We are excited to announce our seed investment in Portainer.io. Portainer provides an operational toolset to simplify the use of container orchestration systems. While containerisation is a big thing in the enterprise, it still takes a pretty skilled engineer to set up and manage containerised infrastructure. Portainer makes that much easier (kind of like putting Windows over DOS) so it’s no wonder that the Portainer software has had over 2b pulls and that 500k developers and IT Ops engineers using it each month (and growing).
Something big was going on in this company.
David Beard and I first met Neil and Geoff at NZTE back in about November last year. At the time my knowledge of the containerisation movement was pretty light and frankly, it felt mostly like an educational session with the founders trying to explain to us what their software did. But what was super clear even then, is that they had absolutely remarkable engagement with IT Teams all over the world. Something big was going on in that company. It peaked my curiosity and since then I have read as much as possible about the rise of Docker, Docker Swarm and Kubernetes. More generally it fits into the movement of enterprises to rewire their software into microservices which can be easily scaled, deployed and managed compared with the brittle monolithic architecture of the past. Open-source technologies feature pretty broadly in this picture and, while it’s not easy to commercialise an open-source technology these days there are plenty of examples of companies who had been wildly successful – MongoDB, Elastic, Mulesoft and Databricks spring to mind. The commercialisation model reminds me of a lot of the freemium approach taken by so many B2C and SaaS companies. Basically, you put something really useful out there for free and drive for massive, massive adoption. If you get a ton of users it’s a decent bet 3-5% of them will be willing to pay you for extensions and 24×7 support and, as long as those companies value it enough to pay a decent enterprise license fee, then you just created a pretty interesting business. We are excited to go on this journey with them as they evolve the functionality to support their paid business offering and build a more formal developer relations function to further accelerate their growth.
Data Science flattens the earth and VC with it.
One of the interesting things about our investment in Portainer was that we followed Bessemer Ventures and extended their note. This early-stage investment was a big of a feat for us as we went from the first conversation to investment decision in under two weeks and hopefully set a new standard for how we work through early-stage investments. Kind of bad that we did not get there first, being Portainer are in our back yard and we had met with them before Bessemer. Part of this is that we spent the last 6 months out of the market as we raised our new Fund 5. But how did Bessemer find them all the way from New York? One of Bessemer’s deal identification tactics is to monitor all of the pull requests in Github which they use to find the “hot” software that is being consumed all around the world. From this data, they cold-called Portainer and offered them a term sheet. That’s the new world we live in. You don’t get chosen only through the fanciness of your pitch deck but actually by a script running somewhere on the other side of the world and shining its light on you. I think we will see more of this in the future and it’s a great thing for New Zealand companies as it reinforces the idea that you don’t need to be in Silicon Valley or Silicon Alley to get noticed anymore. You really can start a great company that will conquer the world right from a wharf in downtown Auckland. And similarly, the team Neil and Geoff have assembled are from all over the world – they picked the people most passionate about their software regardless of where they live. How cool is that? Seeing how they have built their company makes me so hopeful about the future of technology in New Zealand.
The NZ VC village
In closing, I wanted to thank some people for helping make this deal happen. Because the thing about our country is that it’s a village, and many hands sometimes touch the ball in small and large ways before it crosses the line. Thanks to Neil and Geoff for letting Movac join their party even though we came late. Thanks to Chris Burgess from NZTE for re-connecting us. Thanks to Douglas Paul for being the deal glue. Thanks to Simon Robertson for his helpful analysis and intro to Tony Kim. Thanks to Tony Kim from Blackrock who generously gave us his insights on the global containerisation movement. Thanks to Ben Kepes for his views and expertise on open source. Thanks to Michael Droesch at Bessemer for being willing to partner with the locals. Love our village!
