November 2020
This month’s update will focus on the risk profile of each active portfolio investment. The risk associated with each business covers a 12-month period of time.
- Those companies that are at low risk are well capitalized for at least the next year, if not more and have strong commercialization opportunities they are pursuing.
- Those in the medium risk category are well capitalized but are perhaps not making the necessary gains on the business front, which could create some challenges at the next capital raise.
- Those at high risk are experiencing significant capital shortages and are in danger of a near term shut down.
In the last portfolio risk analysis from May, Janvest reported 44% of the active portfolio was either in a state of Medium or High Risk. Over the last six months, Janvest committed significant time and resources to shoring up the strength of the overall portfolio – helping companies with their capital raising, hiring, go to market strategies, and product-market fit efforts. As a result, only 16% or two of our 12 active portfolio companies face failure risk in the next year or so.
LOW RISK
ALTOSTRA (LP C / SPV III)
SUMMARY: Altostra completed a $3.5MM seed round led by Janvest in mid-2019. This gave the company almost three years of operation without having to raise additional capital. Since then, Altostra has hired a dynamic R&D team and started to build a critical mass of software developer users (their customers) as they hone in on their product-market fit and refine their monetization strategy.
FORECAST: The Altostra team is incredibly talented and hitting on a fast-growing space that enables developers to release software more effectively and efficiently. If they can continue their user growth and provide clear indication those users are willing to pay for the technology, a Series A round should be achievable in 2021.
JANVEST VALUE ADD: We are actively involved and providing ongoing advisory related to the company’s commercialization and monetization efforts with the aim to help Altostra get positioned for a quick and successful Series A raise starting middle to end of 2021.
ATOMATION (LP B & C)
SUMMARY: Atomation’s smart connectivity solution for legacy utility infrastructure has received a lot of positive attention from the market. Late in 2019 business development activity pointed towards a big 2020 for Atomation from a revenue standpoint. However, COVID pushed many of the customer integrations into the back half of 2020 and into early 2021. Despite having to revise down some of their revenue projections for the year, Atomation is still expecting to finish 2020 with 100% revenue growth over 2019 while still having a large and expanding pipeline of major deals the company is planning to close in the first half of 2021.
FORECAST: Atomation has the best technology in the market to help utilities monitor their previously unconnected infrastructure. This has become increasingly important as the American workforce has gone remote, thus amplifying our reliance on the integrity of our national power and telecommunications grid to keep us connected and productive. Given the market’s dramatic shift in Atomation’s favor plus the growing and diverse pipeline for 2021, the company was able to raise an additional $1.5MM from pre-existing investors to ensure they could fully execute on their plans for the next 12-15 months. Should Atomation be able to do so, there are numerous top tier venture funds interested in leading a much larger Series A round of financing.
JANVEST VALUE ADD: Atomation was dealing with some cap table issues given the number of investors that have invested in the business over the last five years. In order to render the company investment grade, Janvest led a cap table re-balance that incorporated the company’s leadership, as well as all pre-existing investors. This restored the equity balance between investors and entrepreneurs and has positioned the company for a successful Series A raise in the next 6-12 months. This also allowed Janvest to ‘buy-up’ and increase our equity position which is a hallmark of our ‘recessionary playbook’.
CORALOGIX (LP B and SPV III)
SUMMARY: In September, Coralogix closed a $25MM Series B round of financing. In addition to the nearly two years of capital on hand, the company is growing at 70%+ year over year and expecting to end 2020 with $8-10MM in annually recurring revenue with plans to generate $20-$25MM in 2021 and more than $50MM by 2022. Following this aforementioned round, LP B saw a 40x mark-up on its initial price per share from 2015, while SPV III saw a 2x mark-up in less than a year. Worth noting as well, this year Coralogix ushered in its first seven figure annually recurring contract with a Fortune 100 enterprise here in the U.S. This is a major achievement for the business as it shows their ability to compete and win against much larger, publicly traded competitors.
FORECAST: Coralogix is quickly becoming a recognized leader in the fast-growing log analytics space. With their growth and best-in-class technology, the Janvest General Partners believe that the company presents tremendous potential from a returns perspective. That being said, with this latest capital injection and the big vision of the Coralogix executive team to become a global business, any exit will most likely take some time but with the potential to be a multi-fund returner on its own.
JANVEST VALUE ADD: Coralogix CEO Ariel Assaraf is consulting with Janvest on a weekly basis related to various business matters, but most importantly, on hiring. Janvest is working closely with the CEO to identify and vet some of these candidates and to think through the next phase of hiring, especially as it pertains to the U.S. market.
OBSECURE (LP IV)
SUMMARY: In mid-Q1 Obsecure completed a $1.75MM pre-seed round funded primarily by Janvest IV, but with participation by a number of prominent angel investors. This capital was designed to give Obsecure 20-24 months of capital to put together a core R&D team and pursue some initial product-market fit. Since then, Obsecure has received tremendous amounts of market feedback from leading banks, financial technology providers, and an array of players in the payments space, which is helping shape their go to market and product development.
FORECAST: Obsecure still has a lot of work to do on product-market fit; however, they have a blue chip team of experienced executives and technologists, which gives us a lot of confidence that they will hit their next set of objectives. Those objectives include on-boarding a few enterprise design partners and raising a seed round to continue their momentum. The Obsecure team will head out for their seed round in the coming months with the plan to complete the raise in mid to late Q2 2021.
JANVEST VALUE ADD: Leveraging our national network of both Fortune 1000 corporates, as well as leading B2B SaaS companies here in the U.S., Janvest has facilitated numerous conversations for Obsecure as they seek out much-needed market feedback. Some of the companies to which Janvest introduced Obsecure include Equifax, Amount, Docusign, NCR, and Finastra.
REPOSIFY (LP C)
SUMMARY: Reposify recently completed a $2.5MM Seed II round of financing led by the U.S.-based investment arm of a major publicly traded (and highly reputable) Chinese investment firm with various holdings throughout North America. With this capital, Reposify will continue to build out its R&D infrastructure, as well as executive team and sales capabilities. Over the past 10 months, Reposify has proven that they have the best technology in their specific arena of Attack Surface Management. As such they’ve been able to steal away blue chip customers such as FireEye (NASDAQ: FEYE), FICO (NYSE: FICO) and W.L. Gore from some of their better funded and more mature competitors. This current round will fund approximately 18 months of operations for the company.
FORECAST: With this round complete, Reposify will need to dramatically improve their annually recurring revenue ($500K for 2020) to successfully raise a Series A round of financing in 12-18 months. That being said, their customer list is growing, and the brands represented are impressive and highlight that despite other technology choices in the market, Reposify delivers superior value. FY 2021 will determine Reposify’s outcome and dictate its return profile for the fund. If they can hit some of their growth objectives and successfully raise an A round, the future is exceptionally bright. If they under achieve, the company may be forced to go through a premature M&A process.
JANVEST VALUE ADD: Janvest has been adding value on two fronts – the first is hiring, whereby Janvest’s partners are being asked to speak with and conduct final interviews with VP-level candidates applying for various sales, marketing, and product management roles. The other area where we’ve been adding value is on the capital raise. Janvest has introduced numerous venture funds and Angel investors to CEO Yaron Tal, one of which committed to invest and effectively closed out the round. The next phase in support is advising Yaron on how to build out his C-suite, as well as think about his next round of financing.
RUPERT (LP IV)
SUMMARY: In mid-Q2 Rupert completed a $2.5MM seed round led by NY-based IA Ventures on top of a $350,000 pre-seed round raised a month earlier from Janvest. With two years of capital in the bank, Rupert now has the uphill battle of being a category maker with their Analyst Backlog Management solution. Product-market fit, as well as market education are key to being a successful category maker. Rupert is starting their journey with some impressive design partners including Business Insider and Wix (NASDAQ: WIX), which can hopefully guide the company towards a maturing off-the-shelf product poised for rapid growth.
FORECAST: It’s early days for Rupert, but they have an incredibly talented and strategic team that is thinking about product and go to market in the right way. Janvest is bullish on the space, the vision of the founders, and their ability to execute. It is our belief that Rupert will be able to effectively raise a material Series A round of financing led by a top U.S. venture fund come mid to late 2021.
JANVEST VALUE ADD: Rupert CEO Ziv Wangenheim is a first time start-up founder and as such is relying heavily on Janvest to help close the loop between market feedback, how that translates into their product and how they effectively communicate their corresponding value proposition. In addition, Ziv regularly consults with Janvest on investor relations and how best to manage and communicate with their other VC partner. We are seen as a trusted resource and confidant through which Ziv can ‘test’ various ideas, messaging, and strategies before implementation.
SHIELDIOT (LP C)
SUMMARY: ShieldIoT was able to successfully raise a $3.5MM seed round earlier this year following a $1.5MM pre-seed round led by Janvest 12 months earlier. With this capital, they have pivoted on the product front to deliver a ‘lighter’ security solution to Internet of Things (IoT) networks. Given the superiority of this solution and the commercialization opportunities in the pipeline, ShieldIoT is in the process of completing a $6-7MM Series A round of financing being led by an Israel-based VC run by former Intel executives.
FORECAST: ShieldIoT is heading back out to market with a new product better suited to their prospective customers. Once this Series A is completed, the company can start to strengthen their sales and marketing infrastructure, as well as attend to some of the gaps in their R&D. This round will also give ShieldIoT nearly two years of capital to run.
JANVEST VALUE ADD: Janvest has been a key resource for ShieldIoT’s new investors in their due diligence process and helping the company’s CEO think strategically about board composition, budget, and go to market strategy.
SIMPO (LP C and SPV III)
SUMMARY: Simpo closed $15.5MM in financing in 2019 from two of the best venture capital funds in Silicon Valley (Redpoint Ventures and Menlo Ventures). This capital gives Simpo more than three years of operation, which is plenty of time to continue executing on their growth objectives, product-market fit, and build-out of their leadership team. Simpo aims to complete 2020 with approximately $1MM in annually recurring revenue (4x growth over 2019).
FORECAST: The company has the cash and is adding the personnel to transform them into a true market leader in the automated software onboarding space. Dramatic growth over the next 18-24 months is critical in order to be able to secure their Series B round, which typically requires $5-10MM in annually recurring revenue from name brand customers like those already on their roster including Walmart, Dupont, and Monday.com. Like many of our companies, FY 2021 will be a very telling year for Simpo – they either explode out the gate with dramatic revenue growth or they may have to revisit their plans and team while they still have plenty of cash in reserve.
JANVEST VALUE ADD: With the addition of tier one investors Redpoint Ventures and Menlo Ventures to Simpo’s Board, Janvest is using its legacy knowledge of the business to advise the founders on how to optimize their investor communications and leverage their investors to gain maximum value. In addition, Janvest is providing CEO Yuval Karmi with regular guidance on how to strategically build out his org chart here in the U.S. and appropriately publicize big events within the business.
MEDIUM RISK
LINGACOM (LP B & C)
SUMMARY: Lingacom is a one-of-a-kind business in the Janvest portfolio in that they are developing deep hardware-based technology for government defense and homeland security agencies. In addition to complex technology that requires years of intensive R&D, selling into these types of clients requires high level security clearance, as well as pilot engagements of more than a year. After nearly seven years of development, Lingacom is finally seeing some initial deployments with both U.S. and Israeli defense agencies. This year the company will see approximately $500,000 in revenue from pilot installations with plans to transition into significant 7-year annually recurring revenue generating contracts should those pilots prove successful.
FORECAST: The Lingacom team has immense technical acumen and know how when it comes to navigating government entities; however, they are less adept at raising capital, which is a must-have when developing technology for this market. If Lingacom is able to secure meaningful government contracts in 2021, the company should be able to raise a material growth round of financing in late 2021 to early 2022. The question mark there is surrounding the team and their ability to execute on a successful raise. Should a raise not go according to plan, it may be required that the team and technology be sold in some sort of premature M&A transaction.
JANVEST VALUE ADD: With the expectation that these government contracts will materialize, the Janvest team is working with Lingacom to prepare them for the start of a capital raise in 2021 aimed at strategic investors, and those financial investors that understand selling into defense organizations. This requires the preparation of an appropriate budget, as well as the construction of compelling investor materials aimed at their prospective financiers. In addition, Janvest is working to introduce potential strategic partners to Lingacom, which include defense contractors that have long standing relationships within the U.S. defense apparatus and could help the broaden the company’s distribution.
HIGH RISK
OUTGAGE (LP C)
SUMMARY: Despite experiencing 300% revenue growth in 2020 and having on-boarded numerous blue chip customers including SAP, Cisco, and ZenDesk, Outgage continues to struggle on the capital raising front. A few factors contributing to this struggle include investor sentiment towards enterprise direct mail, strong competition in the space, uncertainty around total addressable market (TAM), and a CEO who has difficulties properly conveying the opportunity and selling the vision. As such, Outgage is nearly out of cash and is in need of either a quick process with an investor to close a round or a premature M&A process.
FORECAST: The enterprise direct mail space, while attractive, does not appeal to a lot of investors. Those that are interested, require education and a big vision being sold by the company’s founders – something with which Outgage has been struggling the last 12 months. It is our belief that Outgage will have to conduct a near term M&A process or have to shut down the business shortly after the first of the year.
JANVEST VALUE ADD: Janvest has been working with the CEO on a strategy to sell the business to either a competitor or larger strategic. Part of that effort is bringing on a boutique investment banker that has experience in this space and believes that he could secure a smaller ticket transaction.
