Leading indicators: why we invested in Funnel


We recently led an $8m investment round in Funnel, a really exciting B2B SaaS company. Funnel automates the collection and enrichment of marketing data from 400+ third-party systems, helping enterprises understand their return on investment in real time and with total accuracy across channels.

Funnel is an outstanding company and a great example of our underlying belief in focusing on the leading indicators of a business’ ability to scale. In Funnel’s case, two elements really stood out in particular:


1) Funnel truly solves a significant and meaningful enterprise problem and 2) the team has a strong focus on embedding a scaling culture.




A significant problem - solved!


While we spend plenty of time reviewing investment opportunities on the basis of SaaS metrics, we recognise that direct conversations with customers are a great route to identifying leading indicators of product/market fit. Our many conversations with customers and other market participants proved that Funnel’s software solves a massive, two-headed problem.


Enterprises face a huge challenge resulting from today’s software landscape: a fragmented vendor pool of highly specialised, cloud-based solutions that lead to data silos and piecemeal analysis and insights related to business performance.


For enterprises, the complexity of combining marketing and advertising data for analysis is significant. An enterprise typically uses at least 10–15 different technologies to digitally connect with potential customers, spanning multiple geographies, campaign structures, channels and other dimensions. The commercial need for this complexity is clear — it enables the targeting and tracking of potential customers, which is central to modern marketing technology. But if a marketer wants to define the value clearly — how would they do it?


As an example question: “How do I compare the performance of my campaigns across Facebook, Amazon, Instagram, and others in real time?”


Well — the likely solution would be to have an analyst work on a weekly manual data dump: pulling data from these platforms, collating it, producing analysis and preparing reports. However, in addition to being slow (i.e. processed weekly, not in real time), this manual method could well be inaccurate, and it is very difficult for the marketer to drill down and understand data from potentially hundreds of individual, manually processed data sources.


To attempt to solve the accuracy problem, the marketer could introduce a developer to create new systems, connecting the enterprise’s chosen marketing technologies with their preferred data warehouse.


However, this presents another challenge: now the marketer must also manage developers to produce a solution which addresses a live situation. And what happens if we chose to add a new marketing technology? Or if our technology provider changes their solution?


Funnel solves both of these problems by (a) providing an automated software solution to the marketer’s complex data environment, and (b) putting that solution squarely in the hands of the business user. The marketer can connect to their data without intermediaries, and without need for complicated and expensive software integration projects, dedicated resources from internal data teams or lengthy consultant-led implementations. In this way Funnel enables accurate, real-time analysis across the whole digital marketing ecosystem.


One message came through consistently from Funnel’s customers during our diligence calls: “If we didn’t use Funnel here already, I would make sure we did.” Customer advocacy of this strength was impossible to ignore.




Scaling culture


Investing in Funnel is a good example of a theme of Oxx investing: we really like to get to know the founders and executives of a business well before investing.


This is central for us because, as my colleague Mikael has mentioned elsewhere, we see our role as a scale-up investor analogously to the role of the movie producer. The trusting relationship we have with the “actors, directors and writers” of the production is key for the show to be a success.


We have been lucky enough to know Fredrik, Funnel’s CEO, and the team for several years. Mikael has assisted the company as independent Chairman since 2015, and has been impressed by how the founders put team culture at the centre of their plans to scale.


In Funnel, we see an experienced management team who have grown businesses before — and who have designed the company from the ground up with scaling in mind.


Culture is a delicate thing to discuss as it relates to young businesses: the term culture is occasionally vaguely interpreted as a kind of a weighted average of the availability of table tennis and the exoticism of rare coffee provided in the kitchen. But real team culture goes much deeper, and involves an experienced senior team knowing how to identify the best talent and bring them together in a highly effective collaboration.


The cultural ‘skill’ is often underrated in the assessment of teams, but it is crucial to a business’ ability to scale. We are very excited to work with the brilliant team at Funnel, many of whom have worked together to build successful businesses before, and who know from experience how to build their team and their processes to scale.




Written by Bob Thomas, Investment Manager at Oxx