Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Tim Wilson of Artiman Ventures was recorded in February 2018.
Tim Wilson, Partner at Artiman Ventures, has been in the venture business for a long time, and refreshingly has the skill and the confidence to do very complex technology deals that are relatively early.
Sramana Mitra: Tell us about Artiman Ventures. Let’s get to know one another. Let’s get you introduced to our audience. What is the fund’s focus? What kind of deals do you like to make?
Tim Wilson: Artiman is a multi-disciplinarian and sector agnostic, which is both a blessing and a curse. The blessing is that we get insights to do a very broad spectrum of technologies and markets. The curse can be speed. When we are in areas new to us, we may take time to educate ourselves and build a network prior to investing. We are early-stage venture capitalists. We have an early-stage fund of $200 million. That’s our fourth fund. We typically invest somewhere between $2 million and $6 million in our initial check.
Geography-wise, we’re in Canada, US, and Bangalore. We also have a growth fund on top. We have the capability to go from initial check of $2 million to $6 million up to $30 million. All of our funds do the same thing. If I look at the venture market, we look for the size of the opportunity that we’re looking at. The source of unfair advantage for the team is bringing that idea to the table. We look at the team itself and its capabilities.
Sramana Mitra: Let me probe a few things that you said and get more clarity. First let’s start with geography. Do you invest all over the US?
Tim Wilson: We do invest all over the US. We also invest all over India.
Sramana Mitra: And you invest all over Canada?
Tim Wilson: Yes.
Sramana Mitra: Could you double-click down on the stage? $2 million to $6 million is your first check. What do you like to see? If you’re willing to write a $2 million check, what do you need to see in that deal?
Tim Wilson: There are three things that we start with. The first is the market size. What we like to think of is how do you create of disrupt a $10 billion type market. We are very specific about $10 billion because that number allows us to think big and help the entrepreneurs think big. It also is tied into the fund’s structure and the outcomes that we need to see on an investment.
If your total addressable market is too small and we own 20% of that company on a $100 million exit, we have to do that 10 times before we make any money. We have to think big in terms of potential market that you could go into over the life of this company. The second thing we look for is, what is the unfair advantage. It’s usually technology-based. We do a lot of heavy technology with a lot of science behind it. Sometimes, we do first mover advantage.
First mover is when you’re building a marketplace where the fact that you are collecting both buyers and sellers in that marketplace allows that to be the unfair advantage. We look forward to a team that we, more or less, can get along with. It is a long road to build any company and there has to be enough capability in the core team that we can say, “It doesn’t have to be fully built, but this is a group that we can work with and help that team get what they need.”
The earliest we’ve done was one guy with an idea that was very compelling. A typical company that we invest in probably has five to ten people and the firm has raised some seed money to prove out something. The biggest thing we look for is what I shared above, which is the size of the market, the unfair advantage, and the team capability.
Sramana Mitra: So it is not a requirement that they have a certain number of customers or certain revenue run rate.
Tim Wilson: Not at all. The further along you are in your journey, the more risk is off the table, but there is nothing that prevents us from investing in a concept. We’ve done that multiple times. If the concept is powerful, we can write a check to back your company.