Sapphire Ventures is a growth/expansion-stage tech investor that focuses primarily on enterprise software, as well as consumer technologies such as wearables, networks and vertical applications. Its growth fund typically invests in companies that have a few million dollars in run-rate revenue and up, focusing on companies with product-market fit and a proven go-to-market strategy.
The firm writes checks in the $5-25M range with
plenty of follow-on capital reserved to support the portfolio. They lead ~75% of their rounds and they take
board seats to remain active in assisting their partners. Sapphire Ventures also manages a fund
investment team that invests in earlier stage funds and operates a dedicated
market development team to add value to its portfolio.
Currently they have independent funds and leverage their
legacy affiliation with SAP to drive value to their portfolio companies. The firm was founded in 1996 as SAP Ventures as
a lens into the startup world within and external to the Silicon Valley. In 2011, the firm spun out of SAP and raised
a dedicated fund of $350M and in 2014 rebranded to Sapphire Ventures to mirror
the business model. They have a $650M
second direct fund as well as a $400M investment fund targeted at investing in
earlier-stage VC funds across the United States, Europe and Israel.
While growth is an important metric they evaluate, the team
is ultimately looking for the most innovative and disruptive technologies and
teams. Another key area of focus are the
underlying business metrics, from cash burn to efficiency of the sales engine. Sapphire Ventures looks for sticky customers,
increasing average selling price (ASP), and increased usage/engagement with the
product or services. More importantly,
they look for efficiency behind the growth to see if the company is diligently
spending to maintain the growth.
Sapphire Ventures is uniquely positioned to add value
through their relationship with SAP as well as some of the other largest
enterprises in the world. They can make
introductions to customers in the enterprise software space, reach the CIOs of
many Fortune 500 companies, and put on executive and industry specific events. This effort is facilitated by their dedicated
market development team that works directly with their portfolio companies. Sapphire also spends a lot of time digging
into SaaS and other key business metrics to help guide their portfolio
companies.
They commented that the Austin ecosystem is hitting an inflection
point in which fast growing companies are hitting scale and are excited to
continue looking for investment opportunities throughout Texas.
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