QUARTERLY LETTER – A WORD FROM THE FOUNDER
We launched blq invest in November 2019 with the idea of sourcing and building companies with a systematic approach. We aim at becoming the best company builders in the valley of death. Our systematic approach and niche expertise in scale, storytelling, stickiness and team make our investments become bankable companies. We call this the blq box.
This is our first quarterly report and needless to say the first quarter has been extraordinary. Based on our sourcing, current pipeline and our portfolio companies, I would like to share some of the key insights we have gained during this period.
– Companies with vulnerable business models and heavy balance sheets will find it hard to allocate additional capital from investors and might not therefore survive this downturn.
– Pre-revenue companies that are in the beginning of their journey and have not been able to iterate with the market, will most likely struggle, and rely on “family, friends or fools” to save them.
– Valuations for early stage scaleups have decreased, with estimates ranging from a 25-40% drop.
– Horizontal SaaS-scaleups, which sell to companies in a wide range of sectors, have experienced a relatively lower drop in growth so far.
– SaaS is in its nature a resilient business model for downturns, thanks to the power of recurring revenue.
Coming back to blq invest our investment focus has always been B2B SaaS-scaleups, providing business critical products and services within clear niches, and this has not changed due to covid-19. Quite the opposite, we feel empowered that it is the right focus ahead.
Ingrid and Cinode, our two portfolio companies, have both been affected mildly and are still growing at a steady pace. Both companies are well-positioned with business critical offerings, providing a solid base from which to tackle the ensuing challenges. Cinode’s focus on competence is proving crucial, as companies are forcing to adapt and reposition their offerings, while Ingrid’s delivery experience platform allows e-commerce companies to meet sharply increasing demand as e-commerce soars.
The epidemic has brought a broad change in behavior, enforcing new digital trends. We don’t know in what form (V, U, W or L) the world will recover, it will depend on second waves of infections, further lockdowns, fiscal policies and monetary policies. But I strongly believe that blq invest, that is in the beginning of its lifecycle, have a very good position with its current portfolio and future investment opportunities.
Kamjar Hajabdolahi, founding partner blq invest