Georgian Partners is the Toronto-based venture capital firm that invests in growth-stage enterprise software companies. KITE Invest and Georgian Partners’ Managing Partner & Co-Founder, Simon Chong, look what components make an investment attractive and why they focus on cloud and SaaS-based companies.
KITE Invest: Companies that Georgian Partners invest in have to show recurring monthly revenues of $500,000 or a strong track record of strong, consistent growth. In your experience why are these ‘the’ requirements and have deals been made when companies did not have this, but showed other significant strengths?
Simon Chong: Our investment mandate is focused on growth-stage companies and in our experience getting to approximately $500,000 MRR is one indicator of the maturing of a business into that expansion / growth stage.
KITE: What is an ideal yearly deal flow (investments and exits)?
SC: Between 3-5 investments per year is about our expectation although we don’t work to a schedule. With regards to exits, they happen when they happen and while you can prepare for them you can’t control them.
KITE: In 2008 you co-founded Georgian Partners, coming from a background in marketing, sales management, and operations. Since co-founding Georgian Partners what have been some of the milestones achieved and what are some future goals?
SC: We’re very proud of the team that we’ve put together at Georgian Partners and of the portfolio of companies we’ve invested in across Fund I and Fund II. I am particularly happy to see the difference our team has been able to make with those companies in terms of developing and executing on their applied analytics strategies.
KITE: What is the most challenging aspect of investing?
SC: Making sure that you find that balance between adding value to a company and letting them get on with the job. We’re strong believers in letting the management teams get on with the job, but we also have a particular point of view about the opportunities in particular around analytics. We strive to get that balance right and we think we do more often than not.
KITE: Your investment area is focused around building and supporting cloud and SaaS-based companies.Why are you primarily interested in cloud and SaaS-based companies?
SC: SaaS-based companies appeal to us for three key reasons. First of all it’s part of a broader shift in the market, this is where things are going because customers are wanting to simplify their IT environments. Secondly, the deployment model is more efficient than trying to support on-premise software. Finally, and this is very important for our applied analytics thesis: there are more opportunities for aggregation of data because it is all co-located rather than spread around different client sites.
KITE: While the company focuses on software companies, are any other industries ever considered and what is your geographical focus?
SC: We have invested in companies where there is a hardware component, but only as part of a large software solution (e.g. onsite monitoring for cyber security). We are software people first and foremost, that is where our expertise is. Our geographical focus is the US and Canada currently.
KITE: What does the term ‘applied analytics’ mean?
SC: Applied analytics refers to the convergence of data science, business processes and information rights. We look for companies who will be able to harness data science to gain insights from data (for which they have strong information rights to use) and then optimize a business process with those insights.
KITE: If you could give any piece of advice to an entrepreneur in cloud and SaaS businesses, or any field for that matter, what would it be?
SC: Think through your analytics strategy from the start, build in a strong information rights and customer trust model for how you collect, store and use data. There is a huge amount of differentiation to be had from applied analytics but it is all-dependent on having access to data.
Simon Chong can be found on Twitter here.