The following is an email Q&A with Matt Garratt, VP of Salesforce Ventures & Corporate Development
How do you select investment opportunities?
What’s unique about Salesforce Ventures is that we are the only strategic fund focused on creating the world’s largest ecosystem of enterprise cloud companies—so we start there to see if the company would be strategic to Salesforce and our customers. When selecting investment opportunities, we also make sure we’re very customer-centric – what do they want, what will make them more successful, and how we can work thoughtfully together.
The Salesforce ecosystem is critical when we think of investing in companies, as we are focused on a building the largest ecosystem for our customers. When a part of our ecosystem, new investments can extend Salesforce’s products. As a result, customers are able to also leverage the innovation we are investing in as we strengthen our overall ecosystem.
Do you invest in any martech that is not “core” to Salesforce, or are all investments tangential to the core business?
Since our goal is to build the largest ecosystem of cloud enterprise companies and drive even more value for our customers, we often find that our investments are tangential to Salesforce’s core products. As we invest in any company, we are thinking about our customers and how we can accelerate a portfolio company’s growth to gain a competitive edge through access to the world’s largest cloud ecosystem and the guidance of Salesforce’s innovators and executives.
Does SFV invest in any consumer companies?
As the usability and user experience of enterprise products continues to improve, there is a growing trend in the enterprise of providing direct to consumer options for products as a way of serving the SMB market or creating viral adoption and introducing through a freemium model. This is a business model we support and where we have made investments.
What is the most important thing(s) you look for in a portfolio company?
The Salesforce Ventures team frequently meets with Salesforce product leaders to determine what the white spaces are and where we may not be getting coverage between products. We also look for CEO’s that understand the needs of our customers and how we can better meet those needs by working together. When we find a those companies where there is that match, we then consider the broader potential of the business and assess the long-term viability of the business and financial performance.
When we are initially looking at companies, we are mainly looking at companies that have experienced some traction in the market and are generating revenue who have an understanding of our ecosystem and how they can help our customers.
What competitive advantages do you have as a venture arm of a company versus a traditional, stand-alone VC?
In terms of competitive advantage, corporate venture capital allows large companies access to working with innovative startups that can further benefit mutual customers. On the other side, portfolio companies are able to take advantage of 1) access to salesforce execs, customers, the ecosystem 2) credibility with our customers and partners 3) advice since we were once in their shoes. For example, at Salesforce Ventures, portfolio companies receive funding to accelerate their growth and gain a competitive edge through access to the world’s largest cloud ecosystem. In return, startups receive a wealth of established resources and guidance of Salesforce’s innovators and executives. This allows them to quickly address issues and tap into extensive internal resources to accelerate their startup’s momentum. Stand-alone VCs are the ones leading rounds and setting price terms, we focus on the strategic alignment and accelerate growth for a symbiotic relationship.