Friday, December 28, 2018
Reflections on 2018: Rob Freelen, Silicon Valley Bank
Editor's note: All this week, and into the start of next year, we'll be featuring reflections on 2018 from notable investors, entrepreneurs, and others from Southern California's technology community. You'll be able to browse all of those contributions here. Here, we have the thoughts of Rob Freelen, Los Angeles Market Manager for Silicon Valley Bank (www.svb.com).
What was the biggest lesson you learned this year?
Telling compelling stories is crucial. For the startup CEO, it can be their most important job. The best founders and CEOs artfully craft narratives that articulate a lucid vision amid the chaos of disruption. Over the last four years, I watched numerous entrepreneurs raise equity. In 2018, many of them sold their companies or raised massive equity rounds. The common thread – these entrepreneurs describe a compelling vision of how they are poised to transform an industry.
What was the biggest news for your company in 2018?
SoCal tech and life science companies are scaling faster than at any point in history. Given SVB’s market position, that is great news. But it’s even better news for the regional SoCal innovation ecosystem. If you measure success by exits, the Ring acquisition by Amazon and Cylance acquisition by Blackberry, each for $1 billion, were among the biggest stories of 2018. Also making tremendous waves in 2018 with their growth and massive venture rounds were Bird, Fair, Honey, Rocket Lab, ServiceTitan, Seismic, Thrive Market, VelosBio, and ZipRecruiter. These data points provide yet more evidence that SoCal has become one of the most profound technology ecosystems in the United States.
Are there any technology innovations, gadgets, devices, software that you found most interesting in 2018?
Consumer companies will continue to dominate headlines, but I think the companies that shined brightest in SoCal this year were B2B software companies, many of which may have the option to go public. Here are five exciting examples (in alphabetical order):
- Appetize, a cloud-based point-of-sale platform for large venues, recently raised funding from Shamrock Capital Advisors, the NFL and the Dodgers. The Playa Vista company is aggressively taking market share and could go public.
- Seismic, a sales software company, raised $100M and became a unicorn. In December, the San Diego company added one of software’s biggest names, Microsoft Chairman John Thompson, to its board of directors.
- ServiceTitan, based in Glendale, created a software platform for home services businesses like HVAC installers, and vaulted to unicorn status this year with a $165M growth round.
- Signal Sciences, a Culver City web application security company, is adding impressive clients and just closed a $30M Series C that will help it continue to scale.
- ZipRecruiter, based in Santa Monica, closed a $156 million Series B round that valued the company at $1.5B.
Finally, what's your prediction on what will be most important thing for the technology industry in the coming year?
The answer is profit. I’m bullish on US tech and, despite recent falling valuations, I believe major deals, like Cisco’s pending $660M acquisition of Luxtera, a Carlsbad-based fabless semiconductor company, will continue to happen. Nonetheless, I expect that in 2019 the VC market will shift toward demanding profit. Investors will look to fund companies with strong gross margins, in case basic survival becomes necessary. Storytelling will be important, and if you’re raising capital in 2019, your story had better include some convincing scenes with dazzling unit economics and the conclusion that your company could, at least some day, be wildly profitable.
Rob Freelen is the Los Angeles Market Manager for Silicon Valley Bank (www.svb.com), where he leads SVB’s technology practice. Across the globe, SVB works with the majority of venture-backed technology companies, delivering products and services including venture debt, lines of credit, treasury management, payments, private banking and equity venture capital. Since joining the bank, Rob has helped guide both the Tech and Life Sciences practices to market-leading positions in the industry, personally having led debt transactions for several hundred public and private companies. Prior to the L.A. Market Manager role, Rob moved into the technology practice, serving as SVB's first Chief of Staff where he helped restructure SVB's sales organization. In his early career, Rob interned at a family-owned winery in Sonoma County, spent two long years as an early employee of a startup in the dot-com era, and then transitioned into finance with an asset management firm based in the Bay Area.