1Mby1M Virtual Accelerator Investor Forum: With Brian Jacobs of Emergence Capital (Part 2)

Brian Jacobs: As we learned more and more about how the cloud changes everything, we have evolved our investment thesis. We found some new areas where the cloud really does provide a new opportunity. Rather than disrupting incumbents, we’re taking advantage of the cloud to do things that we could never do before.

For instance, we knew that the social wave in the consumer world was going to affect businesses. If all of the employees and customers are on social networks, that’s going to affect businesses that try to serve consumers as well as the companies who have those workers in their midst.

We’ve invested in a number of companies that are bringing social technologies to business. We started to realize that the technology trends were being led by consumers but they absolutely have effects on businesses. We’re always looking for how those technology trends, which become visible in the consumer world, can be applied to business computing. Another key theme for us is around vertical software applications.

Initially, we thought those are probably too small and not where the big software companies lie in the old architecture. What we’ve learned is that the cloud enables vertical software companies to grow much larger than they could have with a client-server architecture. Many of our investments in the recent couple of years are targeting industries like education, retail, healthcare, and other industries that haven’t been strong adopters of technology in the past.

With the client-server architecture, they can’t really connect doctors on a hospital floor to the IT system. With mobile technologies and the cloud, you now can include many workers in industries such as I mentioned in the IT system. These workers are the people generally interfacing with customers and dealing with exceptions in the field. They have the information that is critical to running a business.

Sramana Mitra: The horizontal opportunities is starting to look done. There are lots of vertical businesses already in play. Sitting in 2014, what is the future? What is the next game? Of course, the consumerization of the enterprise is a trend against which there has already been quite a bit of investment. You guys have made investments. Other people have made investments. Where are you looking for deals now?

This is something that will be helpful for our audience. A lot of them are working on businesses. By the way we have a company that I’m going to send you soon that is in the social cloud area. They’re doing a million dollars this year. This is a good segue into discussing your thoughts on stage. Also, where do we go from here in terms of cloud investments?

Brian Jacobs: Let me address the stage question first. While we’re smaller than many of the other venture funds in Silicon Valley, our checks are in the $4 million to $8 million range. Our style is not to spread our bets across many very young companies but to find companies that have established product-market fit and can genuinely take good advantage of $4 million to $8 million, which typically means that they have a product that meets the customer needs and they now need to scale up sales and marketing.

That’s where we can provide the most value to entrepreneurs – our pattern recognition around building a robust go-to market strategy taking advantage of the latest techniques in tele-sales, digital market, and some of the specific and unique aspects of using channels to sell cloud services. Those are all things that we have experience with. We’re not the kind of investor that invests in seed rounds with the hopes that maybe something will emerge. We tend to make concentrated bets on companies that we think can become industry leaders.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Brian Jacobs of Emergence Capital
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