@sitarSitar Teli

Investing in Product and User Experience-Focused Companies: Why and How

Pre-Money MENA December 2015

@sitarSitar Teli

• American, live in London• 35• VC for 10 years• Previously with Doughty Hanson

Technology Ventures• Connect Ventures

• London-based seed fund• Focused on Europe• £300k-£1m• 23 investments, 19 active• CVI: £21m• CVII: £41m

@sitarSitar Teli

• Highly focused seed strategy: 7-8 investments per year• We like to lead deals and are often the first and sometimes only investor• Three necessary conditions:

• Strong founder/market fit• Mission-led founders• Focus on product and user-experience from the beginning

@sitarSitar Teli

Platforms SaaS Networks

Product

User Experience

Marketplaces

@sitarSitar Teli

“All aspects of the end-user’s interaction with the company, its

services, and its products. The first requirement for an exemplary user

experience is to meet the exact needs of the customer, without fuss or

bother. Next comes simplicity and elegance that produce products that

are a joy to own, a joy to use.” - Nielsen-Norman Group

@sitarSitar Teli

@sitarSitar Teli

@sitarSitar Teli

@sitarSitar Teli

VS

Significantly better business value

@sitarSitar Teli

Engagement

Loyalty

Virality/Referrals

@sitarSitar Teli

MoreSign-ups, conversions, etc

Engagement

Virality

Brand

Revenue

LessChurn

Cost

Customer complaints

@sitarSitar Teli

@sitarSitar Teli

• LEARN: About user experience. Start with your own daily frustrations, both technology-related and not.

• BEFORE: Use the product, try the prototypes, ask to see wireframes of the product.

• Great user experience focuses on providing value to the user, not extracting value for the company.

• Example: Sign-up or on-boarding flow.• DURING: Start with the product, not the presentation. • TEAM: Look for

• founding teams that include: user-experience or interaction designers, product managers, product designers

• founders with empathy for their users

@sitarSitar Teli

@sitarSitar Teli

• Not all companies gain (enough of) an advantage by initially focussing on product and user experience.

• Many businesses gain a greater advantage simply by raising more capital, which enable them to grow faster and dominate a market, discouraging investment in competitors• Offline services - delivery, cleaning, transport• eCommerce and other low-margin businesses

• A focus on product and UX generally applies to mature technologies, like Internet/mobile companies. Several interesting investment areas such as biohacking, VR and autonomous vehicles are nascent technically (i.e., this presentation doesn’t apply).