How AI is changing SaaS funding with Ventech’s Audrey Soussan

Speaker A: Which good entrepreneurs would not look at AI at all in our world? No one. So I think AI is not um, a vertical in itself anymore. It should be within any company now.

Speaker B: Welcome to the SaaS Revolution Show, a podcast by SaaS Doc. Here we interview SaaS founders from around the world who've been there and done that as they share the ins and outs of how they built their businesses, their operations and their path to securing investment and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your wellbeing and navigate the complexities of this ever changing industry. I'm your host Alex Steamer and together we'll explore the good, the bad and the ugly in the journey to SaaS success. Okay. Welcome back to the SaaS Revolution Show. I am your host Alex Thumer, uh, CEO founder at SaaS stock, also general partner at Back Future Ventures. Delighted to be joined today by Audrey Susan, uh, who's general partner at Ventec. Uh, how are you doing Audrey? Good to see you, uh, again, although you may not have seen me at sasdoc, I think that was the case. But I was in the audience for your fantastic talk, an interview with uh, Robin, uh, Van Leeshout, uh, from insided. So um, uh, I was there.

Speaker A: Hello Alex. Great to see you this time and not face to face but at least be able to speak to you.

Speaker B: Yeah, yeah, no, um, well, I really appreciate that you joined us uh, in Dublin for the last sasdoc Europe. Uh, it was ah, a fantastic session that you had with Robin Van Lee Suit who'd uh, ah, sold uh, uh, inside it, uh, uh, to gain sites and uh, uh, enjoyed that a lot. But Audrey, for um, our guests, the uh, for our listeners, um, would love uh, to, for you to share, uh, you know, who is uh, Audrey Susan, uh, to start with and we can then uh, perhaps go on to a little bit about who uh, Ventec are.

Speaker A: Mhm. So I'm Audrey and uh, I've been working with Ventec for 15 years now. I'm one of the partners of Ventec. I'm based in Paris, investing from France, uh, all over Europe because our Ventec fund is um, actually focusing on France, Germany and the Nordics. We have local teams on the ground uh, for each of these geographies but I'm personally based in Paris so I'm covering France and some of the countries where we don't have anyone on the ground and that are adjacent to France. So it includes the Netherlands where Robin and Inside it come from. So as I said I've been there for 15 years. Um, before that I was working at Dien Capital, another venture capital firm based in London. Um, and I'm also uh, a mother of uh, a daughter, Renaissance.

Speaker B: Very uh, very cool. So 15 years, uh, well 15 years at Ventec and uh, I think a few years prior to that also in the, in uh, the VC world. So uh, you've been there uh for a while. Probably seen uh, you know uh, quite a lot and also quite a lot of shifts in, in tech and, and B2B software. We're obviously going through uh, another big shift uh right now which we, we can uh, uh, touch on uh in a bit. Um, uh, regarding Ventech itself. So you mentioned in terms of uh, where geographically you're based but like in terms of where you invest. M. Is it broad tech? Is it a lot of B2B software now? You know AI?

Speaker A: Yeah, uh, Ventech is a multi specialist fund in the tech industry. So we've been there for 25 years. So of course the thematics changed. Indeed. As you mentioned it already there has been a few shifts in the market since then. Ah. So we've been always investing in the tech um industry but um, currently we focus mainly on AI. Of course, I'm sure we're going to spend a lot of time on that. Uh, but also on digital health, industrial uh, software, also on everything which is related to European sovereignty, cyber space tech and so on. We invest at early stage, um, so it's could be sealed or series A uh companies and um, our ticket size, usual ticket size are 1 to 6 million euros as a first ticket and then we can reinvest up to 15 million euros per companies. We've just raised our latest fund, uh called Ventex 6. Um and uh, so it's a 175 million euro fund. We're very, very glad we can now uh, invest from this uh, fund. Um, it was um, a great Fundraise with uh 95% LP re up RA um and uh, yes we've already made 15 investments from these funds and looking

Speaker B: forward to deploy more investing at the early stage. So maybe just picking on uh again the inside sort of like use case uh was Ventec uh the lead investor uh at Seed, uh for Inside it. How did you find that deal? How did you meet Robin?

Speaker A: Yeah, inside it was very specific because indeed we were the first institutional investor but the company had been bootstrapped for long. So um, indeed it was uh, funded maybe five years before we entered but no one before us entered. Ah, this um, cap table. We invested while the company was generating maybe 2 or 3 million euro ar. So it was already, I would say, quite developed, but without any, uh, external. I know it seems very strange in today's world that some people prefer, um, you know, going the bootstrap way. But, uh, yeah, this company was, uh, was bootstrapped for long before we. We were the first institutional investor to co invest, uh, together with other local funds. As I said, um, it's a Dutch company and we have no local presence, uh, in the Netherlands. We always prefer to have a local presence and to um, yes, to leverage our local presence in France, Germany and the Nordic. So in this case we could not. That's the reason why we um, teamed up with local funds for this round.

Speaker B: Was it through the local fund, to

Speaker A: answer your question, sorry, more, um, broadly speaking. Yeah, usually we would invest at CIDA or Series A. We would be the first institutional investor in the company. We would lead or co lead the rounds.

Speaker B: How did you meet Robin though? Was it, uh, like, in terms of sourcing the deal, was it through some of the local funds and making an intro and you going over to the Netherlands and meeting him?

Speaker A: We had, um, an advisor, uh, as a, uh, common link, I would say, one of his advisors. We knew him for long and so, uh, he brought the deal to us.

Speaker B: So he bootstrapped for a few years. You did the seed round. Uh, how many years after was the, uh, acquisition from Gainsight?

Speaker A: Uh, something like five years after we entered. We invested in the company. It was quite quick.

Speaker B: Yeah, yeah, quite quick. And I guess kind of with that as being the lead investor in the seed, uh, for the five years, um, uh, through that period. What did your engagement as a seed investor look like with Robin? Were you on the board? How regularly did you speak to him, Support, uh, him sort of through the journey. And then how does the lead investor of a seed round get involved and support in the M and A, uh, if at all?

Speaker A: Well, um, again, very specific case, but that illustrates well the way we work with the CEOs. Um, of course we were part of the board, so we had a board seat. We, uh, have a board seat in 100% of our investments and we try to keep it until the very last exit of the, of the company. So, um, even if there are more funds entering, uh, the journey, we, we usually keep our seats until the end. Um, 95% of the case until the exit. And you know, we, we have a 25 years of, um, track record. So we have invested, uh, in 110 invest in 10, 110 companies and 80 of them have exited already, more than 50% of them. So we have a bit of track record on how it went from the beginning to, from the investment to the exit. And in 95% of the case we are still ah, at the board, at the exit. So it's very important for us. And um, we would have regular exchanges, of course, outside of the board. I like to have once every two weeks at least, um, a call, um, or visio, um, or any uh, touchpoint with the founders, um, for two reasons. Why the very beginning they need to understand what we can offer them. Um, I like to say that we tailor our um, value adds. So I couldn't say, hey, here is the catalog of everyone we can deliver to you. It's very tailored to everyone and very, um, very dependent on our specific network of 25 years in this industry. So, um, while letting the founders explain me their challenges, their current challenges made them be very operational. I, uh, won't be usually the one telling them what to do, uh, or how to solve this operational issue. But I will definitely be able to connect to the right person that could help. Um, at the very beginning it's important to have this regular code so that the founders understand what are our, um, um, how this network look like and how much we can help on this, uh, operational, um, challenges. Because I like to say that we invest in the best entrepreneurs, the one who should know their market better than us, who should know how to operate better than us. And I'm not trying to tell them I'm a better entrepreneur that you would be and I would do it better than you and I know how to solve all your issues. Not at all. We are financial, uh, investors and we can bring value by connecting people. So this network is giant again, 25 years in this industry. Um, and um, so that my main role is actually to match uh, this network with the main challenges of the CEO at a specific timing.

Speaker B: When did, uh, uh, the acquisition, uh, of Insider by Gainsight Happen? Was it 2023?

Speaker A: No, it was uh. 2022. Yeah. 2022.

Speaker B: 2022. So, so here's a question. If, uh, if it was today, do you think that uh, Gainsight would have acquired inside it? Uh, because I guess what uh, what we're seeing now is that yes, there is M and A, but companies the size of Gainsight are now all focused on acquiring or it seems, you know, AI, uh, you know, enabled AI first companies. So uh, obviously it happened and it was great that it happened. But maybe was the timing good and because would it have happened today?

Speaker A: The timing was excellent. Uh, and to answer your question. Well, indeed I think that Gainsight as of today would not invest in a company with no AI native strategy. But I'm sure, because I know very well Robin that from then he would have shifted uh, the product to a much more AI product because he's the. So Robin was the CEO and co founder of Inside it and really one of his main skills was his agility and vision. And actually already through the five years we had together, uh, he shifted a bit the company so that it was more fitted to the market. And um, I actually participated to a pivot with him, uh, together with him through Inside it. So I invested on another uh, seam and another value proposition than the one that we sold to Gainsight together. So he already had uh, the agility to shift a bit his uh, value proposition so that it fits more with the customers first but also with the potential acquirers. So I'm sure that uh, I agree, agree with you. Gainsight would um, would not invest in a non AI company as of today, I'm sure. But at the same time I'm sure also that Inside it would have moved from then and uh, put much more

Speaker B: AI and with that I guess kind of segueing into just the, the general like B2B software sort of market and where uh, where VCs are investing now. So you're you know, fully focused on, on AI. So it like is. Is uh, investing in B2B SaaS or like traditional B2B SaaS dead. Is that over? If it is not an AI, uh first AI native company, I mean, which

Speaker A: good entrepreneurs would not look at AI at all in our world? No one. So at some point I think AI, uh, is not um, a vertical in itself anymore. It should be within any company now. And um, AI became a tool that any company could leverage to get more productivity, uh, get faster and get more functionalities, even you know, provide more values to their customers. So uh, a customer, I don't know any SaaS company that would not look at all at AI today and would just say okay, we have a, we had a product without AI, so let's not look at AI and pursue our past. I mean that doesn't exist. So, so there is no uh, non AI SaaS companies anymore. I would just say that some of the founders are, have been more or less agile in the way they incorporated and they added uh, AI functionalities. And I can see it already again, we have a Portfolio of uh, recent deals that are very um, early stage companies and less recent deal that actually are major um companies. And these major companies, some of them you know they've been, they've reached a product market fit for five years, six years, seven years, they've reached some of them more than 50 million euros. Um and by the way in our portfolio we have company doing 800 million euro revenue. So large uh companies and I mean of course they have to rethink all of their positioning. Even if they are mature, they have customers, they already have reached a product market fit. We know that the whole market is shifting with AI and um, he's disruptive in a way for everyone. Not only for uh, the large corporate uh companies, it's also for our major companies that we still call startups. But uh even them they are challenged by AI. They are challenged and they find opportunities in AI. So of course all of them ah, ah leverage AI. So um, what is an AI native company and what is not? The um, main difference is that of course when you have the white page, uh the blank page uh and you start from scratch with knowing that all these tools are now available it's a bit easier to get the agility to understand these tools and include them in your product. While of course when you have a bit of um, um depth, technical depth in your product because you didn't start with rating this AI sometimes agility is a bit less uh easy. And you, you, you you need of course to push yourself to uh, adopt this, this new technology but you have to. So I mean there is no mature companies in our portfolio where we didn't challenge them to uh, especially I mean the one that are SaaS companies where we didn't challenge them at board meetings to tell them okay how are you shifting your value propos you leveraging internally AI, uh how are you competing against these AI native companies? So uh, and the fight between uh, the fight between AI native companies and this, let's say major companies that are now leveraging AI to improve or adapt to beats their value proposition is not for sure won by AI native companies. I mean we have this portfolio company which is a great example uh called Botify Botif Y. Uh it's um, it started as an SEO company search engine customization solution. So um, basically um, it helps any E commerce and media companies to be found within Google. And of course a year and a half ago they launched their geo solution which is hard to be found now within uh chatgpt Perplexity and uh, all the um LLMs and of course they had to be agile enough to understand that the market was moving even if today the maturity of the customers are not yet on you and much more on SEO. And you know this company of course is competing now with many startups, native AI native companies that saw the JIO thing appear and uh, decided to build a product for jio. While Botify launched the JIO product without knowing that JIO was the new term. You know they, they, they by the way the product was not named like that before. They just understood from their customers because they were already on the market because they knew their customers very well. Uh they understood that something was happening and that their customer would need very soon a uh product like that. And so of course they um, you know they added this new, this new product to the market and yes they have um, this challenge that they have to adapt the product and change the products compared uh, to this native company which start from scratch but at the same time they have already access to customers that could upsell and that they know from uh, from long that, that, that they have, I mean the customers have trust uh already in Botify. They uh, they are already using their SEO solution that makes sense to have only one supplier offering both solution SEO and Geo. Because as of today Google is still owning maybe 90 or 92% of market share in the search. Even uh, uh, uh is challenging a lot uh and very quickly uh replacing them. But uh, you know having the trust of the customers and being able to offer both products to uh, let's say the old uh product and the new generation of product is also an asset. So even if I'm investing in early stage startups, I uh, mean I think it's our role as well to consider the incumbents uh especially the major scale ups as uh potential competitors, uh direct competitors to these AI native companies.

Speaker B: Yep, no 100% and great points there. And maybe just on the picking on the legacy uh tech debt um uh point uh so just anecdotally and uh, I think it was in March of this year and we're in a very fast moving world, everything's moving so quickly. But I was having dinner with a bunch of SaaS founders, uh one of them, their uh company's at 10 million ARR, uh it's growing right. I don't know what the growth rates are but I think they were like 5 million probably a year or two years ago. Um and uh, he said uh to me uh this founder that he's got so much legacy tech debt that he's not going to move to AI and rebuild it, um, at the time, I don't know. I should probably check after this if, if he's changed his mind. One would hope so. But do you think in that instance, and let's say if he hasn't changed his mind, right, and that he's at 10 million ARR, and he's still growing and he hasn't moved, uh, you know, has been dynamic as like Robin and you know, agile as other founders, uh, that, you know, he can sustain his business and continue to grow his business? Or do you think that it's going to be a big mistake and in 12 months or 24 months, you, uh, know this, this company could be in, in real trouble.

Speaker A: It's an odd question because, I mean, uh, there is no standard answer to this question. Depends on the market, depends on um, the motion of the company. But I would say, yeah, a good founder should definitely, uh, be able to adapt. And um, maybe he thought about adapting and decided that the cost of adapting was too large compared to what it could provide him. And then that makes sense that it doesn't go there or that he says, okay, let's wait, let's wait a, uh, year more or six months more, uh, to see what else we can do. Because also rushing into every new trend is not a good thing for uh, for a CEO. So um, saying that uh, rushing into AI is not great. But uh, yeah, I think totally depends on what he's rational for not going now into uh, this new direction. I mean, killing the product and starting from scratch is not an answer either. So maybe he thought about, okay, let's acquire uh, an AI native company to complete my uh, offer or uh, you know, change my redesign, my product. Or maybe he thought, well, in my very specific vertical, uh, we've very specific, sensitive data. Uh, I mean, no, a uh, player could compete, so let's not go. But even if that's the case, I mean, I would expect from him that he would leverage AI at least for more productivity internally, even if it's not changing his own products, but for his uh, sales department or marketing department or tech department. I mean, whoever can now use AI for more productivity, even if it's not to implement AI in the finalized product,

Speaker B: and maybe then just sort of shifting um, into uh, now like where you're investing in AI, it's a very competitive space, so you've got to deal with the competition. Prices are, you know, pretty punchy. Um, and uh, so we'd love to know like how, how it is for you as an investor. M. You know, to, to, to, to win a deal, uh, today, um, uh, you know, given the, the competition, what do you need to do, you know, how fast you need to move, um, you know, and maybe also then what you're looking for.

Speaker A: Interesting. Well, um, I mean we are seven partners at Ventec and we don't all have the same investment within the AI area. Uh, my main angle would be actually to find experts in their specific vertical with um, specific barriers to entry that are not linked to the tech itself, but that are linked to either the expertise of the founder or their access to specific data. This is what I'm looking for. And then I would expect um, that they leverage AI to leverage this expertise or this specific data. So even if they are not, you know, um, uh, like the guys coming from Google or from OpenAI or from Mistral or whatever, um, that are um. These are not the founders I'm looking for personally. Of course. Adventec. There are other partners that are specifically focusing on this tech, uh, oriented entrepreneurs. Myself I'm more focusing on these expert guys that know their market very well and my goal will be to help them get surrounded by the people who know everything about AI so that they can mix their great expertise with great AI expertise. So that's a bit what my uh, my uh, let's say uh, beauty, uh, what I'm looking for.

Speaker B: BAS and M. What about advice for founders that are raising in, in this current climate, you know, is it uh, a great time to raise and you know, also what, what should they be doing? You know, what is your advice?

Speaker A: Good question. Um, basically everything which is not very AI related is um, I mean it's very hard for them to, to raise money right now. Um, you know we are also operating, creating a um, sustainability and resilience fund and well, uh, not all of them are focusing a lot on AI. And when they go to the market with their marketplace business model, well it's hard for them to find uh, you know, generalist or AI funds getting uh, interesting to their product. But you know, I think there is no real, I mean whatever you're doing, which is doing great, should get interest from the investor. So I would, I would still go to the M market if I, if I were a founder and if I, you know, if I um, was going into the right direction with my company, uh, growing well and um, you know, with a sustainable growth and really uh, um, answering your market demands or clients demand and finding traction in a way. Yeah, I mean then you have to add a bit of equity story to it so that again you, you show that your vision is maybe to move to the market which is currently booming uh and getting the excite the excitement of everyone or at least taking advantage of this market which getting so much excitement. Um but um. Yeah I mean even if you're not in the, in the pure uh scope I would um tell you to raise money and try and just adapt your roadshow to the right investors.

Speaker B: What about yourself personally? Like what AI tools are you using on a day to day business to help you be uh, you know a better investor, uh more productive or um. Yeah be curious to know what tools you're using.

Speaker A: Well I'm like everyone, I'm um using chat GBD a lot for uh, for many things uh, for gaining productivity to write my emails, to uh write uh on the social media ah to um score my emails ah to um basically uh get the better understanding of the markets to um um get summaries of um of deals that are presented to me to ask the right questions to the founders. So basically uh yeah I'm leveraging LLMs to yeah get sharper and crisper um in understanding faster the deals. Um and uh, yeah I'm using. I mean we are on uh teams basically we are on the Microsoft suite. So uh, everything is including we can leverage many uh agents that are already uh, let's say not tailor made. Um but then we also have a team internally at Vendec which is developing specific tools for us. Um so there are two developers uh working uh full time um on um tailoring being it the existing products or rebuilding products specifically to us and mainly for sourcing for um, you know managing the deal flow, um these type of things.

Speaker B: Finally Audrey, are you bullish on the B2B software market, you know over the next 12 to 24 months?

Speaker A: I am bullish on the B2B market but I am bullish on the B2C as well. I think we should not put it aside. I think um. Of course now it's not to the moment when everyone get excitement about it but at some point you know if agents are spending a lot of. I mean if agents are getting so productive that we have more time for ourselves, maybe we will spend more time uh on B2C tools and uh. And then there will be a new new trend for me to see. We've been in the market for 25 years Adventec and we know that technology is all about trends and cycles and when cycles dies another cycle uh is born. And so basically we stay open to um, any new innovation and any great founders supporting this new innovation.

Speaker B: Awesome. Well, Audrey, thank you so much for joining as a guest on the SaaS Revolution Show. I'm glad we got to do this. Uh, really appreciate it. So thank you so much Audrey. Uh, Susan, general Partner at Ventec, thanks for listening to the SAS Revolution Show. If you enjoyed this episode, please leave a review and follow the show. It helps more SaaS and AI founders to discover the podcast and keeps us bringing you the leaders who are shaping the future of the industry. For more insights and to join the sastock community, head to sastock dot com.