Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Vivek Ladsariya was recorded in April 2018.
Vivek Ladsariya, Partner at SineWave Ventures, talks about the firm’s investment thesis, as well as trends in the industry.
Sramana Mitra: Let’s start by introducing our audience to you as well as SineWave. What is your investment focus? How big is the fund?
Vivek Ladsariya: We’re a fairly new fund. We’re based out of DC and California. SineWave typically invests in seed to B companies mostly in the enterprise software space but also some companies in the applied technology space like healthcare and transportation. We work closely with our entrepreneurs trying to help them bridge the gap with large enterprises and the public sector. We see a huge opportunity for early-stage entrepreneurs to both sell into those verticals and also navigate from a regulatory standpoint. That’s what we are trying to work towards with our portfolio companies.
Sramana Mitra: How big is the fund?
Vivek Ladsariya: We’re just over $60 million.
Sramana Mitra: What size investments do you like to make?
Vivek Ladsariya: That varies. As I said, we’re a seed to B fund. In the seed stage, our check sizes are slightly smaller around $500,000 to a million dollars range. That expands to $3 million to $5 million range at the Series A and B stage where we either lead or co-lead.
Sramana Mitra: Let’s double-click down a little bit on what your definition of seed is. What do you like to see in terms of validation? What do you normally like to see in terms of metrics for a company to be interesting to you?
Vivek Ladsariya: That’s a great question because the seed stage has become so granularized. What we are typically looking for is there needs to be a team that understands the technology well and the space well. That’s the least common denominator for most VCs in the seed stage.
What we need in the team is entrepreneurs who are in that space for a specific reason and not just because it’s the current noise in the market. These are people who have been working towards problems in that space or who understand the challenges well. As far as traction goes, there are some revenue metrics that we look at. I don’t think that’s as easy to pinpoint across the entire sector. I think different companies have different dynamics that they need to accomplish.
We do need to see some kind of market traction and some kind of customer interaction. We’ve only done a handful of seed deals so far. Those tend to have some kind of pilot interaction with a few customers. Maybe one or two of those pilots are close to or moving towards a contract. It tends to vary with companies in different stages and with the kind of product they’re selling.
Some companies are selling products from the computing space where, on average, a customer might be in the $30,000 to $50,000 range. We expect to see at least a few customers bringing the YTD revenue to somewhere over $200,000 with an annualized run rate of close to a million dollars. That might vary for a business.