On SME Vertical SaaS and Series B investing with Lucile Cornet, General Partner at Eight Roads

On building relationships, the importance of speed in decision-making, and why SME vertical SaaS is such a great opportunity 🔍 Speaking of opportunities; Frontline's hiring - listing in the bottom🔥

Patricia Borlovan

Jan 11, 2024

Transcript

Today, we have Lucile Cornet with us. Lucile is a Partner at Eight Roads, a $11BN global venture fund with offices across the globe.

Eight Roads invests in companies at the Series B stage and helps them scale up internationally. They have 450 portfolio companies globally, of which 60 have IPO’d, and multiple are unicorns: Alibaba, Toast, Flywire, Chewy, Hibob, Neo4j, or Fever.

Lucile is part of the European team of Eight Roads. She is a French national (born in Toulouse) but has been based in London for 15 years and focuses on anything SaaS and Fintech series B. She became one of the youngest female partners in Europe, being promoted to Partner in 2021 at just 33 years old. Her investments include companies such as Spendesk, Leocare, Amenitiz, Reveal, and Thinksurance.

Outside work, Lucile is a mum of two daughters who loves adventurous travel and cooking and as you’ll see, a dazzling extrovert who thrives in meeting new people.

Listen to the pod on Apple & Spotify 🎧

Table of Contents | Scroll ⏬ for all the insights 👀

Episode chapters
The Opportunity of SME Vertical SaaS
Three biggest learnings from the last 10 years of life.
Learning and unlearning in venture capital
Why not having everything figured out is good
Shout-outs for someone in the industry
Advice to a younger self
Top tips for emerging managers fundraising
The most counterintuitive thing learned in venture

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Chapters:

00:00:00 - Lucile’s journey in VC & Eight Roads Venture Fund intro
00:06:30 - Moving fast in the tech industry
00:07:07 - Learning and unlearning in VC
00:15:07 - Building firm belief & conviction ahead of an investment
00:18:00 - Why a little bit of chaos is good for you
00:24:02 - The Potential of SME Vertical SaaS
00:29:49 - The value ad model and investing in growth
00:35:59 - Sales, marketing and adoption in enterprise software
00:38:59 - The importance of Humility and listening
00:42:17 - The importance of Speed and execution
00:45:03 - On Leadership and decision-making
00:48:04 - Building strong relationships in business
00:51:11 - People and culture in VC
00:54:16 - Advice for emerging VCs across Europe
00:57:27 - Don't give up on fundraising

Q: Tell us how you think about SME Vertical SaaS?

Firstly, Vertical SaaS is defined as building purpose-build software for a specific industry, for instance hotels, or construction firms, or vet practices, or hairdressers.
Ideally, this software becomes the core operating system used to run their business and is well placed for upselling new functionalities over time.
At Eight Roads, in our portfolio we have invested in many vertical saas businesses. In the US we invested in Toast - which is a vertical software and payment platform for restaurants (which is a $8bn NYC listed company now). In Europe i have invested last year in Amenitiz in Spain, which is a vertical software for hotels, and also provides payments (The company is doing amazingly well and has raised already over $40m by now), and in the UK we had also invested in Treatwell, which is a marketplace and software for health and beauty salons (Treatwell was very successfully acquired by Japanese giant Recruit Holdings in 2015).
So why do i like vertical SaaS? for a couple of reasons
First its pretty counter-cyclical - this is not software selling into other vc backed companies, its usually selling to a large base of SMEs . its what i call “the real economy”. Its also a very fragmented customer base - which can be hard to acquire, but is more resilient.
Second of all, vertical saas companies typically sell a core system, a must-have system of record. Its not a nice to have. another marketing software which one could do without. this is actually the core software the shop is running on, or the vet practice, or the hotel. Which means you have high stickiness, and high potential to upsell more products over time. because once users spend most of their day in your product, they will trust you to bring new functionalities, sometimes payments, or other services to them
Finally - vertical markets are usually less competitive. While the total addressable market can be smaller initially, there is also usually less new entrants in these markets. A lot of these verticals are usually dominated by incumbent systems, or by pen and paper, and they are still yet to be fully digitalized. think in your daily life when you go to the doctor, when you go to a hotel, when you book a plumber appointment - most of the time its clunky, not digital, you cant pay by card, they don't remember your name, they don't have you in their CRM. So i think there are lots of verticals like that that could be disrupted and give birth to interesting software companies.

Q: Three biggest learnings from the last 10 years of life.

Velocity is a common trait for successful founders.

We get asked a lot about what makes a perfect founder.
Immigrant or not. Wealthy or not. Younger or not.
When I try to find the one common trait between our succesful founders, I always find velocity.
Great founders move faster. Their decision cycles are faster, the way they reply back to me on WhatsApp is faster. When I create an intro, they follow-up immediately.
Small things like these add up and end up creating a sense of urgency and momentum in the company. This makes the different.
Most of the success in tech is about execution. Yes, you can definitely out execute your competitors. 100%!

Embrace a growth mindset for ongoing progress

Have a growth mindset, for me, my team, the founders I work with.
It’s not about where you are today, but the trajectory you are in. It sounds a bit cheesy, but it’s the real thing.
Most people will not necessarily judge you on where you are standing. BUT, rather focus on how fast you are progressing. For example, I often hear customers say: «We bought this software, it wasnt the best, but they are releasing improvements every month.» It made us think they will quickly become the best in the market.
Similarly with people, I would always prefer working with a founder or a team member who is open minded and can hear feedback, than someone brilliant but completely set in his views.

The power of positive energy and relationships in business

I wouldn’t underestimate the power of positive energy. Be likeable and build positive relationships.
I am always surprised how decisions in business are actually quite subjectives. People want to hang with people they like, that are fun, easy to work with, interesting. Those are the people they want to hire, to do business with, to acquire. This is why it’s more important than people think to be out there, build relationships, build that positive side.
Many founders think they will do great work in the background and one day someone will notice. Life doesn't work that way.
Of course metrics, numbers, strategy are important, but equally is the public persona and the relationships one can build.

Q: Give a shout-out to someone you love in the industry

Our shout-out goes to Kevin Kimber.
He is an operator, a mentor to some of our portfolio companies, but also a fellow angel investor in some others. Also, a VP with Eight Roads.
Kevin was one of the founding members of ServiceNow, the giant B2B software success story, which is now at $140BN market cap. He was the first person on the ground in Europe. After his time at ServiceNow, Kevin went to run some parts of Zoura, and the UK for SAP.
We love working with Kevin because is very humble and easy to work with. When he gives advice to other founders, he always does it with a lot of humour and himiliity. He always makes sure to listens intently before he gives any advice.
We are very lucky to count Kevin as one of the friends of the firm, and he acts as a mentor to some of my founders

Q: Learning and unlearning in venture capital.

When I grew in my VC careers, especially as a scale-up investors, I always heard about why hiring top talent at C-level is important, to find experienced people that have done it before.
They say «Find people that come from other unicorns, and come with the playbooks.» In practice, I observed the exact opposite.
Often times, the people that had a shiny CV ended up being disappointing hires because: they weren’t cultural fits, and they didn’t deliver the value they were supposed to do.
I have portfolio companies where some very unlikely young folks, with inexperinced profiles have learned to do the job very well. Today, they grown and become excellent leaders.

Always question black-and-white thinking.

As a VC, I hear a lot of «blanket statements»: SME SaaS doesn’t scale. Software shouldn’t have professional services. Hardware is not good.
Those are the easy ways to think. It's the easy path. Our job is to take the hard path. What if this was a successful way to build a business?

It’s also about confidence.

As a female VC, in the beginning I tried to replicate and learn from others. Fake it until you make it, kind of thing.
At first you tend to just replicate some of the patterns you learn from others. I think, once you have more confidence in yourself, you realize:
«I think differently! I dissagree with this! I think this!» It takes guts to do it.

Q: Take a stance:

“A little bit of chaos is good for you.” — Sarah Drinkwater, Common Magic.

This resonated very with with me.
One of my Partners at Eight Roads, Davor, always says:
“Relax, nothing is under control”, which always helped me.
As a VC, it often feels like being in a racing car, but seating at the back. You can choose the car, but once you are in it, you aren’t the one driving.
The road is bumpy, you need to make sharp turns, and from time to time, you can give some advice to “avoid the rocks” or “take this turn”, but that’s pretty much it.
You need to embrace the journey.
You need to like rallying.
But not being on the podium at the end. :)

Q: What advice would you give your 10-year-old younger self?

Take more risks.
I know it sounds funny as a VC. Our job is to take risks, but I wish I had taken ever more risks.
That’s why I love working with founders because all they do is taking risks, taking the hard path, and I really respect them for that.

Q: What are your top tips for emerging VCs across Europe who are fundraising?

Keep it up.
This may sound a bit discouraging, if you’re out there raising money. I think a lot of the institutional LPs haven’s been investing at all. But, I believe 2024 is going to be better. Maybe not on exits, but certainly in the market. I expect to see more transactions, and more liquidity.
Don’t give up. & Good luck!

Q: What’s the most counterintuitive thing you’ve learned in venture?

Valuations is a false precise concept.
My journey brought me to learn that valuation is actually what people are prepared to pay at that given point. It could be zero, if no one wants it. If people really want it, it could be high.
At the end of the day, I don’t think there is a precice science at any given point in time, and there’s no point in debating about it too much.
You just need to take it as it is.
I know it sounds funny, because as investors a lot of what we do relies around negotiating term sheets and valuations, but there’s no huge science behind it.

Frontline’s hiring two new Associates 🔥

There’s few that we love more than our good friends at Frontline. And now you have the chance to join them (or recommend a dear friend to join them) as they’re hiring two new Associates to join their Seed investment team in Europe 🪴

Both positions will working directly with the wonderful Zoe, William, Will and George, with one based in London and the other in Dublin.