Scale Venture Partners Announces New $400M Fund to Invest in the Future of Work
The team at Scale Venture Partners is excited to announce the close of our sixth fund, Scale Venture Partners VI. Fund VI is a $400 million fund that will continue our strategy of investing in software companies that are creating the future of work. To date this has included companies like DocuSign, Box, Treasure Data, DataStax, KeepTruckin, Locus Robotics, JFrog, Textio and, recently announced, BigID. Fund VI will be a continuation of this vision, as we look to fund the next wave of companies that are modernizing the way we work, create and collaborate.
Changing technology trends: Cloud x AI
The major technology trend for the past twenty years has been the platform shift to the cloud. That move is not yet complete but cloud software is a crowded, competitive and fast maturing market. The big story for the next twenty years will be about the addition of meaningful elements of artificial intelligence to make cloud software and the humans that use it, more productive.
The cloud application trend started in the late 1990s (Salesforce was founded in February 1999), and in the last decade the trend continued for general purpose computing (Amazon Web Services was launched in March 2006). We have been lucky enough to invest in companies like Box, DocuSign, HubSpot, ExactTarget, RingCentral and many others that were part of this SaaS/Cloud platform shift. We now believe that moving applications to the cloud will, in retrospect, seem only the first step towards enabling those applications to become more intelligent. In simple math terms, it is not Cloud + AI but rather Cloud x AI, with the cloud being the infrastructure that enables AI to finally achieve its potential.
In our own current portfolio, we already see humans getting real-time help with writing (Textio), language translation (Unbabel), customer support (Solvvy), and even sales (TalkIQ). The companies that win will be the ones that can identify where automation is the answer, and where to step back and let the human take over. Many of our existing cloud companies are also evolving their service to incorporate AI as a core part of their offering as they recognize the Cloud x AI opportunity as well.
We will also see software expand further in the physical world of work. Collaborative robotics allows robots to work with humans, rather than replace them. It turns out robots and humans are working well together as we have seen in recent ScaleVP investments Locus Robotics and Soft Robotics. My partner Andy Vitus talks further about the future markets we are interested in.
ScaleVP focus on go-to-market execution
We see huge change in the markets we invest in, but strong continuity in when and where we invest. Our focus remains on software companies that have achieved product market fit with early customers. At this point every software company has to make a cultural shift from being solely a product company to being both a product and a go-to-market company. This is an additive change because no company can afford to lose the product chops that created product market fit, but it is a hard, often wrenching, change. The skills are different, the scale is different and the headcount goes from being almost all R&D to being 60% sales and marketing.
It is also an unavoidable change. Business software at scale is a distribution game and once a company crosses even $1M in ARR, for every subsequent dollar spent on engineering, two to four dollars will be spent on sales and marketing. We have been financing software companies at this stage for twenty years. We have the experience and the pattern recognition at the partner level to help, and we have invested in the tools to help entrepreneurs succeed. My partner Stacey Bishop talks about the launch of Scale Studio, the growth platform for private cloud companies.
And last, a thank you
We want to close with a thanks to our LPs, new and existing, for investing in our vision and to the entrepreneurs whose courage and success makes our success possible.
Looking forward to Fund VI. If you think your company is a good fit for our focus, we would love to hear from you.
Originally published July 10, 2018.