Five years ago, Munich-based investor Senovo launched the company. Private investors commissioned Frederick von Mallinckrodt and Alexander Buchberger to invest their capital. Markus Grundmann has since joined as a partner and reported to us on the direction the company is heading.
Senovo has been active since 2011, and in 2013 the investor began to focus more on investments in the Software-as-a-Service (SaaS) sector. This year the company brought on board Markus Grundmann, a software expert and former associate of Target Partners on board. The goal: Senovo is to grow into a VC firm. Will Senovo be more visible in the future? Is the investor reorienting itself, or is the Munich-based company simply continuing its growth path? We asked partners Markus Grundmann:
What was your original approach? Why the change of course now?
The expansion is not a change of course, but rather an expansion of our activities, which helps us to better meet the challenges posed by investors and to anchor the important areas of sales, legal and tech directly within our partners.
By expanding our partnership, we're strengthening our focus: We each have a B2B background, over five years of experience in the B2B SaaS space, yet we complement each other. Alex has a business administration background, Frederick is a lawyer, and I'm now joining with my background in software development.
“SaaS deal flow in Europe has grown fourfold.”
Why do you focus on SaaS?
On the one hand, it's the internal perspective that makes SaaS the standard business model for emerging B2B startups: SaaS offers excellent unit economics with low integration costs, and its cash flow corresponds to the long-term customer relationships typically found in the enterprise sector. At the same time, SaaS enables high product quality through agile and data-driven development processes.
On the other hand, SaaS is also the business model most in demand among B2B startups' customers. Gartner recently stated that in 2019 In 2020, a “No Cloud” policy will be as rare as a “No Internet” policy is todayWe see a massive change in the market and, as a B2B VC, we naturally want to be part of it.
Startups in the B2B sector agree: SaaS deal flow in Europe has quadrupled in the last two to three years. The last quadrupling before that took about six years.
The SaaS startup market is developing enormous momentum, and like all new business models and markets, there are certain recipes for success when it comes to metrics, processes, and tools. Our job as a VC is to manage our investments so that they are state-of-the-art in all areas and have access to the most relevant investors in their field.
We strongly believe that venture capital is a product for entrepreneurs, and that entrepreneurs are at the heart of our activities. This focus helps us, as investors, offer entrepreneurs the best possible customer experience.
Which of your investments do you currently see the greatest potential in?
We have many exciting companies in our portfolio: the most visible are certainly our somewhat older investments such as Veact, Shore, or RiskmethodsIt takes about seven years to successfully launch a successful enterprise startup, and our average investment is only 1.4 years old. We expect several more stars to join these three.
Before Senovo, I spent almost five years at Target Partners, where you can see a similar picture: with the first investments in tado° and Falcon.io are already clearly showing success. But younger startups like Dedrone are also developing well.
The location counts
Why is Munich a good location for VCs?
Munich is an excellent location with great business angels, excellent VC funds, startups, and potential founders and employees. Munich also has many established large companies, which are the customers of our startups. These are all the ingredients that make up a great ecosystem.
However, I think it's important that a startup locates where it makes the most sense for its business model. For example, I would rather locate a startup with software for shipping companies in Hamburg than Munich. As investors, we're quite pragmatic in this regard and are happy to look at all exciting startups within our focus, regardless of their location.
