Here is a list of 2018 highlights:

1 – We led investments in three new portfolio companies: Connected2Fiber, gr8 People, and empow. All of these new portfolio companies were sourced via a combination of proactive thematic research (connectivity, HR tech, and cybersecurity), and referrals and introductions from friends in the industry.

2 – At Ascent, we have a more concentrated approach to investing, believing that investing in fewer companies per fund, and spending significant time with each of them, produces the best outcome for all. In 2018, we were active board members and advisors to 17 portfolio companies. We helped these companies with executive hires, organizational design, go-to-market strategy, partnership discussions, product strategy, and M&A processes.

3 – Speaking of executive hires, the majority of early growth stage companies are consistently looking to build out their executive team. Our portfolio hired more than two dozen new executives, many of which were Ascent referrals. At Promoboxx, we were lucky to recruit Mark DiAntonio as VP of Engineering, who held senior-level positions at DraftKings, Warner Brother Games, and Turbine. Diane Smith, the CEO of gr8 People was ecstatic to recruit Rachael McCarthy, who was the CFO of prior Ascent portfolio company CloudLock, which sold to Cisco for $293M in 2016.

4 – Congratulations to two of our companies, which attracted new CEOs: Ernie Cormier of Promoboxx and Lenny Nash of Clickfox, to lead their next phase of growth.

5 – We also supported four of our portfolio companies in follow-on deals. It’s incredible to see these companies make such incredible progress!

6 – Codeship exit to Cloudbees, giving Cloudbees access to 100,000+ developers across 2,400 customers, all using a turnkey, cloud-based CI/CD platform for their everyday work. CodeShip is now a part of complete CI/CD solution that has achieved impressive scale and industry reach.

While we enjoyed numerous professional highlights and growth opportunities in 2018, we are most proud of our very own personal highlight: Lauren Peck, our office manager, gave birth to beautiful baby Jack on November 26, 2018 at 2:25am. He made sure to pay his future colleagues a visit in late December. He is easily the best looking Ascent team member to date!

Lauren and Baby Jack visiting our office

Our VP Finance Tom with his future colleague

From our family to yours, happy 2019!

-the Ascent team

At $27B in Q3 2018 run rate revenue, representing 46% year over year growth, and holding a 51% market share, Amazon Web Services has maintained and defended its dominant position in the public cloud.  According to Gartner, the worldwide IaaS and PaaS revenues are projected to grow to $55B in 2018, with Amazon being the leader.

AWS has routinely evangelized the public cloud, touting customer stories such as Netflix and Spotify who are 100% on public cloud. However, the reality is that approximately two-thirds of enterprise workloads are still on-premise and the vast majority of core applications are still run on-premise. In fact it wasn’t until 2015 that Netflix announced the closing of their last data center. At Ascent, we are big fans of the cloud. Almost 100% of our investments are SaaS and on the cloud and there is indisputable data that more enterprises are moving to the cloud, for the flexibility, cost reduction, ease of management, etc. However, at what pace is migration to the cloud happening?

Not quickly enough, it turns out. Perhaps the biggests announcement from Andy Jassy’s keynote revealed AWS’ nod to hybrid by announcing an on-premise product in partnership with VMware: AWS Outposts. AWS is literally selling the same hardware they use in their own data centers, to their customers who aren’t ready to make the full jump to public cloud. There are two Outposts variations: one which uses the VMware control panel, and one which run’s AWS’ cloud services natively. The idea is for customers to have the same user experience regardless of where they choose to run their applications and workloads. In both cases, AWS will sell companies their hardware, install it, and even maintain and repair it. For a company that has been “all in” on cloud, this move represents a big surprising step by Amazon.

AWS Outposts shows that the company realizes that expecting enterprises to completely abandon the data center is unrealistic and, in same cases, impossible. Sometimes, it’s a matter of keeping core applications on-premise, workloads that require low latency, security considerations, or privacy or governance rules and regulations. Moreover, the reality is IT has been increasingly managing a diverse portfolio of products across multiple disparate environments.  The future is hybrid and multi-cloud, and Amazon believes that managing that in itself is a long standing enterprise market opportunity large enough to start selling hardware.

Turns out the hybrid cloud is real. Even Amazon says so.

Set yourself up for Success

Lock down board calendar early: Set the schedule for entire coming year in November or December to lock down calendars.  You want all members present and providing the maximum amount of lead time helps.  The larger the board, the more critical this becomes.  Once the calendar is set, think about which major topic(s) you want to cover at each meeting.  This does not need to be set in stone as things often change in technology startups and you want to be nimble, but it helps makes sure you balance the key topics you cover and gives your team ample time to prepare.

Cadence: The appropriate frequency of meetings is not universal.  For the earliest stage companies, shorter monthly meetings are often useful as things can change very quickly.  For companies in the early growth stage, we typical recommend 4 – 6 in person meetings per year, interspersed with a few shorter board update calls in between.  Some companies also choose to use ad hoc/optional additional board sessions to go into depth on a specific and timely topic when needed.

Pre-Meeting Check in:  Check in with each board member at least 1 – 2 weeks ahead of the meeting.  This provides an opportunity to share any important updates or changes, good and bad, ahead of time, as well as see what is on their mind.  Even if you are already in frequent contact with a particular board member, make sure to discuss this with them ahead of the meeting. This also allows you make changes or additions to your board deck prior to the meeting.

Post-Meeting Follow-up: Always follow up on any requests that come out of a meeting (unanswered questions, specific analyses, etc.) and touch base with each board member, asking them for specific feedback on content, meeting and any areas of concern or improvement.  It is generally a good idea to try and set the agenda/outline for the next board meeting right after gathering all feedback from the one you just held.

Hold Members Accountable:  Get materials out at least 2 days ahead of time (3 or 4 if possible) and set expectations that they are to be read ahead of time.  Do not waste valuable board time walking meticulously through all of the sent materials.  Review efficiently, address questions, and move on to the main topics for discussion.

Avoid Surprises:  Perhaps this is already obvious from the Pre-Meeting Check in, but make sure you let board members know about any major events or updates, good or bad, ahead of the meeting.  If people’s heads are reeling from a surprise, they will not be ready for a deep discussion and will likely be upset or embarrassed.

Casual Interactions:  Allowing the board members and key team members to get to know each other in less formal settings has real value.  Pre-meeting dinners or lunches with no set agenda are great for this purpose, but if time is tight, even simple “ice-breakers” to start the meeting and have everyone take part in can help foster closer relationships.

Content

Always Set the Stage: Because things change quickly at young tech companies, it is wise to always use one page to remind the board of the vision and main mission as well as top goals for the business.  It may feel redundant to some, but it is important to make sure everyone remains on the same page.

Reporting Clarity & Consistency: Achieving a set of reporting and measurement dashboards that are focused on the meaningful business metrics and fundamentals is critical – cover marketing, sales/BD, support, product and engineering, hiring and finance.  These should be used by the management team for internal meetings, as well as for reporting to the board.  Try to limit to roughly a dozen pages of content. You want to be consistent from meeting to meeting so the board understands what each chart represents, but you should also work to iterate to ensure you are providing as much clarity and insight as possible, constantly seeking feedback.  As stated before, do not waste time going through each chart or graph in detail, but do give the board an opportunity to ask questions.

Focused Discussions: Outside of the standard updates, limit major topics to one or two at most per board meeting.  Invite in the relevant senior team members to help lead these discussions.  Having an external expert or two present can also be valuable at times for industry perspective.  Share any reading materials or research ahead of time to make sure everyone shows up with same the base level of understanding.  The richest and most rewarding discussions come when the board can apply their experience and insight against comprehensive analysis and/or deep industry perspective.

Running the meeting

Who’s in the room?:  Ideally, all board members are present in person, and almost always the CFO.  In addition, depending on the topics, it may be helpful to have counsel present, or at least listening in.  We advise against having the entire management team sit in for the full meeting.  Instead, invite in the team members that are directly related to the presentation and key topics of the meeting.  Some choose to only bring them in when needed.  Either way works.

Interaction & Pace: Encourage or even prompt each board member to provide input and feedback on key questions and topics.  This is not a time for passivity or quiet head nodding.  In your agenda, be thoughtful about allocating the proper amount of time to each section and stick to it.  With that said, it is important not to cut short valuable discussions.  Always leave some cushion in your time allocations, and insert a break or two that can be used for longer discussions if needed.

Non-Executive Board Session: When the main portion of the board meeting is complete, allow the non-executive board members, i.e. all those not employed by the company, to have a discussion amongst themselves.  This is important as it allows them to air their thoughts and opinions and reach some level of consensus on the proper feedback to the CEO.  The CEO can then come back in when signaled and discuss any feedback or other questions that arise.

Clearly, running a productive and valuable board meeting takes a lot of work, and it is always a bit easier when the business is going well, but it is often even more valuable, and helpful, when the company may be challenged.  Challenging times provide the greatest opportunity for learning and insight that could lead to critical course correction.  When things are going well, focus the topics on continuing to raise the bar, planning ahead, new product or service ideas, and driving further improvements across the business.  The CEOs and teams that do board meetings best, look forward to them and get a ton out of them.

Chatbots

Chatbot companies, such as Mya, Wade and Wendy, Paradox, Ally-O, TextRecruit and Canvas, exist to relieve recruiters from spending time on mundane tasks but more importantly, the goal is to provide a better candidate experience by surfacing positions relevant to their skills and interest, shortening the response time, and interact with candidates outside of business hours.  These bots range in capability, from canned Q&A to more sophisticated NLP and responses.  While the concept of a human-like bot having meaningful conversations with candidates is enticing, the reality today is well short. Many of these companies still rely on humans to take over conversations the bots can’t understand. Instead, the play is to “save” all candidate interactions as data points that can be later reviewed by a recruiter.

Many TA leaders I spoke to understand this reality however, and instead find value in the ability to save a recruiter’s time on the front end while increasing their top of funnel activity and quality by simply having a tool to capture candidates at the career landing page stage. Addeco is already seeing results in this regard: 89% of candidates (vs. 43% prior to chatbot) filled out a prescreen and the applicant to hire ratio reduced from 10:1 to 7:1.

Scheduling

Scheduling is a complex use case to solve, particularly at scale, but can save significant recruiter time or reduce a company’s need for recruitment schedulers (yes – that’s a job position!).  Companies such as Timetrade, Calendly and x.ai have been working on meeting scheduling beyond the HR use case and it’s not easy. X.ai employs hundreds of humans in the Philippines to continue training its AI on “edge cases” such as: time zones, recurring availability, generic references to dates, places and names, and meeting formats.  Timetrade has focused its product development on serving complex and large scale use cases, where the challenge is backend matching of skill, location, nuanced availability and other requirements. Thankfully, the recruiter scheduling use case is narrower and therefore has fewer edge cases to account for. Companies such as GoodTime and IntervewierAssistant focus solely on the recruiting use case, but are faced with the additional complexity of matching candidates with interviewers based on availability, skill set and progression in the interview process.  I met several TA leaders who, when faced with the build vs. buy decision, ultimately decide building is too much of a strain on IT resources given the complexity of the technology.

Advanced Screening

The last automation category is perhaps the most advanced in comparison when it comes to artificial intelligence development: advanced screening. This includes video assessment companies like HireVue, in which an AI analyzes answers, tone, and body language. Other advanced screening companies such as Pymetrics, HackerRank and Hire-Intelligence have developed proprietary tests to surface the best fit candidates for any given role.  In a Business Insider article, Unilever North America shared preliminary results from working with advanced screening tools. In a year, they experienced double the number of applicants 90 days after posting a job, reduced time to hire from four months to four weeks, increased offer acceptance rate, and hired its most diverse class to date.

AI Resulting in Diversity?

Speaking of diversity, there is a lot of discussion today on whether artificial intelligence can eliminate bias from hiring. Unless programmed otherwise, automation could filter out data such as age, gender and race and instead focus on experience, competency, skills and performance.  However, there is an interest debate in the AI community about which algorithms have the potential to make hiring more fair. Some models were built with inherit bias in them, since they are built by programmers who have prioritized certain qualities over others.  Technology alone isn’t enough to solve the diversity issue, but automating pieces of the recruitment process may yield candidate pools more representative of the general population.

Automation to AI

Where is HR tech headed? We are just starting to see early applications of predictive and prescriptive analytics, powered by machine learning. The goal is for a machine to be able to surface the best candidate for a role or prescribe the best recruiting process to achieve lower applicant to close ratios.  I haven’t yet met a company with enough data or proof points to show consistent results, but this type of technology has a clear ROI.

It’s important to note that TA leaders strongly agreed with the notion that despite the positive early results from automating the recruiting process and the promise of real AI on the horizon, there is no substitute for the human interaction.  Where human interaction is necessary versus better replaced by machine is a matter of philosophy, but the HR department is not immune to this digital transformation experienced by all other industries.  It is the startup’s job to continue pushing the boundaries of intelligent systems. Until there more progress on AI for HR tech, TA leaders are testing automation solutions to solve problems of today.

I had lunch with Greg Higgins, VP of Accounts at Splash, and the company’s first and longtime (6+ years!) leader of customer success, account management, and support, to hear his insights on building and scaling an account team from scratch. Splash is an event marketing platform based in New York, serving hundreds of customers, including half of the Fortune 500.  We are grateful to have been an early investor in the company.

Balancing Freemium While Going Enterprise

A few years after launching its B2C business, Splash experienced an exciting and natural pull from enterprise companies that were using its freemium product but wanted more from it. Thus came the genesis for Splash’s B2B business. As more and more enterprise companies called on them, an implementation and support function was built as essentially a hyper efficient agency, doing custom event page design work for customers like Equinox and CBS Interactive.  By this point, Splash was balancing the needs of its freemium user base and its new enterprise customers. Before even hiring its first true enterprise sales rep, Splash knew they needed a support team to “go enterprise.”

As many SaaS companies experience, the freemium user base can be a valuable pool of product testers and warm prospects with much opportunity for revenue upside. But, it can also be a resource-intensive part of the user base given its open access, untrained users, fluctuating usage patterns. Therefore, having a defined and purposeful plan for how to interact with your freemium users is key. Early on, Splash dedicated a few support team members to field questions and triage requests from freemium users, and kept the rest of the account team focused on servicing enterprise accounts. This structure helped prioritize revenue, enterprise satisfaction, and growth,  and remains in place today.

Turning Customer Insights into  Go-to-Market Strategy

Customer success came as a necessity: it was the first external facing department focused on learning as much as possible about the market and it leveraged these learnings to inform Splash’s enterprise go-to-market strategy.

It was our way of putting our ear to the ground for sales and product. In a nutshell, that was everything for us.

To start a continuous feedback loop, Splash created a “Golden List”, which included accounts with five or more contacts using the product.

We would call them and ask – how are they using our product? What could we be doing better? If they didn’t send out an invite three weeks before the event, why was that?

This customer feedback helped Splash build toward product-market fit, and Greg knew it was the only way to ensure Splash actually achieved it. Additionally, the market constantly changes, so he had to build a process and organization that could scale.

Building a Team to Scale

One of the most wonderful yet challenging aspects of working with early stage companies is helping them scale their team. When Ascent invests, we often encounter companies still relying predominantly on their founding team. This group of individuals have a knack for “just figuring it out” and could be successful doing anything from closing out support tickets to closing customers. As enterprise interest grew, it was time for Greg to ramp from a one man show to a scaled team.

In the early days, instead of hiring for a customer success background, consider hiring people with the ability to learn, experience being your customer or working in their shoes, flexible attitudes, and who have the potential to become leaders. This way, you’re able to experiment and test different structures to see which has the most success.

Splash wasn’t sure what profile of employee they needed at first, so Greg hired a team with diverse experiences and allowed them to shift roles between customer success, support, and implementation. When he finally honed in on the ideal background for each of those roles, hiring became easier and scalable.

Aligning the Team on a North Star

The importance of organizational metrics cannot be overstated, but figuring out which metrics properly incentivize individuals and aligns a team is easier said than done. At Splash, the customer team aligns to the north star (or key metric) of Net MRR. All individuals have a variable compensation component based on team-wide attainment of Net MRR every quarter.

We know the simple truth that if a customer expands, they’re more likely to renew and if you engage with them they’re more likely to renew. Now every manager and individual on my team can make decisions for themselves under this single north star. Slowly, we can introduce more operationally complex offerings because we all have a baseline of understanding.

Not only does having a single north star provide clarity to all levels of the organization, but it drives teamwork. For example, someone in support may identify an expansion opportunity and kick it over to a customer success manager. With a unified goal towards Net MRR, Splash is in the process of gathering and sharing more data points across the success, support and implementation teams to develop the next level of metrics.

We are at a point where we can surface more data points through the organization and make it all available to our team in a very transparent, actionable way. We don’t feel the need to have them report on all of them all the time, but it allows our team members to diagnose issues for themselves.

Continuous Improvement

It’s nearly impossible to achieve perfection in account management. However, Splash is constantly testing, learning and iterating on building a best-in-class customer team. Today, they’ve achieved industry-leading metrics, such as net dollar retention and net promoter score. Moreover, they have a passionate and referenceable customer base that regularly buys more and does the selling for them. If you’re an enterprise software company leader who hasn’t put a plan in place around account management, you’re missing the opportunity to listen to and serve your customers. Plenty of companies strive to be “customer-first” but don’t put the resources in place towards the only true “customer-centric” team that exists: account management.

First, let’s share some basic data.  Ascent works with B2B Tech/SaaS software companies in the U.S., so that is what we will focus on.  According to Pitchbook, over the last five years the average number of IPOs has been around 30 per year (2018 is showing a modest increase) and the average number of strategic acquisitions (think IBM, Oracle, SalesForce, Cisco etc.) has been around 1,200.  You can see why M&A is the more likely path to an investment outcome. This is probably not news to anyone.  What is more interesting is that the activity level of financial buyers for technology companies, or Private Equity (“PE”) tech, has grown significantly.  Ten years ago there were under 100 PE acquisitions in our area of focus (B2B Tech).  Last year there were 438! (data from Pitchbook).  That is a major increase, growing from about 16% of the strategic driven M&A volume to over a third, or 36%.

Outcomes for Information Tech Companies

You might ask what is driving this trend, and we see a number of factors at work:

1)    We believe that as SaaS businesses have matured and been rewarded by the public markets with premium valuations, the private equity world has taken notice.  The Nasdaq Tech 100, or NXDT, has outperformed the Dow Jones Industrial Average by 183% to 65% over the past 5 years. This also means that PE buyers see a path to liquidity for their tech bets down the road.

Nasdaq Tech 100 vs. Dow Jones Industrial Average

2)    When net customer churn is low, or even negative, and profitability has been achieved through some scale, SaaS provides a highly predictable and attractive revenue stream as well as high margins, making it an ideal business model for paying off debt or leverage often used for private equity acquisitions.

3)    The substantial increase in capital flows into PE funds.  Institutional investors have been directing larger and larger amounts of capital to tech-focused PE Funds.  According to Preqin data in the Wall Street Journal, annual capital raised has grown from the $50B per year range in 2010, to over $200B recently.  Firms such as Silverlake, Vista Equity Partners and Thoma Bravo have all raised funds north of $10B, and there are a growing number of other competitors, not to mention the enormous Softbank funds, and sovereign wealth funds starting to make more direct investments or acquisitions in our world.

There are certainly some in the PE world who argue that software and tech are not a great match for the investment model, claiming that tech markets can change very rapidly, pricing is often very expensive and it is more of a momentum/growth bet versus a true value or turn/around type opportunity more typical of buyouts.  But these objections are drowned out, at least for the time being, by those PE firms who are making aggressive moves to acquire emerging SaaS and tech businesses.

So, as you prepare for your next set of fund raising meetings, in addition to studying the universe of relevant potential strategic acquirers, you probably want to look at which tech oriented PE firms have been active in your segment of the tech world.  If the current trend persists, and you are able to scale your business to the proper level, there is better than a 1/4 chance that your software company could be acquired by a financial buyer.

]]> https://www.ascentvp.com/who-will-buy-your-emerging-software-company/feed/ 0 https://www.ascentvp.com/vc-due-diligence-is-a-two-way-street/ https://www.ascentvp.com/vc-due-diligence-is-a-two-way-street/#respond Thu, 17 May 2018 19:13:30 +0000 https://www.ascentvp.com/?p=5092 Borrowing an enterprise sales term, the “funnel” for startup opportunities at a venture firm starts very wide and ends up extremely narrow, and there are numerous stages along the way.  From initial call or email to actual funding, there is a massive filtering process.  The magnitude varies amongst firms, but to give you a sense, at Ascent, we see roughly 1,000 B2B business proposals throughout a given year, we meet with between 100 and 200, initiate diligence on 20 to 25, get really serious with a handful, investing in 3 to 5.  Yes, an extremely tight filter by the end.  Even enterprise tech sales people doing true “whale hunting” see better conversion ratios than that.

Most of the companies we spend time with are interesting and likely have the potential to build a good business, but only a few fit our specific investment strategy.  In this piece, as a follow up to our post covering how to get Series A investors engaged, I will share thoughts on what to do once you have us interested and what it takes to get through our process.  I hope it will be helpful in working with us as well as other potential investors.

How long does it take?

Let’s start with timeline.  Overall, it is wise to allocate about six months for a full fund raising process.  This is to be safe and make sure you have enough time to meet with the right groups, get them engaged, and work through a process.  It may go faster, but you need to ensure you don’t run out of capital before the process is over.  With any given firm, the diligence part of the process is about four to six weeks, followed by another four weeks for the legal process and documentation.

What are the stages?

At Ascent, if you have made it to the meeting stage, that means that you fit our basic criteria and are likely in an enterprise technology sector that we have identified as attractive.  We have a small team, so we must be ruthlessly efficient with our time.  We despise the “slow no/maybe” as much as you do.  If we are not interested, we aim tell you within a week.  If we are interested, we will talk to our team, and start to test the waters a bit, speaking with relevant industry contacts.  I refer to this as the initial “lite diligence” phase.  We may also request a few pieces of follow up materials from you.

If our team is generally supportive, and the feedback from industry sources is encouraging, we set up a follow up meeting at your office, with a specific agenda that will always include meeting more of your team, going through the sales process and pipeline in more detail, and covering any areas of specific interest or concern based on the unique aspects of your company.

After this meeting we will talk in more detail with our partners and make a collective judgement call regarding whether we are going to prioritize the opportunity, dedicating two people to work on it, and coming up with a specific diligence plan that includes a comprehensive evaluation of the business and a full partnership presentation from you and your management team.  We will likely request a larger set of information such as org chart and hiring plans, cap table, prior round term sheet, product details, financials and budget, customer contacts, management references etc.  Our goal is to get to know you and your company extremely well so that we can advocate (or not) for an investment. Assuming we proceed we will be knowledgeable and valuable partners to you from the start.

What materials to prepare?

Once you get past the initial overview deck, there are a lot of different items that may be requested depending on areas of interest or potential concern.  The obvious ones are sales pipeline, customer segmentation analysis, full organization chart plus hiring plan through next 12 months, detailed capitalization table, detailed financials and growth plan (budget), CAC, Churn and LTV analysis, references (management team, customers, partners), legal docs and term sheet from prior round and any important employee contracts.  The best advice here is to get your house in order to provide this information quickly, and to be completely transparent.  The diligence process is as much about building trust as it is about convincing us to invest.  The best experience I’ve had is when a CEO literally gave me access to the company’s Google drive and told me I could look at everything.

When does a term sheet come?

This does differ by venture firm, but beware those that give them out too early in the process – they may be trying to lock you into an exclusive period (meaning you can’t talk to other investors) and will decide later if they really want to do the deal or not.  At our firm, we typically wait until we are well into the diligence process and have a high degree of certainty before we issue a term sheet.  A very high percentage of the term sheets we issue end up closing.  We will write more about the actual term sheet in a subsequent post.

What about the lawyers?

It likely makes sense to touch base with your counsel when you start funding raising, and you should certainly consult with them on the term sheet – you typically want to get all material points covered prior to agreeing to terms.  Once signed, documentation is very important but should be mostly a formality and not reveal any new surprises.

Do your own homework

We will want to spend a lot of time with you and your team, and we will be asking for lots of info and references.  You should do the same.  Take the time to ask your own questions and then talk to the CEO’s we have worked with directly.  Make sure you get comfortable with us through this process as well.

What to watch out for

Timeline and process do vary by firm, and it can be hard for entrepreneurs interpret and influence at times. Examples of VC firm dynamics which can dictate timing include:

• Decision-making capability of your main contact at the firm
• Pre-existing knowledge/experience of your business or industry
• The firm’s investment committee process
• The phase of the actual fund that the firm is investing
• General internal politics and firm dynamics

Given that these factors are largely out of your control, it’s important for you to openly communicate with the VC, making sure you have a good understanding of their process and feedback on your business, and do reference checking as much as possible.   If the process is unclear or you do not really know where you stand, that is a bad sign and you probably want to focus on other potential investors.

In summary, you want to be prepared for a thorough and open investigation of your company and the opportunity going forward.  Good potential partners will add value during the diligence phase by making helpful introductions, offering insights gained from working with other relevant companies, and perhaps even force some deep thinking about important topics going forward.  Raising the capital is important, but your real goal should be to find the right partner to help you build your company.

Last night, we explored the future of work in the enterprise at our 10th B2B IT Forum. With the help of our panelists we kicked off with the topic of Automation and Technology: Its Impact on Daily Work. Our first round of panelists included experts from Catalant, Wayfair and JLL. The conversation was colorful but the most pervasive theme was around the shift from corporate power to the management of an employee-centric landscape. Every panelist talked about the technology needed to adapt to the changing needs of recruiting for today’s (and tomorrow’s) workplace.

According to Arthur Matuszewski, head of strategic talent sourcing at Wayfair, the company is exploring technologies to augment both recruiting and how people work. The ways in which we interact have changed and “there is no longer one type of worker,” he said. Adaptability and fluidity are impacting the type of human capital companies are looking for.

Patrick Petitti, co-founder and co-CEO at Catalant, said that instead of thinking about “talent acquisition,” companies of the future think about “talent or skills access.” The demand for a healthy workplace, work/life balance and flexibility are a few important factors impacting the “human experience,” said Julia Georgules, SVP and director of research at JLL.

Julia delivered the mic drop moment, summing up the changing recruiting landscape with this stat: “there are six million open jobs in the U.S.” yet 6.8 million unemployed Americans are looking for a job. Why? Companies are no longer merely filling spots and are “constantly running up against the challenge of where you can get the best talent.” They are rethinking what it means to be a qualified candidate just as candidates are not settling for the status quo, but are looking for increased engagement in the workplace. Julia suggests that if companies can increase worker engagement, they may not need to hire as much.

Our second panel titled Attracting and Recruiting the Best Talent, continued the conversation with speakers from Pega, gr8 People and Synthesio. No one challenged the fact that there’s a skills gap in the U.S., and that it’s hard to find talent in specific areas. To attract talent, “you need to differentiate your employee brand,” according to Brandon Carmack, head of executive recruiting at Pega.

Jack Coapman, chief strategy officer at gr8 People, agreed. “Corporations used to be in charge of the engagement process; now candidates drive it,” he said. But there’s a transparency inherent in the process that never existed before. “There’s very little a recruiter can’t learn about a candidate quickly, and market specifically to them.” Technology has upleveled the recruiting playing field.

Barbara Curran, VP of global HR at Synthesio has been in recruiting since 1985. The biggest change is that “we really need to go out and find people. You have to go to them, and have to find them in a whole bunch of different ways and be extremely creative, and sell the job to them, and at the same time you have to vet and qualify them.” The process is more complex than ever but “recruiting is very much sales and math. You have to figure out what job to fill, how you want to fill it and then create a narrative to engage the people you want to speak with. What you really need to do is be laser focused on who you want to get,” she said.

We closed the evening with Sean Quimby, principal at The Quimby Group Consulting, former VP operations at Invaluable, and Zipcar and Equinox, and Bob Quinn, chief people officer at Cygilant. The topic, Scaling from 10 to 100+, triggered some valuable advice for the audience.

“The first thing companies do with new funding is expand talent,” said Bob. The biggest mistake, in his opinion, is not having a hiring plan before taking on the new funding. Hiring missteps or delays are costly and companies cannot overestimate the value of a well thought out organizational and hiring plan.

Sean Quimby agrees: “Have a meeting with the key decision makers. What are the three to five competencies you need that are crucial for this person to be successful?” It hurts more to hire the wrong talent than to take time to do it right.

With growth brings change and according to Bob, when companies scale and change there are competencies and skills that change. But companies need to think about what they don’t want to change.

“It’s healthy for organizations to think early on about the values they have as a company. They  will act as a beacon for decision making,” Sean said. “Creating a strong set of values and linking them to your business practices is really important.”

Despite concerns, the outlook is positive – the Bureau of Labor Statistics predicts that the unemployment rate will continue to decline from 4.3 percent in 2017 to 4.2 percent in 2018, with an overall projection of 20.5 million jobs being created by 2020. However, jobs will likely shift as technology continues to proliferate and workers will have to adapt. Today, artificial intelligence is the main driver for the changing nature of work. For example, chatbots, which are programs that facilitate text conversations, are expected to save companies $8 billion by 2022 and the efficiencies received by using them are in excess of 30 percent.

Workers are challenging the conventional ideas of work and driving companies to adapt how they’re identifying and recruiting talent. In a competitive and low unemployment rate environment, companies are becoming more candidate and employee-centric. This calls for disruptions in recruiting strategies to attract top-tier talent and expedite the process – increasing efficiency and quality of workers. Companies are also investing in employee happiness by building programs around onboarding, training and performance management, as well as providing opportunities for flexible or remote working schedules to accommodate diverse lifestyles and working needs.

There are dozens of ways robotics and automation affect daily work. Understanding these shifts will help business leaders, employees and policy makers prepare as best they can for what the future holds.

Join us for our next B2B IT Forum on May 8, 2018 at the Royal Sonesta in Cambridge, MA, as we dive into the future of work in the enterprise. We will be focusing our discussions around three main topics:

1) Automation and Technology: Its Impact on Daily Work

Technology has been changing the nature of work for years. The growth of mobile and computing power has allowed companies to rethink how they hire and augment their workers. A report by Deloitte revealed that 30 percent of company workforces consists of contingent workers and will grow to 50 percent by 2020. This means a greater demand by companies for flexible and remote workers, contractors, consultants, off-shore and part-time employees. Additionally, technology will continue to augment enterprise work by completely replacing or automating certain workflows, or changing the meaning of daily work by augmenting human workers.

Panelists:

• Patrick Petitti – Co-Founder and Co-CEO, Catalant
• Arthur Matuszewski – Head of Strategic Talent Sourcing, Wayfair

2) Attracting and Recruiting the Best Talent

Gone are the days of job-board posting and waiting for candidates to come to you. Instead, recruiters must think of recruiting like a customer-centric B2B sales process. Just as the sales and marketing departments have become more measured, process-oriented and tech-enabled, talent acquisition teams are redefining what it means to be a corporate recruiter. This panel will cover everything from the importance of recruitment marketing to sourcing hacks and competing for talent against well-funded competitors.

Panelists:

• Brandon Carmack – Head of Executive Recruiting, Pegasystems
• Jack Coapman – Chief Strategy Officer, gr8 People
• Barbara Curran – VP Global HR, Synthesio

3) Scaling from 10 to 100+

What does it take to scale your company from 10 employees to 100 and beyond? What challenges do organizations face when they go from a founding team, to their first external hires, to their first layer of mid-level managers, to multiple offices globally? What does it mean to scale culture and how do you keep a pulse on your workforce? What is a Head of HR or Chief People Officer and when does it make sense to hire one? For CEOs of fast growing companies this panel will help you prepare for what to expect as you scale.

Panelists (more to come):

• Sean Quimby – EVP of People and Operations. Formerly at Invaluable, Zipcar, and Equinox
• Bob Quinn – Chief People Officer, Cygilant

You can register for the free event here. Complimentary hors d’oeuvres and beverages will be served. We hope you will join us.

1. It’s a thesis driven investment based on months of research and outreach
2. It’s partnering with an exceptional entrepreneur from across the Atlantic to help build a US presence
3. It’s revitalizing a relationship with an outstanding CEO of a prior Ascent investment

To expand on these points:

Ascent has a heritage of successful cybersecurity investments including CloudLock (acquired by Cisco), Guardium (acquired by IBM), Network Intelligence (acquired by EMC), and Fidelis (acquired by General Dynamics). In each of these cases, we identified an emerging market segment (e.g. cloud security, database security, SIEM, DLP) that we felt was poised for rapid growth and held strategic importance. Most recently, we’ve been focused on the issue of scarcity of IT security talent and the resulting implications at enterprises large and small. One recent report estimates there will be 3.5 million unfilled cybersecurity jobs by 2021, up from 1 million openings last year. Another study from ESG found that 70 percent of cybersecurity professionals felt the cybersecurity skills shortage had a negative impact on their organizational capabilities. We believe the only solution to this problem is to drive more efficiency from the existing tools and talent within security operations centers through effective orchestration and automation. We also believe that the way to achieve this is by embracing the latest advances in artificial intelligence and machine learning.

With that thesis established, we spent considerable effort looking for the team and technology that could truly meet this challenge. We found many companies that were pure-play orchestration or automation plays; and then we met Avi Chesla and empow. What made Avi and empow special was the audacity of their vision – to go beyond orchestration and automation, and redefine the SIEM itself. By leveraging artificial intelligence, natural language processing and machine learning, empow makes sense of the avalanche of data produced by security tools, ultimately identifying attacker intent and empowering automated response. empow sits at the center of a security operation as a new type of SIEM that is nimble, pro-active and operationally efficient. The market desperately needs this product.

The empow vision was realized through the tremendous leadership and technical prowess of its co-founders, Avi Chesla and Iko Azoulay. Avi and Iko founded the company in Israel where they built out a world class technical team. Israel is a global leader in cybersecurity innovation, and Ascent has partnered with many Israeli-founded companies over the years including StartApp, CloudLock and Guardium. We have also partnered with many European-founded companies including RapidMiner, Codeship and Vee24. In each of these cases, the founders understood the central role that the US market could play in accelerating their growth, and each decided to move to the US to embrace that opportunity. We are proud to partner with Avi as he expands empow’s reach into the United States, while Iko remains in Israel to lead the team’s efforts there.

In partnering with Avi, a key role that Ascent will play is supporting the team building efforts here in the US. To that end, we are excited that we’ve been able to introduce Peter George to the company. We have worked with Peter before as he led our portfolio company Fidelis Security Systems to a successful exit to General Dynamics. Peter is an experienced CEO with strong expertise in building commercial operations, and he is joining empow as CEO to build out the sales, marketing and finance operations of the company to fuel its rapid growth. He is a tremendous leader and visionary, and we are privileged to work with him again.

As I get ready to head out to San Francisco for the RSA Conference next week, I know what to expect. There will be a record number of exhibitors and attendees. The noise in the cybersecurity market will be louder than ever, but so will the opportunity. With this investment in empow, we have an amazing team, a world class product and a burning market need – the sky is the limit for what Peter, Avi, Iko and the rest of the team can accomplish with this business.