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

0:01Which good entrepreneurs would not look at AI at all in our world. no one. So I think AI is not a vertical in itself anymore. It should be within any company now. Welcome to the SaaS Revolution show, a podcast by SaaS.com. Here we interview SaaS founders from around the world who've been there and done that. They share the ins and outs of how they built their businesses, their operations, their path for securing investment and more. Our mission with the podcast is to help you, the founder, learn how to scale your SaaS, maintain your well-being, and navigate the complexities of this ever-changing industry.

0:40I'm your host, Alex Thiemann, 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 Thiemann, CEO, founder at SaaS, also general partner at BackFuture Ventures. Delighted to be joined today by Audrey Soussin, who's general partner at Ventec. How are you doing, Audrey? Good to see you again. Although you may not have seen me at Sastoc, I think that was the case, but I was in the audience for your fantastic talk, an interview with Robin Van Lysout from Insided. So I was there. Hello, Alex. Great to see you this time and not a face-to-face, but at least be able to speak to you.

1:26Yeah. Well, I really appreciate that you joined us in Dublin for the last SaaStock Europe. It was a fantastic session that you had with Robin van Lee who sold inside it to gain sites and enjoyed that a lot. But Audrey, for our guests, for our listeners, I would love for you to share who is Audrey Soussin to start with. And we can then perhaps go on to a little bit about who Ventec are. So I'm Audrey and 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 all over Europe because our Ventec fund is actually focusing on France, Germany and the Nordics.

2:22We have local teams on the ground 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 Insighted come from. So as I said, I've been there for 15 years. Before that, I was working at DN Capital, another venture capital firm based in London. And I'm also a mother of a daughter and a son. Very, very cool. So 15 years, well, 15 years at Ventech and I think a few years prior to that also in the VC world. So you've been there for a while, probably seen, you know, quite a lot and also quite a lot of shifts in tech and B2B software.

3:16We're obviously going through another big shift right now, which we can touch on in a bit. Regarding Ventec itself, so you mentioned in terms of where geographically you're based, but in terms of where you invest, is it broad tech? Is it a lot of B2B software now, AI? Yeah. Ventec 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. And so we've been always investing in the tech industry. But currently, we focus mainly on AI, of course. I'm sure we're going to spend a lot of time on that.

4:04but also on digital health, industrial software, also on everything which is related to European sovereignty, cyber, space tech, and so on. We invest at early stage. So it could be seed or series A companies. And 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 company. We've just raised our latest fund called Ventec6. And so it's a 175 million euro fund. We're very, very glad we can now invest from this fund. It was a great fund raise with 95 % LP REAP rates. And yes, we've already made 15 investments from this fund and looking forward to deploy more.

4:59Investing at the early stage, so maybe just like picking on, again, the Insided sort of like use case. Was Ventec the lead investor at Seed for Insided? How did you find that deal? How did you meet Robin? Yeah, Insided was very specific because indeed we were the first institutional investor, but the company had been bootstrapped for long. So indeed, it was founded maybe five years before we entered, but no one before us entered this cap table. We invested while the company was generating maybe two or three million euro AR. So it was already, I would say, quite developed, but without any external.

5:52I know it seems very strange in today's world that some people prefer, you know, going the bootstrap way. But yeah, this company was bootstrapped for long before we were the first institutional investor to co-invest together with other local funds. As I said, it's a Dutch company and we have no local presence in the Netherlands. we always prefer to have a local presence and to leverage our local presence in France, Germany and the Nordic. So in this case, we could not. That's the reason why we teamed up with local funds for this round. Was it through the local fund? To answer your question, sorry.

6:35More broadly speaking, usually we would invest at Cedar Series A. We would be the first institutional investor in the company. We would lead or co-lead the rounds. How did you meet Robin though? Was it 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? We had an advisor as a common link, I would say one of his advisors. We knew him for long and so he brought the deal to us. So he bootstrapped for a few years. You did the seed round how many years after was the acquisition from Gainsight? Something like five years after we entered we invested in the company it was quite quick yeah.

7:21Yeah quite quick and I guess kind of with that as being the lead investor in the seed for the five years through that period you know where like what did your engagement as a seed investor look like like with with robin were you you know on the board how regularly did you speak to him you know support uh him sort of through the journey and then how how does the lead investor of a seed round get involved in support in the mna uh if at all well um again very specific case but that illustrates well the way we work with the CEOs. Of course, we were part of the board. So we had a board seat. We have a board seat in 100 % of our investments.

8:09And we try to keep it until the very last exit of the company. So even if there are more funds entering the journey, we usually keep our seats until the end, 95 % of the case until the exit. And we have a 25 years of track record. So we have invested in 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 from the investment to the exits. And in 95 % of the case, we are still at the board at the exits. So it's very important for us. And we would have regular exchanges, of course, outside of the board. I like to have once every two weeks at least a call or a visio or any touchpoint with the founders for two reasons.

9:11why at the very beginning they need to understand what we can offer them. I like to say that we tailor our value ads. 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 dependent on our specific network of 25 years in this industry. So while, you know, letting the founders explain me their challenges, their current challenges, made them be very operational. I won't be usually the one telling them what to do or how to solve this operational issue, but I will definitely be able to connect to the right person that could help. And so at the very beginning, it's important to have these regular calls so that the founders understand what are our, how this network look like and how much we can help on these operational 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.

10:21And I'm not trying to tell them, you know, I'm a better entrepreneur than 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 investors and we can bring value by connecting people. So this network is giant. Again, 25 years in this industry. and so that my main role is actually to to match uh the this network with the the the main challenges of the ceo at a specific year timing when did the uh the acquisition from uh off inside it by gain site happen was it was it 2023 no it was uh 2022 yeah 2022 2022 so so here's the question If it was today, do you think that Gainsight would have acquired Insided?

11:14Because I guess what we're seeing now is that, yes, there is M &A, but companies the size of Gainsight are now all focused on acquiring, or it seems, AI-enabled, AI-first companies. So obviously it happened and it was great that it happened, but maybe was the timing good? And because would it have happened today? The timing was excellent. 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 the product to a much more AI product. because he's the, so Robin was the CEO and co-founder of Insighted.

12:03And really one of his main skills was his agility and vision. So, and actually already through the five years we had together, he shifted a bit the company so that it was more fitted to the market. And I actually participated to a pivot with him, together with him through Insighted. So I invested on another theme and another value proposition than the one that we sold to Gainsight together. So he already had, you know, the agility to shift a bit his value proposition so that it's, I mean, so that it fits more with the customers first, but also with the potential acquirer. So I'm sure that, I mean, I agree with you, Insight would not invest in a non-AI company as of today, I'm sure.

12:55But at the same time, I'm sure also that Insight would have moved from then and put much more AI. And with that, I guess, kind of segwaying into just the general B2B software sort of market and where VCs are investing now. So you're fully focused on AI. So is investing in B2B SaaS or traditional B2B SaaS dead? Is that over if it is not an AI-first, AI-native company? I mean, which good entrepreneurs would not look at AI at all in our world? No one. So at some point, I think AI is not a vertical in itself anymore. It should be within any company now. And AI became a tool that any company could leverage to get more productivity, get faster and get more functionalities, even, you know, provide more values to their customers.

13:57So I don't know any SaaS company that would not look at all at AI today and would just say, OK, we had a product without AI. So let's not look at AI and pursue our path. I mean, that doesn't exist. So there is no non-AI SaaS companies anymore. I would just say that some of the founders have been more or less agile in the way they incorporated and they added AI functionalities. And I can see it already. Again, we have a portfolio of recent deals that are very early stage companies and less recent deals that actually are mature companies. and these mature companies, some of them, you know, they've been, they've reached a product market fit for five years, six years, seven years.

14:48They've reached some of them more than 50 million EUR ARR. And by the way, in our portfolio, we have company doing 800 million EUR revenue. So large 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 he's, yeah, he's disrupted in a way for everyone, not only for the large corporate companies. It's also for our major companies that we still call startups, but even them, they are challenged by AI. They are challenged and they find opportunities in AI.

15:30So, of course, all of them, I mean, leverage AI. So what is an AI native company and what is not? The main difference is that, of course, when you have the white page, the blank page, 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. Like while, of course, when you have a bit of depth, technical depth in your product, because you didn't start with leveraging this AI, sometimes agility is a bit less easy. And you need, of course, to push yourself to adopt this new technology, but you have to.

16:18So, I mean, there is no mature companies in our portfolio where we didn't challenge them to, 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 proposition? How are you leveraging internally AI? How are you competing against these AI-native companies? And the fight between AI-native companies and these, let's say, major companies that are now leveraging AI to improve or adapt a bit their value proposition is not for sure won by AI native companies. I mean, we have this portfolio company, which is a great example called Botify, B-O-T-I-F-Y.

17:04It started as an SEO company, search engine customization, SaaS solution. So basically, 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 how to be found now within ChatGPT, Perplexity and all the LLMs. And of course, they had to be agile enough to, you know, understand that the market was moving, even if today the maturity of the customers are not yet on GEO and much more on SEO. And, you know, this company, of course, is competing now with many startups, native AI, native companies that saw this GEO thing appear and decided to build a product for GEO, while Botify launched the GEO product without knowing that GEO was the new term.

18:03You know, 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. They understood that something was happening and that their customer would need very soon a product like that. And so, of course, they, you know, they added this new product to the market. And yes, they have this challenge that they have to adapt the product and change a bit the product compared to this AI native company, which starts from scratch. But at the same time, they have already access to customers that could upsell and that they know from long that they have, I mean, the customers have trust already in Botify.

18:50They are already using their SEO solution. that makes sense to have only one supplier offering both solution, SEO and GAO, because as of today, Google is still owning maybe 90 or 92 % of market share in the search, even if ChatGPT is challenging a lot and very quickly replacing them. But, you know, having the trust of the customers and being able to offer both product, let's say the old product and the new generation of product, is also an asset. So even if I'm investing in early stage startups, I mean, I think it's our role as well to consider the incumbents, especially the major scale-ups as potential competitors, direct competitors to these AI native companies.

19:44Yeah, 100 % and great points there. And maybe just on the, picking on the legacy tech debt point, like so just anecdotally and uh i think it was in march of this year and you know we're in a very fast moving world like everything's moving so quickly but i was having a dinner with a bunch of sass founders uh one of them uh their company's at 10 million ar uh it's it's growing right i don't know what the growth rates are but i think they were like five million probably a year or or two years ago. And he said to me, this founder, that he's got so much legacy tech debt that, you know, he's not going to like move to AI and rebuild it, you know, at the time.

20:29I don't know. I should probably check after this 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, you know, has been dynamic as like Robin and, you know, Agile as other founders, 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 know, this company could be in real trouble? It's an odd question because, I mean, there is no standard answer to this question.

21:07It depends on the market, depends on the motion of the company. But I would say, yeah, a good founder should definitely be able to adapt. And 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, OK, let's wait. Let's wait a year more or six months more to see what else we can do. because also rushing into every new trend is not a good thing for a CEO. So I'm not saying that rushing into AI is not great. But yeah, I think it totally depends on what is rational for not going now into this new direction.

21:56I mean, killing the product and starting from scratch is not an answer neither. So maybe he thought about, OK, let's acquire an AI native company to complete my offer or, you know, change my, redesign my product. Or maybe he thought, well, in my very specific vertical with very specific sensitive data, I mean, no AI 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 product, but for his 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.

22:45and 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 um you know, to win a deal today, you know, given the competition, what do you need to do, you know, how fast you need to move, you know, and maybe also then what you're looking for? Interesting. Well, I mean, we are seven partners at Ventec and we don't all have the same investment thesis within the AI area. My main angle would be actually to find experts in their specific vertical with 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.

23:53This is what I'm looking for. And then I would expect that they leverage AI to leverage this expertise or this specific data. So even if they are not, you know, like the guys coming from Google or from OpenAI or from Mistral or whatever, these are not the founders I'm looking for personally. Of course, at Ventech, there are other partners that are specifically focusing on these tech-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.

24:43So that's a bit what's my, let's say, beauty, what I'm looking for, basically. And what about advice for founders that are raising in this current climate? You know, is it a great time to raise? And, you know, also what should they be doing? You know, what is your advice? Good question. Basically, everything which is not very AI related is, I mean, it's very hard for them to raise money right now. You know, we are also operating a sustainability and resilience fund. And, well, 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, you know, generalist or AI funds getting interesting to their product.

25:37But, you know, I think there is no real I mean, whatever you are doing, which is doing great, should get interest from the investor. So I would I would still go to the market if I if I were a founder. And if I was going into the right direction with my company, growing well and with a sustainable growth and really answering your market's demands or clients' demands and finding traction in a way, then you have to add a bit of equity story to it so that, again, you show that your vision is maybe to move to the market which is currently booming and getting the excitement of everyone, or at least taking advantage of this market, which is getting so much excitement.

26:28But yeah, I mean, even if you're not in the pure AI scope, I would tell you to raise money and try and just adapt your roadshow to the right investors. What about yourself personally? What AI tools are you using on a day-to-day business to help you be a better investor, more productive? I'd be curious to know what tools you're using. Well, like everyone, I'm using ChatGPD a lot for many things, for gaining productivity, to write my emails, to write on the social media, to score my emails, to basically get a better understanding of the markets, to get summaries of deals that are presented to me, to ask the right questions to the founders.

27:27So basically, yeah, I'm leveraging LLMs to get sharper and crisper in understanding faster the deals. And yeah, I'm using, I mean, we are on Teams, basically. We are on the Microsoft Suite, so everything is included. We can leverage many agents that are already, let's say, not tailor-made. But then we also have a team internally at Ventec, which is developing specific tools for us. So there are two developers working full time on tailoring a bit the existing products or rebuilding products specifically to us and mainly for sourcing, for managing the deal flow, these type of things. Finally, Audrey, are you bullish on the B2B software market over the next 12 to 24 months?

28:25I 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, of course, now it's not the moment when everyone gets 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 on B2C tools. and then there will be a new trend for B2C. We've been in the market for 25 years at Ventec and we know that technology is all about trends and cycles and when a cycle dies, another cycle is born. And so basically we stay open to any new innovation and any great founders supporting this new innovation.

29:13Awesome. Well, Audrey, thank you so much for joining as a guest on the SaaS Revolution Show. So I'm glad we got to do this. Really appreciates it. So thank you so much, Audrey Sussan, General Partner of Bentech.

29:27Thanks for listening to the SaaS 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 SaaS Talk community, head to sasstalk.com. Thank you.