HubSpot is the latest company to move into the corporate venture capital space, building on its handful of investments with the launch of a dedicated US$30 million ($41.5 million) fund.
The fund will look to invest in software-as-a-service (SaaS) companies at seed, Series A, or Series B round. Portfolio companies must, among other things, have the potential to “deliver unique value to the HubSpot community”, and be raising a round with a “notable” lead investor.
Andrew Lindsay, VP of corporate and business development at HubSpot, said the company isn’t looking for quick wins with the fund.
“Yes, we’re investing in companies that we believe will lead to a positive return on investment, but more than just that, we’re investing in companies that are committed to our philosophy of growing better,” he said.
The company added that portfolio startups will receive mentorship from HubSpot Ventures to help them grow.
HubSpot has invested in a number of companies over the last 12 months or so. It participated in a Series B round for conversation marketing and sales company, Drift in September 2017, and participated in a seed round for Blissfully, which allows organisations to track their spending on SaaS products, in August.
It has also invested in freelancing platform Lorem and AdStage, a reporting and automation platform for paid marketers.
Lindsay, who was in Sydney earlier this month for StartCon, said the company comes across startups in a number of ways, from its HubSpot for Startups mentorship and education program to advocacy from its customers.
“We can hear about a company from our customers telling us about a product they’re already using and would like us to work with, it can be from an existing partner that we’re already integrated with, or it can be a company that we’re a customer of ourselves,” Lindsay said.
The best way for a startup to find its way to an investment or partnership, Lindsay said, is to find an advocate within the business: whether they be on the product side, engineering side, or the partnerships team, he said, find an advocate.
“There should be someone who feels strongly and can help make the case for the business internally,” Lindsay said.
“Conversely, when we partner with companies, we seek to have a champion inside the organisation as well who can tell our story and help articulate the value we bring to them and their customers.”
The work shouldn’t stop once you find your champion and get a deal over the line, however, Lindsay warned.
“It’s important for startups, when they’re signing these agreements, to ensure that there’s clear value creation for them in return…and then they have to ensure that they follow up with their partner and have regular check ins,” he said.
“We tend to do quarterly reviews, where we’re checking in in a formalised way, in addition to the communication we have throughout the quarter. Here we review preset metrics that we established at the outset of the agreement as indicators for success.”
With the HubSpot Ventures fund looking to invest in startups across the world, Lindsay said he was impressed with the startups he met while in Sydney.
“I was extremely impressed with the calibre of the businesses, the problems they’re solving, and the level of sophistication of the thought and planning around them,” he said.
Image: Andrew Lindsay. Source: HubSpot.