Why Draper Esprit Invested in Decibel: Interview with Partner Nicola McClafferty
In this interview, we speak to Nicola McClafferty, Partner at Draper Esprit. Draper Esprit is one of the most active venture capital firms in Europe, developing and investing in disruptive, high growth technology companies, including Trustpilot, Transferwise, and Graphcore.
Tell us a bit about your firm & your general investment strategy and approach
I’m Nicola McClafferty, and I’m a partner at Draper Esprit. We are a London-based, early- and growth-stage venture capital firm, and our focus really is to find European businesses who can become global champions.
We invest across the technology space including consumer, digital health, B2B software, as well as deep tech and hardware, backing companies at a point where they’re ready to scale up for international expansion.
Our model is different to many other venture capital firms in that we’re a public company, so we very much focus on a patient capital model – we invest from our own balance sheet, and our goal is to be able continue to back companies over however long it takes to grow meaningful global scale. This is different from other VCs that can be restricted by the cycle imposed by their fund structure, we can take a very long term and flexible approach to funding.
How did you first hear about Decibel?
Decibel is a company that we’ve been aware of and impressed by for many years – we tend to monitor companies a long way before investment and in this case one of my colleagues had a conversation with them years ago.
More recently, we were reintroduced through Eight Roads, one of Decibel’s early investors. When Decibel was starting to think about its Series B, Eight Roads dropped us a line – we know those guys well as we’ve worked with them previously – and that kickstarted our reengagement with the company.
What makes Decibel such an attractive proposition for investors?
Typically, we look at several factors when investing: the size of the market opportunity, the quality of the team, and the traction of the business so far. Really all those things aligned very well when we were looking at Decibel. What became very clear to us early on is the potential of the digital customer experience space, as well as how well-positioned Decibel is to lead it.
We were excited to back not just a UK or European champion in the space but a global business. The Decibel team has done a really good job in building the company to a meaningful scale so far, and for a company at this stage of raising Series B we were really impressed by the top tier customer base of Decibel, its level of engagement with that customer base, and also how successful the company had already been at expanding into the US, which is quite unusual at this stage of a business.
Another thing that really impressed us was the growth rate. As VCs what we look for is a business’s ability to grow, and Decibel’s demonstrated that and then some.
What makes Decibel’s market so exciting?
Digital customer experience has been a topic for a while, but over the last decade or so consumer-facing businesses like Amazon, like Netflix, like Uber have really redefined what a strong online customer experience looks like. In turn, they’ve redefined customer expectations around online experiences, and consumers are taking those expectations into every digital interaction they have, regardless of who with. Brands need to be able to keep up and continuously offer the level of frictionless experience customers now expect.
Big traditional enterprise brands tend to be slower moving in responding to customer trends and adopting new technologies, but what’s becoming really clear is that this is top of mind, top of the agenda for all businesses regardless of their size. Marketing budgets are shifting away from purely focusing on offline or physical experiences and placing a much greater emphasis on digital channels.
Digital customer experience is the new competitive battleground, and if you are not heavily investing in this as a space and you’re not delivering this kind of frictionless experience to your consumer, the customer will go elsewhere.
Decibel has built world-class technology and has already been able to penetrate a really strong base of customers, so we’re hugely excited about what Decibel can bring to this market.
Where do you see the company going?
Decibel’s AI capability is going to become a really, really important growth driver and focus over the next few years, particularly with regards to being able to deliver very real time and accurate, speedy insights to digital teams, so enterprises are able to react and respond to customer needs as they occur.
Another very compelling aspect of the Decibel proposition, which is something that came out when we spoke to customers directly, is how applicable the data is across multiple functions in an organization. The data is used not just by marketing and analytics but also product, engineering, and customer service teams, as organizations start thinking of the more holistic customer journey and how it can be improved.
Any other comments?
At Draper Esprit we’re really proud to be an investor in Decibel. We think the business is on a path to build a very large global software winner in this space, and we’re thrilled to be backing them on their journey.