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Doubling Down: Peter Berg, Managing Partner at M12

Republished By Plato
Republished By Plato

Date:

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“Doubling Down” is a new SaaStr series where we hear from top B2B SaaS investors on their most recent activities and takes on the current market. In May, we had a great conversation with Karl Alomar, Managing Partner at M13. Check that out here.

This week we’re focusing on Peter Berg, Managing Partner at M12!

#1.  What’s your most recent disclosed investment?  Why did you do the deal?

PAXAFE uses AI to predict issues in cold chain logistics before they happen. It’s like “Minority Report” for the cold chain (think: delivery of perishable goods, sensitive pharmaceuticals, etc). It’s mind blowing how much product is wasted or lost in the supply chain due to temperature issues (e.g. a pallet gets left on a hot tarmac for too long and a $100M shipment of drugs needs to be scrapped).

To me, this is such a great, practical use of AI, driving real value for companies by increasing visibility and actually preventing losses before they occur. PAXAFE can ingest and analyze large volumes of data from IoT sensors, PDFs, unstructured log files, etc., and synthesize it in a way that no human can currently do.

#2.  What’s your sweet spot for investing — check size, stage, type of deal?  And how big is your current fund?

We invest in early-stage startups, so we’ll participate in Seed through Series C rounds, with an emphasis on Series A and B. Our priority is identifying opportunities where we can add value to a startup, so we look for companies that have initial traction, early product-market fit, a clear understanding of their target customers, and a scalable, repeatable sales motion. Our typical check size is in the mid-to-high single digit millions.

#3.  What’s the #1 bit of advice you’d give to SaaS founders today?

Be selective with the investors you choose to work with. Really seek out those who want to work with you and your company, and are looking for a relationship and not just a return. When evaluating CVCs, it’s important for founders to understand how that CVC is structured, what motivates them, and what their process looks like, to make sure it aligns with their goals. So if you’re only looking for money, look for a VC that only focuses on returns. But if you’re looking for that strategic relationship and partnership, make sure that’s something they focus on and can help deliver.

#4.  What’s your pulse check on the venture markets right now, today?

It’s a challenging time, in some regards, but some of the best companies have been built in similar circumstances. Today’s climate necessitates a certain level of focus, even frugality to a certain extent on the business side, and forces founders to make sure that they have something real and viable. The zero interest rate phenomenon is a thing of the past, and free money days are very much over. Founders really need to think about making the capital they have work and optimizing whatever they have.

I think for net new companies that are getting built, it’s actually very encouraging. At the seed stage, we’re seeing companies and founders that understand the landscape they’re operating in, and are being very capital efficient in most cases.

#5.  What’s different about your fund / how you invest and support founders?

As Microsoft’s venture arm, we’re thesis-driven and aligned to Microsoft’s business priorities, which helps us create value for our portfolio companies. CVCs can be a massive superpower. As strategic investors, we’re better positioned to provide startups with a shared understanding of their vision and ability to scale alongside the company; invaluable technical expertise, and the resources that come along with that; and access to the communities that will support their go-to-market activities.

Another thing that sets us apart is our ability to work with the companies we invest in. At M12, we have concrete and quantifiable ways that we can and do add value to our portfolio companies. We don’t require our portfolio companies to work with us, or to have a commercial arrangement, but they have the backing and resources of Microsoft when they need them, and we can help with things like go-to-market assistance and product partnerships.

#6.  What’s an “exit” you’re particularly proud of?

One highlight is Chain, a company I invested in at Visa that ended up working with us to create an entirely new product line now known as Visa B2B Connect. At the time, a lot of people were very skeptical because our investment in Chain was the first blockchain investment by any major payments network. It’s now a multi-billion dollar cross-border payments network for businesses that has achieved a level of scale and success that is so significant it’s routinely mentioned on Visa earnings calls and is a core component of Visa’s commercial payments strategy. Chain was ultimately acquired by another company which produced a good outcome for their shareholders as well.

To me this is a shining example of the type of extremely high leverage outcomes made possible by Corporate Venture Capital if you genuinely work to partner with your portfolio companies. When a startup and a larger enterprise work together to leverage each other’s respective strengths, magic can happen.

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Peter is a managing partner at M12, where he leads the fund’s Vertical SaaS investments and work.

Peter is a founder twice over, and most recently ran strategy and business development for Very Good Security.

Prior to this role, Peter spent over 6 years leading Visa Ventures where he directed a team of investment and portfolio development professionals focused on investments in the fintech ecosystem.

Peter is a graduate of Stanford University, where he earned a Bachelor’s degree in Mathematical and Computer Science and a Master’s degree in Statistics.

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