Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Rajeev Madhavan of Clear Ventures was recorded in January 2018.
Rajeev Madhavan, Founder and General Partner at Clear Ventures, was first a highly successful serial entrepreneur, and brings to the VC game an entrepreneur’s view of the world. Rajeev highlighted the Series A gap in a big way.
Sramana Mitra: Tell us about Clear Ventures. How big is it? What is the investing focus? What sized investments are you making?
Rajeev Madhavan: Clear Ventures was founded in 2016. We are a $120 million venture fund. We focus mostly on B2B investments although there is nothing that prevents us from investing in any particular area. We are purely opportunistic, and we are here to make money. We’re not into the belief that you go with a particular team alone in terms of investment.
The reason is very simple. Things come and go. There’s no AI fund that has succeeded or this fund that will succeed because things just keep changing in the Valley. It’s that constant change and evolution of the Valley that makes this a hotbed. We focus on early stages. Given my and my co-founder’s experience as entrepreneurs before the fund, we focus on very early stage. These are what people would call angel-level seed.
We like to write $1 million to $4 million checks. The low-end could be in the $200,000 range. We can go up to $4 million in the first round which we’ve done in programs that require that kind of money. I have gone through different experiences. My second company was more of a bootstrap experience than anything else.
Some of it was forced by the fact that 35 Silicon Valley VCs turned me down. I understand entrepreneurs and I really love working with entrepreneurs. Our job is to make them successful and help them wherever we can.
Sramana Mitra: Let’s take a moment to actually highlight your entrepreneurial experience just for context. Rajeev did one of the most successful EDA in Silicon Valley called Magma Design Automation. He built it to a very substantial size from scratch. Are there some highlights that you want to point out there from your journey just to provide some context for this discussion?
Rajeev Madhavan: I’m one of the lucky ones because I only worked a year and a half in a big company. After that, I did my first company and have been the boss of myself in some form or shape. LogicVision was my first company. It was a chip design IT company formed in 1991. It went public in 2001. My second company was Ambit Design Systems, which I consider to be my toughest company because we were going up against goliaths.
We sold the company for $280 million. For three years, the company was built up to be a big success. Then, I did Magma. Magma was at the right place and at the right time. We led the low-power revolution. 80% to 90% of the cellphones designed up until about five years ago were designed using our chips and after that, using Synopsys’ software, and now some from Cadence Software. We ended up dominating that space of designing low-power in 1998.
The timing couldn’t have been perfect. We went out right after the economy and internet tanked. We raised a lot of money because there wasn’t very many avenues even though the market was down to seed good companies. In 2001, we did our IPO. On the third year of forming the company, we went from zero to $14 million in revenue. That was a real growth and growing 2x the numbers.
We had a lot of issues subsequent to the IPO. Eleven years of running a public company made me a lot grayer, wiser, and older in all aspects of things. There was a year where our biggest competition used litigation as a tactic to control us. We went through a massive litigation. That was a terrible experience. We had to give a good fight. It was a big roller coaster in the sense that we went up to $125 million in bookings and then tanked down to $70 million, and then went back up to $200 million.
We spent two and a half years defending and winning the litigation. It was not an easy ride during those two and a half years of my life. That’s when you realize as a founder that you have to stand up and fight for the rest of the company. That’s a very important portion of what I had to do. When you go to work and when you have that many lawyers, you don’t enjoy it. You feel really bad about it.