Suranga Chandratillake has (almost) seen it all. After being the early CTO for Autonomy, he went on to found the blinkx video search engine in 2004, long before many thought we’d even need one. He scaled the company to San Francisco and the U.S. market, eventually IPO’ing blinkx for more than $1 billion. On his return to Europe, he joined Balderton Capital, one of Europe’s top-tier VCs, and has invested in many of Europe’s hottest startups. As part of TechCrunch Disrupt 2020, we caught up with him.
Last year Balderton raised a $400 million fund. But has the way that fund is being invested changed because of COVID-19?
“In many ways, nothing has changed,” he said. ”We have been a series of focused pan-European VC for 20 years… If anything, I think COVID-19 has demonstrated how tech can help us get through various challenges, and I mean all of the work from home stuff… It’s been really weird, not being able to spend time in person with those people [entrepreneurs]… But the overall strategy of investing in tech in Europe, it’s exactly the same as it was before.”
Although it’s not that simple. For instance, Balderton invested in car rental startup Virtuo to the tune of €20 million. And travel is not exactly a great sector right now.
Chandratillake admitted, “some industries we have had challenges this year.” However, he said they “had a difficult April and May, but they’ve actually had a booming August” as holidays came back.
“I would say that by and large, most [startups] have navigated fairly well.” He noted that European governments have put in place funds to support tech companies, and, of course, other sectors of tech have boomed.
During the pandemic lockdown, many consumers jumped into virtual networking via apps like Zoom and Houseparty, but Balderton did a small investment into a stealth-mode startup called Riff, which, not unlike Clubhouse, is using audio in a new way. He hinted that this will be an enterprise-play on Audio.
“Funnily enough, the closest to it right now is probably Discord, which obviously is already a large network, but really a very much a vertical app aimed at gamers… But I think there’s an opportunity to do something similar in enterprise in the same way that Slack, you know, arguably got a lot of its initial cues from consumer messaging [such as] from WhatsApp or Facebook Messenger. I think we’ll see a similar thing where the enterprise gets something that’s based a bit on what we’ve seen in consumer products.”
He said Riff solves the “classic cliche of the water cooler moment when you bump into someone in the office and have a chat, and it’s really hard to do that in this new reality.”
He also said there are interesting sub-markets following on the coattails of Zoom “that also need to be worked out.” Balderton invested in a company called DemoDesk (a cloud-based screen-sharing platform), which looks at, for example, “webinars and sales meetings and specific kinds of conversations like that, where the requirements are a bit different.”
Chandratillake is of the opinion that the world will have to live with COVID-19 for many years, but that new solutions will emerge to mitigate the downsides: “Anything that helps you stay more connected to your colleagues and your co-workers is going to be interesting from a VC point of view, right?”
In terms of the diversity issues thrown up by the Black Lives Matter movement, Balderton has backed initiatives such as Diversity VC in Europe.
“If you’ve got a more diverse venture capital industry, they will start to back more diverse founders doing more diverse things, and that will naturally propagate. That’s really important to me and that’s a big part of what we focused on….
“In the last three years, we’ve hired more women than we have men into the investment team. We recently hired our first female general partner directly into the firm… three more people of color in the partnership and so on. So it’s beginning to change to where it should be, but I think it’s one of these things where you have to battle on many fronts.”