founder-Led-Sales approach and build up PLG in parallel to scale faster in a next step. I would not recommend finding PMF with PLG, because this takes too long and requires too many investments that are not PMF relevant (think e.g. of self-service / free trial).
Often I hear "PLG is not suitable for enterprise products". This is not true. Some of the most successful PLG companies sell to large enterprises. A good example is Slack, which makes 90% of its revenue with large companies. It is important to look at organizations as a group of teams, departments, etc. Can my product add value within a small team or to a single employee? Then an effective "land and expand" strategy can be implemented with PLG. Products that need to be purchased top-down and integrated into the infrastructure or process of the company (e.g. cyber security solutions, ERP systems) are less suitable for this approach.
Another myth is that PLG means you need no sales people. This is completely wrong. Ideally, marketing, sales and product work perfectly together. That is, sales comes into play when prospects have already had contact with the product and are therefore not only more effective but also more efficient.
A good approach to control the Sales-Effort is to look at the Annual Contract Value (ACV). The higher my ACV is, the more complex the sales process often is. Low ACV below 2k should be sold without sales or with minimal sales effort.
Successful Saas companies ideally grow not only through new customers, but also through existing customers spending more each year (positive Net Revenue Retention, NRR). PLG can not only help to grow and acquire customers efficiently and quickly, but can also help to develop already acquired customers effectively. Free trials for add-on functionality or the activation of additional features and users in self-service can play a central role here. Also important here is a good alignment with your Customer Success Team.
Big thanks to Joel from realgrowthhacking.com for the great insights.
Ich spreche heute mit Thomas Oehl, General Partner bei VSquared über u.A. das early-stage Investment in Isar Aerospace. Außerdem hat VSquared vor nicht all zu langer Zeit einen neuen €165Mio. deep-tech Fonds aufgesetzt, worüber wir in der Folge auch noch sprechen.
Noa described the most significant challenge that On faced over the last four years as keeping the balance between rapid growth and maintaining a unique culture. Here are the top six lessons from our Masterclass with Noa:
Culture development is the responsibility of the entire leadership team. The number one lesson here is to never compromise on touchpoints with your employees, especially not in a virtual environment. Examples include:
Even at On's scale today, two out of three founders participate in every onboarding of new employees!
Testing objectively for culture fit is hard, especially in a virtual environment. To objectivize the hiring process, you need to first develop a company-specific set of core values together with the behaviors that every value stands for. With this, employees can develop a shared understanding of your company's culture and create a common language within the organization, which potential hires can be tested against. Another recommendation is to use interview scorecards as a quantitative basis for comparison between interviewers.
As a young company, you cannot (and probably should not) hire the most experienced people for the job. You have to go for people that are underqualified on paper but whom you believe can grow into their roles. Hire people that have less experience but lots of potential!
Develop a framework to measure your employees not just based on performance but also cultural values and behavioral alignment. On uses a 9 box grid, where the top right box reflects an employee who delivers results above expectations and who is a role model for the culture of the organization.
Using good case studies in interviews requires a lot of work. Still, they are an essential tool to evaluate a person's ability to contribute to their potential role in the organization. On still uses case study interviews for every single hiring process.
As a young company, you often meet senior people who are too early to join your organization. Invest in these relationships! While they might not be the right fit today, they will help you in your future war for talent once the company has grown to the next level.
In summary, the importance of corporate values and the culture they engender cannot be overstated. Put simply, a company's values, and the culture they create, can spell the difference between success and failure.
Stay tuned for more. The next session.vc Masterclass is scheduled for 17.02.2022 on the topic of B2B Sales.
Fact is that since the last financial crises in 08/09, monetary conditions around the world have been very loose, something that was amplified by Covid, and hence capital to fund startups over the past few years has come relatively cheap. With a tightening of monetary conditions and rising interest rates, company valuations go down because the present value of future cash flows are discounted at a higher interest rate and the result is VC’s demanding lower entry levels for their investments in order to meet return expectations of their investors. The process where markets adapt to the new reality is always a volatile one as we are witnessing at the moment.
With a tightening of monetary conditions comes the question, what the effects are on the real economy, meaning the impact on the willingness of companies to spend on new tech.
Expect the fundraising process to take longer. Investors are slowing down capital deployment and will also dedicate more time to the decision-making process. At the same time, good teams and startups with solid traction will of course continue to have access to capital. But investors want to see more data points on product market fit and robust growth. This increases the requirements for a Series A, for example.
In general, very capital-intensive businesses will have a harder time raising funds.
There’s also a requirement for you to do some due diligence of the investors: How are their funds structured? Did they put (enough) cash aside to fund their existing portfolio? Do they have a “clearn” structure, where it is given that the fund itself is not running into financial issues themselves?
Capital efficiently is becoming more important again. Growth at any price was yesterday.
Look at your marketing & sales channels and optimize for faster payback, higher marketing ROI and a healthy LTV/CAC- ratio. This means that channels and activities through which customers were not acquired efficiently in the past may need to be shut down. The same applies to investments in product or R&D: Ask yourself which features can deliver business value in the foreseeable future and prioritize accordingly. Keep in mind that growth is still the most important currency for your startup. But make sure that you have the KPIs under control.
History has shown that companies that adapt faster emerge as winners. If your runway falls below 12 months you should be proactive and consider where you can cut costs or extend your runway with a bridge round. Especially if your revenue projection is very uncertain. Adapting to the changed economic environment too late is likely causing more damage than acting too early.
When budgets get tighter more approvals are involved for a purchase. Especially if you sell to larger companies you should expect longer sales cycles. Try to understand who can approve which investments and adjust your pricing if necessary. Think even more about "land and expand" and try to minimize the financial risk for your customers. That means your customers also want a faster ROI. Appropriate features should be prioritized in product development.
In times of high uncertainty, transparent and honest stakeholder communication is even more important than usual. Show your team that you have a plan and be visible and approachable as a leader. Keep in mind to talk early and openly with your existing investors and to report transparently. It may be useful or necessary to do an internal bridge round and for this it is essential to have the trust of your investors.
We must not forget that the current market development also brings many opportunities. The situation on the labor market could ease a bit and access to talent could improve. Competitors who do not react quickly enough could run out of cash and you can overtake them.
Therefore, keep your eyes open, consistently adapt to the new environment and be a realistic optimist! Winners are made in difficult times!
Our fireside chat-style dialogue resulted in these top 7 lessons:
Your first sales hire should be more entrepreneur than “Mr. Dashboard VP Sales” that is willing & capable to get her hands dirty to fill your lead pipeline quickly. Many founders make the mistake of hiring a senior account executive too early, resulting in frustration for everybody involved as there are no qualified leads to convert and close and the last time the hire picked up the phone for cold calling and in general prospecting was years ago.
Avoid generic questions like “How would you build your lead generation funnel?” and instead ask much more specific questions like
In addition ask hard questions to evaluate cultural fit and key traits such as urgent curiosity, competitiveness, resilience and coachability.
Leave your slide deck at home for at least the first discovery & qualification call, aim to listen at least 60% of the time, interrupt only to ask clarifying questions. Aim to “be a doctor”, ask questions until you really understand before you “prescribe medication” (aka your offer with the best fit).
“No” is great: Because you get the other party to clarify what they really want, not what they do not want. A classic case for this is asking after your demo if there are any questions, to which the prospect’s answer is often “No”. Then follow up with a trigger along the lines of “Well, then we can commit to a collaboration today and start tomorrow, right?” Then listen actively and invest into proactively unveiling concerns why a prospect is not yet ready to buy.
How do you get to the real decision maker fast? By having a champion inside your buyer’s company who is “co-selling” with you. Equip the champion and test him before a crucial internal meeting where you can’t go. Also differentiate carefully between an internal coach who can tell you what needs to be done and a champion who can get these things done.
Long buying cycles are bad for your cash flow, conversion rate and quite frankly risky.
Avoid Proof of Concepts where you can and accelerate trust building by other mechanisms such as case studies, reference calls and action-based money-back guarantees. If a prospect still insists on “evaluating your solution internally and getting back to you if interesting”, you need to go (way) back into discovery & qualification before making an offer.
Avoid letting prospects “off the hook” too easily if they argue “they do not have the time / money / resources available right now”. If cash-out is the issue, offer better payment terms. If resources are the issue, offer to start at a later date if improvements are predictable or to support the implementation from your side. You also book a flight ticket today to go on vacation months later right?
In summary, the importance of building up B2B sales as a core competency as a startup cannot be overstated as market traction is the primary value driver to build a successful company, hire top talent and also get future funding at favourable terms.
Put simply: Startups that sell are startups that scale!
A big thank you to Manuel and Patrick for supporting this masterclass and sharing these valuable insights.
Jan ist direkt nach der Uni im VC eingestiegen und hat verschiedene Arten von VCs auch schon von Innen gesehen. Daher ist er der perfekte Gesprächspartner, um über das Thema "Einstieg im VC" zu sprechen. Wir klappern alle wichtigen Schritte im Bewerbungsprozess ab, von der Frage, wo man sich überhaupt bewerben soll, bis hin zu der Frage, was man im Interview erwarten kann und wie man evt. mit Absagen umgeht. Möchtest du dir dein nächstes Praktikum im VC sicher, dann komme auf das VC Dinner in Frankfurt am Main am 28. April.
Infos dazu findest du unter folgenden Link: https://docs.google.com/forms/d/12CROoJzSvgsoJEAA0ilhXEPVPjdMoO-WG5cejP9eWk4/edit
A little more than a year later I have decided to join venture investor session.vc - here are the three most important reasons why:
At session.vc, entrepreneurs invest in other entrepreneurs. I have not experienced any other VC fund that can provide such hands-on support and brings in experience in all areas from pre-seed to IPO. At session.vc, the partners combine more than half a century of experience in building their own successful companies - with all the beautiful, and not so beautiful learning experiences that one gains along the way. In addition the capital we invest comes primarily from the partners and from other successful entrepreneurs.
I love building companies and working with great people. That's exactly what I can do at session.vc: I help companies and founder teams grow by sharing my experience from more than 15 years of entrepreneurship. And we at session.vc have only just started and have the ambition to build a leading early stage VC fund, offering real hands-on support from successful entrepreneurs who have done it before. So I am excited to contribute to session.vc’ growth and to the whole startup ecosystem.
Martin and Philippe, the two founders of session.vc were my first angel investors at bexio. They taught me how important it is to have the right investors on board as an early-stage startup. I can say that we would not have developed bexio so successfully without them. Martin, who was Chairman of bexio for many years, was an incredibly great mentor. So I am very happy to work with Martin and Philippe again.
It often boils down to the same issue: Building up and running your business costs roughly the same in every developed market of the world (provided you know how to deal with outsourcing certain tasks to low-wage countries). Assume you now get 2Mio in capital and the job to build a B2C platform for a business where you assume market readiness across different geographies is comparable. Imagine that many (if not most) business' require some sort of local specialities preventing you from taking it quickly from country A to country B. Why would you spend the money for building your tech stack and market entry in Switzerland as opposed to a market (like Germany) where you have 10x the potential client base?
A real-world example: 2009 my colleague Philippe Bubb and myself were working on yet another time on a potential new business: We wanted to build what is called a "Robo Advisor" today in Switzerland. We spent days and weeks doing financial models, building prototypes, conducting meetings with potential partners (like banks) to simply give up late 2009 because we just couldn't come up with a sustainable business case - simply due to the limited market size in Switzerland and the fact that banking (and wealth management in particular) was nearly impossible to scale across markets and we were clever enough to understand that it's not as simple as just go to move to another market and build it there. Very frustrating time.
Fast forward to 2011: During an event in London where startups pitch their ideas, I realised that a guy named Nick Hungerford was virtually presenting our idea on stage: He wanted to democratise the wealth management by building an automated digital wealth management solutions. After a great presentation and a few further interactions it was clear for us to invest in nutmeg.com (named Hungry Finance at the time...) since our main obstacle for not building such a solution in Switzerland - the market size - was solved with >60Mio population in the UK. Under the lead of Daniel Aegerter we then joined the financing the round.
It took another 10 years to growth the business to 130'000 customers and £3.5B of assets before JP Morgan Chase acquired the company to use it as foundation for their own international retail wealth management offering.
We at session.vc take the “smart money” approach very seriously. We do our homework, even if that means going to the hardware store and starting to solder, build and craft ourselves.
In 2020, the CEO of Airica, Lukas Limacher, came to us seeking advice on how to accelerate his Go-To-Market strategy and to raise some seed funding. The mission at Airica is to use smart monitoring technology to improve the quality of indoor air and thus, to increase the health, performance and well-being of organisations and companies. The company was about to enter the market when COVID-19 hit Europe.
At that time I knew little about air quality monitoring, but when the pandemic started, we were all taught via the media and health agencies the extent to which indoor air quality impacts the virus’ ability to spread. I knew from the very first moment we spoke to Lukas that smart indoor air quality measuring will be one of those topics that will stay relevant – even in post-pandemic times. Just remember the last time you took a short break during a long meeting and then re-entered the same room, nearly fainting because of the poor air quality.
But even though I had now realised the importance of the topic, I still didn’t quite understand how the whole measuring process worked. So, I decided to go to the hardware store and build a simplified version of Airica's product to learn and understand the complexity of the topic. I learned a lot during this process. Here are some of the key lessons:
Without doing such a thorough personal investigation of the product, we at session.vc would have never been able to understand the real challenges which face Airica today and into the future. We also would have never fully understood the huge potential smart indoor air measuring technology has. As an early stage investor, we had to invest first and foremost into building up our knowledge and our skills, in order to become the best possible partner and active supporter of our new portfolio company Airica. This is what we do at session.vc.
