Salesforce Ventures recently announced its fourth investment fund, the Salesforce platform fund.
Given Salesforce’s critical market position in both SaaS and enterprise-facing software, what does the new fund mean for entrepreneurs seeking investment, and what could it tell us about Salesforce’s broader ambitions? Let’s find out.
Deploy All The Funds In The Name of Salesforce
Under the umbrella of the venture sector is corporate venture capital (CVC). Oftentimes, CVC investments are deployed by large firms, such as Intel, in order to fund startups who are particularly innovative or will help propel the the parent company’s strategic goals.
The concept has also expanded to cash-rich incumbents like Slack, which uses its CVC investments to encourage developers to build on Slack’s bot platform. Salesforce Ventures does not break the mold in this regard, and the firm is quite overt about the purpose of its fund.
“We are a strategic investor,” Matt Garratt, Vice President of Salesforce Ventures, told Crunchbase News. “Before we make any investment, we first make sure there is strategic alignment within our business and that the company extends Salesforce for our customers.”
And according to Crunchbase data, Salesforce Ventures isn’t afraid to make a large number of strategic bets. The fund has made 220 known investments since 2008. Of the companies it has invested in, 39 have exited, some of which are high profile unicorns such as Box, Mulesoft, and Twilio.
The venture firm has also shown interest in making bets on early-stage companies. According to Crunchbase data, 47 percent of Salesforce Ventures investments are in Seed and Series A funding stages.
The cadence of investment puts Salesforce Ventures in third place for the most active corporate venture capital firms, according to CB Insights. This level of investment activity puts the firm in league with other high-profile CVCs, including Google Ventures, Intel Capital, and Comcast Ventures.
And according to Salesforce Ventures, the firm has had no issue deploying its funds.
Leveraging partnerships with other venture firms such as KPCB, “[Salesforce] saw a ton of interest in the $50 million Lightning Fund… so much so that we fully deployed it in a year,” said Garratt.
To underscore how Salesforce Ventures invests, we cut its investment data by leadership role starting from 2010:
But will Salesforce Ventures most recent fund, which has a focus on AI, be deployed with equal enthusiasm?
AI And The Enterprise
Like many other large tech companies, Salesforce has made its own moves into the AI space.
It’s spin on AI, called Salesforce Einstein, “is like having your own data scientist to guide you through your day” according to the company’s website. Importantly, developers can also can integrate Einstein into their own applications.
It’s a sector that has seen immense interest from investors already, particularly with AI-powered virtual assistants. And while the name of Salesforce Venture’s latest fund doesn’t mention AI, it is, according to Garratt, a focus for the fund given Salesforce’s Einstein ambitions.
“Salesforce Ventures is strategically focused on the goal of creating the world’s #1 enterprise cloud ecosystem… ,” said Garratt. “Artificial intelligence is critical to us achieving that goal, which is why we developed Salesforce Einstein, the first comprehensive AI for CRM.”
Even though Salesforce Ventures is making it known that it will invest in AI startups now, the fund has not eschewed investments into the sector in the past.
Since 2014, according to Crunchbase data, Salesforce Ventures has invested in 7 startups that operate in the artificial intelligence space. Of those startups, Salesforce Ventures participated as the lead investor in two separate companies. This includes Insidesales.com’s $60.65 million Series D in March of 2015 and Moneytree’s Series A for an undisclosed amount in October 2015. It has made other notable investments in the AI space as well:
- Workfit. Much like X.ai, Workfit has created a virtual assistant, named Eva, that helps schedule meetings. But this particular virtual assistant works with voice, and it can also “follow up on action items, take note of important decisions, and highlight key moments of a call.” Salesforce Ventures participated in its $5.5 million seed round with six other investors.
- Msg.ai. As chat bots becomes more commonplace across platforms (such as Facebook’s Messenger), msg.ai is betting that its AI-powered chat bots will help improve customer service and marketing efforts. In turn, businesses will realize increased revenues. Following Salesforce Ventures stated goal of creating the world’s foremost enterprise cloud ecosystem, msg.ai integrates with Salesforce Desk.
- Claire. Managing the whims of consumer fashion and what will sell is a difficult task many retailers embark on. But Claire intends to make picking and choosing the most profitable clothing items easier by using a mixture of automated customer feedback and machine learning tools. It’s a concept that has landed the company $2.7 million in seed funding.
With a fresh $100 million in tow, and a fund that is making a point to invest in startups that integrate AI into their products, founders who are looking to garner funding for their AI-empowered startup have options. But according to Garratt, the standards AI-startups are held up to have increased—at least for Salesforce Ventures.
“Early on, we saw AI companies raising money more easily, but now AI capabilities are table stakes for most investments,” said Garratt. “For enterprise applications, entrepreneurs have to show how AI and other services like messaging will make an application more intuitive and easier to use.”
In order to do this, Garratt believes that AI startups need to collapse processes and reduce the need for “clicks and search.”
Ben Parr, co-founder and CMO of Octane.ai, echoes Garratt’s sentiment that investors are looking for more out of AI companies.
“Funding for AI companies remains hot — I can’t think of a single investor who isn’t investing in AI,” Parr explained. “That said, investors are more grounded in their decision-making than they were in 2016.”
How much of that direction Salesforce Ventures will fund is not yet known. But the firm has shown a modicum of interest in the sector, and given that AI is an explicit part of the latest fund’s mandate, it’s a safe expectation that Salesforce Ventures will be rapidly adding to its short list of AI-powered startups.
Disclosure: Salesforce Ventures is an investor in Crunchbase.