Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Ashu Garg, Foundation Capital was recorded in March 2016.
Ashu Garg, General Partner at Foundation Capital, outlines the top trends driving startups and venture capital from his firm’s perspective.
Sramana Mitra: What is your read of how the venture capital industry has evolved in the Silicon Valley over the last five years?
Ashu Garg: The last five years have been, in some ways, the most exciting period for venture capital and entrepreneurs within the Bay Area. It has also been the basis for a gradual buildup of, what one might call, enthusiasm. It’s probably been the most frenzied period in entrepreneurship and venture capital in the history of a relatively young industry.
Sramana Mitra: What do you see as the key trends at this point?
Ashu Garg: There are three trends that we are spending a lot of time thinking about. By no means is this comprehensive. The first is the infusion of machine learning and predictive analytics into all spheres of life. If you think about Google search and the sophistication of being able to extract intent and then extract answers to what you might want, you’re starting to see that across the board.
Every form of enterprise software will, over the course of this decade, be a machine learning application. That trend has profound implications in how software is built. The term I use half-jokingly is enterprise software will become more like self-driving cars. That’s exactly true for all consumer software as well. That’s one mega trend.
The second mega trend that we see is the emergence of marketplaces between a host of business owners or individual entrepreneurs and consumers. Consumers could be in the enterprise or individuals. These marketplaces are disrupting traditional oligopolies. Uber is the obvious example. I think we are seeing this across the board. We have marketplaces like Lending Club that is disrupting traditional banking. We have marketplace businesses that are disrupting event management space. The list goes on and on.
The third mega trend is a trend around IoT and the notion that you’re going to have internet-connected devices that is part of virtually everything you do. This isn’t a new trend. People have talked about this probably for a decade, if not more. I think it’s finally coming into fruition. I recently bought an internet-connected shirt which tracks every muscle in my body as I work out. Once you start doing that, it’s hard to go back.
Sramana Mitra: We have Thought Leadership series on Artificial Intelligence and Big Data that are relevant to these macro trends. We also have a couple of marketplace case studies. We don’t have a Thought Leadership series on marketplaces but we do have thought leadership series, for instance, on FinTech, which we think is going through disruptive trends.
Ashu, your firm has a special commitment to fintech, right?
Ashu Garg: Absolutely. We have made very large investments in FinTech marketplaces. We were early investors in Lending Club. We were early investors in Lending Home, which is in the mortgages space. In India, I’m on the Board of a company called FundsIndia, which is transforming retail savings in India. That has been a big category for us.