BIP Capital is recognized as one of the most active and successful venture investors in the Southeast. As senior VP, Dan Drechsel has extensive experience building and scaling technology businesses and oversees the firm’s investments in SaaS, Fintech, and Dev Tools/Architecture. He has worked with leading innovators that include S1 and Global Energy Decisions.
Dan was a great conversation and I enjoyed hearing his observations about the SaaS marketplace.
M.R. Rangaswami: What is the current state of the enterprise SaaS market?
Dan Drechsel: As you know, by now most enterprises are already using some level of SaaS, which has transformed the modern business environment by replacing legacy systems and providing savings on infrastructure while eliminating perpetual licensing costs. But does this mean the market is firmly established? I don’t think so.
While there are already some major names dominating the current SaaS space, as a technology investor, I believe that SaaS is set for another significant transformation as artificial intelligence, machine learning, and predictive analytics continue to advance. The capabilities these technologies provide will deliver applications that are increasingly smarter and more intuitive, opening up a whole new world of possibility in regard to what SaaS can do and how productive it can help us be.
While the major SaaS players are no doubt investing in these transformative technologies, this also means there’s still plenty of room for not-yet-heard-of innovators to shake up the game and SaaS landscape.
M.R.: Where is BIP Capital investing in terms of the SaaS space right now?
Dan: We’re working with one company that is actually serving the SaaS industry at-large. As you know, the SaaS sales model is geared toward recurring revenue, but that revenue will only recur if your customers are satisfied. User IQ taps into this problem by helping companies not just get new customers, but also grow the customers they already have. By driving value through a deep understanding of the entire customer journey, SaaS firms retain users and grow existing accounts.
We are investing in data being levered into knowledge. As part of this, we’re seeing continuing evolution in the Healthcare IT space. BIP Capital has a portfolio company, OncoLens, that is capturing cancer treatment approaches in one hospital and exposing the best practices taxonomy gathered across the cancer treatment space to other cancer treatment boards to improve outcomes.
We’re also investing in the intersection of data, the physical world, machine learning, and AI. Our investments in Pointivo and ThingTech are examples. Pointivo uses imagery data to enable automation of the inspecting, assessing, and servicing of large assets such as cellular towers, transmission poles, and commercial buildings using data captured by computer vision on drones and manned aerial flights to produce the physical world inside computing in a way that can be fed into workflows. ThingTech, meanwhile, helps enterprises connect and track physical assets such as construction equipment, trucks, and shipping containers in real time using advanced analytics and cloud services.
M.R.: As an investor, in general, what trends and opportunities are you seeing out there?
Dan: We recently published our inaugural BIP Capital 2019 Outlook report that answers the question “where should we invest today in order to be part of tomorrow’s successful innovation?” Our experts analyzed data from over 50 venture capital firms, reviewing the past year’s leading areas of investment. From that, the team extrapolated four “mega trends” for VCs to watch when considering investments in the coming months. They are:
- A change in the way we view trust. In light of recent security breaches and data privacy scandals, consumers, as well as enterprises, will continue to grow more cautious of businesses they used to inherently trust. Tomorrow’s growth companies will build solutions that allow consumers to secure their personal data, or help companies better secure and properly utilize their apps and online systems.
- Using data to drive operational effectiveness. More and more of today’s businesses need technology solutions designed to help them more effectively deliver their value proposition. This trend is factoring into the use of aggregated data for more effective healthcare, the rise of the data-driven customer success industry, and the continued proliferation of IoT technology in government and corporate environments.
- Applications of new technology to create efficiency. Today’s businesses are having to do more with less, which is why technologies like the previously mentioned artificial intelligence (AI), virtual reality (VR), and the use of “smart” drones will create more workplace efficiency.
- Solutions with direct-to-consumer benefits. Many consumer-oriented categories will see high growth over the next 12 months, such as precision medicine and solutions that enhance the event/ticketing experience.
Our goal is to publish a new report each spring that reviews our predictions from last year while making new ones for the upcoming year. If we get this right, we believe smart investments will follow.