.jpg)
Origination = the lifeblood of any VC firm
An investment fund’s success relies on many facets, from decision making capability, to investor relations and everything in between. But in many respects, for a venture investor, it is preferential access to high quality investment opportunities that underpins the “edge” so many fund managers profess to maintain.
Fund managers have different approaches to sourcing. While most strategies are relationship focused, a number of funds now also blend strategies involving outbound activities and some use of technology to help them identify the best opportunities in market. During the last two years of private market exuberance, managers have increasingly looked to “out-of-cycle” sourcing to avoid highly competitive fundraise processes at inflated valuations.
The associates at VC funds are charged with the responsibility for origination most directly. In reality, many VC funds operate a quasi sales motion similar to the sales motions at startups you’ve probably encountered. That blog you might have recently read authored by a venture investor? Well, that’s simply a lead magnet for new founders to reach out. The dinner you were invited to? Same idea. What about the cohort based learning program for early stage product managers? You guessed it…
A recent partner at a Tier one fund told me their ambition is to have 100% coverage of every deal in their local market. Most strategies are therefore garnered at building top of funnel optionality and being part of the information flow. Well… Fortunately for me, our peers don’t quite have total coverage. They aren’t rocking the same 4 year old birthday party circuit as me. And they aren’t mates with one Charlie Krowitz (proud friend, 4 years of age). It’s the b’day circuit and everyday activities that remain a critical piece of the EVP origination strategy, continuing to drive exceptional, serendipitous opportunities.
Uncovering BlendAI
Having watched many kids b’day parties over the years alongside Dean Krowitz, it was great fun to meet Dean and his co-founder Michael Bezman in a professional context. The pair are building BlendAI. And it’s not the first successful company they’ve set out to build. Both have long histories within the technology ecosystem and proven capabilities of building teams, products and solutions for their customers.
BlendAI’s product helps e-commerce stores maintain profitable growth by simplifying and centralising online advertising. Machine learning algorithms distribute content and optimise budgets across multiple channels to help with ongoing management, optimisation and content creation. BlendAI has demonstrated the early signs of a very strong product offering that can deliver major profit improvements for its customers. During customer conversations we frequently heard stories of significant step changes in ROAS (as much as from 2x to 16x).
Growing complexity of digital marketing
With the ongoing emergence of new digital advertising platforms, the complexity of online marketing continues to grow. The 2010s were characterised by the adoption of social media marketing at scale, the widespread proliferation of e-commerce, and the collapse of traditional retail distribution networks. The 2020s are being characterised by complex digital user journeys, multi-touch attribution, sophisticated retargeting and rapidly shifting audiences, all making the process of digital marketing increasingly nuanced and complex.
At the same time, channels are becoming saturated and expensive. Audiences are flocking to (now not so) new platforms (such as TikTok), and companies like Walgreens, Uber and Disney have announced the launch of their own ad platforms. Small to mid sized business operators are required to advertise across multiple channels, to varied (and transient) audiences in an increasingly sophisticated online environment. As the complexity of the channel mix grows, having a centralised tool to manage the underlying platforms, as well as a highly sophisticated data and machine learning capability is becoming imperative.
The rise of the "Solopreneur"
At the same time, new online-first businesses are being created at an accelerating rate. The capital required to start a company has collapsed, the tooling to get a product off the ground now exists ‘off the shelf’, and the barriers to start a business have never been lower. These new businesses all require digital marketing, a skill which most “solopreneurs” typically do not have. As the digital marketing complexity described above continues to grow, it is becoming increasingly difficult for a solopreneur to “self-serve” and to achieve results.
This is precisely the opportunity for BlendAI, which benefits from the tailwind of ongoing digital business creation, in an environment of ever increasing digital marketing complexity.
A story we’ve seen before?
At EVP we have previously enjoyed success investing in products attached to existing ecosystems. Much of Deputy’s and Ignition’s early growth came via the Xero marketplace. As we remain in the early innings of the Shopify App Store, without a clear leader having emerged in the marketing automation space, we believe Blend to be well positioned to replicate these outcomes within Shopify’s vast ecosystem of over 1.75m merchants.
To draw the parallel, from the same point, Ignition grew 13x in a 2 year stretch from c.$150k ARR to $2m A RR (without a sales or marketing capability). In the case of Deputy, c.80% of new customers acquired over the first 6 years came via the Xero App Store. In closed app ecosystems, when a company can deliver a genuine value proposition via an easy-to-use product, there is potential for widespread adoption, strong referral characteristics and rapid growth. Whilst the proposition is early, we see enormous potential and believe that the founding team have the requisite skills, experience and drive to deliver on the opportunity.
We are proud to join the BlendAI journey and partner with Michael and Dean on their scaling journey. If you or a friend are building an e-commerce business and looking for a step change on marketing ROI, please be in touch directly. A special thanks to Benj and Charlie for the serendipitous connection. And yes, Oli is accepting of all b’day party invites…
Origination = the lifeblood of any VC firm
An investment fund’s success relies on many facets, from decision making capability, to investor relations and everything in between. But in many respects, for a venture investor, it is preferential access to high quality investment opportunities that underpins the “edge” so many fund managers profess to maintain.
Fund managers have different approaches to sourcing. While most strategies are relationship focused, a number of funds now also blend strategies involving outbound activities and some use of technology to help them identify the best opportunities in market. During the last two years of private market exuberance, managers have increasingly looked to “out-of-cycle” sourcing to avoid highly competitive fundraise processes at inflated valuations.
The associates at VC funds are charged with the responsibility for origination most directly. In reality, many VC funds operate a quasi sales motion similar to the sales motions at startups you’ve probably encountered. That blog you might have recently read authored by a venture investor? Well, that’s simply a lead magnet for new founders to reach out. The dinner you were invited to? Same idea. What about the cohort based learning program for early stage product managers? You guessed it…
A recent partner at a Tier one fund told me their ambition is to have 100% coverage of every deal in their local market. Most strategies are therefore garnered at building top of funnel optionality and being part of the information flow. Well… Fortunately for me, our peers don’t quite have total coverage. They aren’t rocking the same 4 year old birthday party circuit as me. And they aren’t mates with one Charlie Krowitz (proud friend, 4 years of age). It’s the b’day circuit and everyday activities that remain a critical piece of the EVP origination strategy, continuing to drive exceptional, serendipitous opportunities.
Uncovering BlendAI
Having watched many kids b’day parties over the years alongside Dean Krowitz, it was great fun to meet Dean and his co-founder Michael Bezman in a professional context. The pair are building BlendAI. And it’s not the first successful company they’ve set out to build. Both have long histories within the technology ecosystem and proven capabilities of building teams, products and solutions for their customers.
BlendAI’s product helps e-commerce stores maintain profitable growth by simplifying and centralising online advertising. Machine learning algorithms distribute content and optimise budgets across multiple channels to help with ongoing management, optimisation and content creation. BlendAI has demonstrated the early signs of a very strong product offering that can deliver major profit improvements for its customers. During customer conversations we frequently heard stories of significant step changes in ROAS (as much as from 2x to 16x).
Growing complexity of digital marketing
With the ongoing emergence of new digital advertising platforms, the complexity of online marketing continues to grow. The 2010s were characterised by the adoption of social media marketing at scale, the widespread proliferation of e-commerce, and the collapse of traditional retail distribution networks. The 2020s are being characterised by complex digital user journeys, multi-touch attribution, sophisticated retargeting and rapidly shifting audiences, all making the process of digital marketing increasingly nuanced and complex.
At the same time, channels are becoming saturated and expensive. Audiences are flocking to (now not so) new platforms (such as TikTok), and companies like Walgreens, Uber and Disney have announced the launch of their own ad platforms. Small to mid sized business operators are required to advertise across multiple channels, to varied (and transient) audiences in an increasingly sophisticated online environment. As the complexity of the channel mix grows, having a centralised tool to manage the underlying platforms, as well as a highly sophisticated data and machine learning capability is becoming imperative.
The rise of the "Solopreneur"
At the same time, new online-first businesses are being created at an accelerating rate. The capital required to start a company has collapsed, the tooling to get a product off the ground now exists ‘off the shelf’, and the barriers to start a business have never been lower. These new businesses all require digital marketing, a skill which most “solopreneurs” typically do not have. As the digital marketing complexity described above continues to grow, it is becoming increasingly difficult for a solopreneur to “self-serve” and to achieve results.
This is precisely the opportunity for BlendAI, which benefits from the tailwind of ongoing digital business creation, in an environment of ever increasing digital marketing complexity.
A story we’ve seen before?
At EVP we have previously enjoyed success investing in products attached to existing ecosystems. Much of Deputy’s and Ignition’s early growth came via the Xero marketplace. As we remain in the early innings of the Shopify App Store, without a clear leader having emerged in the marketing automation space, we believe Blend to be well positioned to replicate these outcomes within Shopify’s vast ecosystem of over 1.75m merchants.
To draw the parallel, from the same point, Ignition grew 13x in a 2 year stretch from c.$150k ARR to $2m A RR (without a sales or marketing capability). In the case of Deputy, c.80% of new customers acquired over the first 6 years came via the Xero App Store. In closed app ecosystems, when a company can deliver a genuine value proposition via an easy-to-use product, there is potential for widespread adoption, strong referral characteristics and rapid growth. Whilst the proposition is early, we see enormous potential and believe that the founding team have the requisite skills, experience and drive to deliver on the opportunity.
We are proud to join the BlendAI journey and partner with Michael and Dean on their scaling journey. If you or a friend are building an e-commerce business and looking for a step change on marketing ROI, please be in touch directly. A special thanks to Benj and Charlie for the serendipitous connection. And yes, Oli is accepting of all b’day party invites…