By guest authors Irina Patterson and Ravi Bulusu
This is the seventeenth interview in our series on financing for entrepreneurs. I am talking to Manu Kumar, the founder and chief firestarter at K9 Ventures, an early-stage venture fund that provides funding and support for concept-stage and seed-stage technology companies. It is based in Palo Alto, California.
Irina: Hi, Manu. Let’s start with your background.
Manu: I am an entrepreneur turned investor. I started my entrepreneurial career in the late 1990s while I was a grad student at Carnegie Mellon. I started my first company in 1996. That company was doing Web-based customer service. We built that company and sold it in 2000 to Epiphany.
That was a great exit; my investors were very happy. Then I went on to do my second startup, which was started in 2000. We sold that company in 2005. It did Web conferencing is called iMeet and Netspoke.
K9 Ventures was the outcome of my helping a third company called Refocus Imaging. While helping this company I realized that there was a gap in the early-stage investing space. K9 ventures was designed to do funding in the seed stage, which is between individual investors and institutional venture capital.
Irina: When did you start K9 Ventures?
Manu: The fund was started in 2009. We did the first closing on the fund last year, and I also started investing through the fund last year. We did a final closing on the fund in the March of this year, and that’s when I announced the fund.
Irina: How much capital do you have in the fund?
Manu: It’s a micro VC fund or a super angel fund depending on how you like to call it. It’s $ 6.25 million fund. It’s designed to do very early stage deals, the first money into a company. The typical investment size is between $100,000 and $250,000 as an initial investment and then participating in the following round.
Irina: How many people are involved in this fund?
Manu: The fund is managed just by me. I am the only person who does the day-to-day operations. The capital comes from several individuals and family offices.
Irina: What is your industry focus?
Manu: My academic background is electrical engineering and computer science. So, those are the areas that I focus on. Mostly software-based technologies and companies that use core computer science.
The types of things that I look for are new computer technology, new software technology, or something that is in a new market and using technology to create that new market. I don’t really use a particular sector strategy. I focus more on asking myself, is it technology that I can understand or am I willing to take the time to get interested in and spend some time to understand it.
Irina: Where do you invest?
Manu: I am very localized in my investing. I call it hyper-local. I invest only in the San Francisco Bay Area. And I want the entire team to be located in the Bay Area. I jokingly say that my operating radius is 30 miles around the Stanford Oval.
Irina: What is your current source of deal flow?
Manu: Most of my deals come through my network either from Stanford or Carnegie Mellon or other entrepreneurs with whom I have worked before, and also from other angels and VCs who are looking at the deals which are too early for them.
Irina: Which are your best sources?
Manu: The best ones are the ones that come in through the referrals from my existing portfolio companies. Those are the ones that are most qualified because the entrepreneurs whom I am already working with have an idea about what type of things I look for. So, they are able to do the best filtering. When something comes in through them, then I know that it is definitely the highest quality deal.
Irina: If an entrepreneur wants to reach you, what is the best way to do that?
Manu: The best way would be to find someone within my network whom they know and then be referred through that person. The introduction depends a lot on the credibility of the person who is making the introduction. If it is somebody whom I know who is referring the person in, it definitely floats to the top. That said, I look at every single e-mail that comes into my inbox. I may not get a chance to respond to every e-mail, but I do read all of them.