Capital is narrowly focused on investing in early-stage
enterprise software companies.
- That specialization helps give it an edge over rivals when it
comes to getting in on deals in the sector, Santi
Subotovsky, a general partner at the firm, told Business
- Emergence can offer startups access to all its partners and a
community of founders at similar companies experiencing like
challenges, he said.
- Subotovsky remains bullish on the enterprise software sector,
saying such as the need for mobile enterprise applications, the
productivity promise of artificial intelligence, and the desire to
replace aging software will boost demand for new services.
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Enterprise software is one of the hottest areas in tech, and
lots of venture-capital firms have tried to get in on the
But Santi Subotovsky thinks Emergence Capital has an edge over
its rivals when it comes to investing in such companies — its
very narrow focus. Emergence only invests in early-stage enterprise
software companies, said Subotovsky, a general partner with the
firm. That allows its portfolio companies to tap into the knowledge
of any and all of Emergence’s partners. And the firm can connect
founders to peers who are running similar firms and facing like
“That creates an incredibly powerful community,” Subotovsky told
Business Insider in a recent interview. “You’re building a
relationship with the entire team, and that makes a huge
Emergence has been around for 15 years and has backed some of
the more successful enterprise startups over that time, including
Salesforce, Veeva, and Box. But it had one of its biggest successes
earlier this year when another one of its portfolio companies,
Zoom, went public and more than doubled its IPO price within a
The firm only makes about five to seven investments each year
— all in A rounds. But because of its specific focus, it gets to
look at pretty much all the companies in the enterprise space,
Subotovsky said. Seeing that many companies allows it to survey the
landscape and pick the ones it thinks have the best chance of
succeeding, he said. It can also tap into its own knowledge of how
such companies have developed in the past, he said.
“We’ve seen this movie play out many times in enterprise,”
Emergence’s partners all focus on the enterprise sector
Emergence’s narrow focus is also a benefit to its portfolio
companies, he said. Subotovsky and his partners know what it takes
for nascent enterprise startups to reach their potential, he
Many venture firms only have one or two partners focusing on
such companies, and they often spend their time with their
portfolio companies just meeting with the CEO. Emergence’s partners
all work with its portfolio companies and they end up meeting with
many of the companies’ top leaders — not just their CEOs.
Subotovsky said it’s not unusual for him to meet with a portfolio
company’s heads of marketing, sales, or product.
“I spend time with the CEO, because I want to help them out,” he
said. “But if I can help out the rest of executive team, then that
has a huge impact on the organization.”
At other firms, where only one or two partners focus on
enterprise startups, the firm’s relationship with the startup can
be disrupted if one of those partners leaves, Subotovsky said. But
that’s not a danger with Emergence, since the entire firm develops
a relationship with the startup and the partners only focus on
enterprise companies, he said.
Zoom aside, the stock market has been rough for many of this
year’s high-profile IPOs.
Slack are all well off their initial prices and
WeWork had to pull its offering after facing stiff resistance
from potential investors.
Even so, Subotovsky remains bullish on the enterprise software
sector. Some big trends in the market will continue to drive demand
for new products and create opportunities for startups, he
Mobile phones and AI will boost demand
For one thing, the near ubiquity of smartphones has created a
need and an opportunity for workplace applications that are
designed with those devices in mind, he said. Much of the
enterprise applications that have been built in the past have been
designed to be used by office workers sitting at desktop computers.
But there’s a whole “desk-less workforce,” Subotovsky refers to it,
of people who can now access enterprise applications through their
ServiceMax, an Emergence-backed company that GE acquired three
years ago, offers a service that helps companies direct their field
service technicians to particular customers and helps them place
orders for new parts all through a mobile app. Similarly, UpKeep,
another of the firm’s portfolio companies, offers a mobile
application that helps restaurants, manufacturers, and property
management companies direct maintenance workers to repair jobs.
Such apps are replacing antiquated solutions and technologies,
such as pen and paper and simple spreadsheets, Subotovsky said.
Catering to such workers “expands the market a lot,” he said.
“The desk-less workforce,” he continued, “needs productivity
Another factor that’s going to continue to boost the enterprise
software sector is the continued development of artificial
intelligence, including in machine learning and natural language
processing, Subotovsky said. Such technologies have plenty of
applications, he said. And while some fear they will be used to
replace workers, he thinks they will actually be used to help
workers and make them more productive.
Companies are looking to replace older apps
Take Chorus.ai, yet another Emergence-backed company. It has
developed a service that listens in on sales calls and uses
artificial intelligence to analyze the conversations to determine
what sales people are doing right and what they can improve on.
Similarly Textio has developed a service that enhances job-wanted
postings, taking simple ideas and requirements and turning them
into polished sentences that are designed to attract desired
“From what you do, the technology should be able to learn and
adapt to help other people do their job better,” Subotovsky said.
“So we’re super-excited about that.”
The enterprise market is also likely to be driven by a demand to
replace and upgrade older business-oriented applications, he said.
Zoom’s video conferencing application was by no means the first of
its kind. But older video-conferencing services had failed to keep
up with innovation, Subotovsky said. Business customers were asking
for a better, more up-to-date tool, he said.
Similarly, he thinks there might be an opportunity for an
upstart to take on Salesforce. Salesforce has a negative net
promoter score — a measurement that indicates customer
satisfaction and loyalty — he said.
“People don’t love it,” he said. “That’s a great sign,” he
continued, “that there’s an opportunity for someone to come up with
a solution people love.”
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Source: FS – All – Economy – News
Emergence Capital had a huge hit this year with Zoom. Here are some of the other software trends a partner expects to boom. (ZM)