Sramana Mitra: I’ve known George Zachary for a long time. When I started One Million by One Million, he was one of the people who wanted to invest. I’ve had interactions with CRV for many years. What is the current fund size?
Devdutt Yellurkar: Fund 17 is a $600 million fund.
Sramana Mitra: What check sizes are you writing these days?
Devdutt Yellurkar: Our focus hasn’t changed. We still do early stage. We do seed and Series A. Check size these days goes from $1.5 million to $7 million. That’s a range in which these projects are coming in. Sometimes, we do Series B. Those are $10 million to $15 million. Of late, we have started writing a few very selective growth investments. We have done one or two of them so far. Those are in the range of $20 million to $25 million.
Sramana Mitra: I know you do both B2B and B2C. Can you double-click down a little bit and talk about how you define seed and how you define Series A in terms of metrics. Today, I’m sure you’re doing a lot of B2B SaaS. What is the seed metric that you’re comfortable with in B2B SaaS? What is the Series A metric?
Devdutt Yellurkar: Our focus is entirely based on the quality of the entrepreneur. We have found that to be the single-most important variable in the success or the outcome of the company. For 48 years, we have made over 455 investments. We’ve got over 75 IPOs. If you analyze that, the common success factor is the quality of the entrepreneur. Markets come and go. Technologies come and go. Then the price gets settled by the market. You can’t control the price.
The amount of funds raised by the entrepreneur depends on what they’re looking to do with that money. In the seed stage, entrepreneurs are looking to get to a particular milestone whether they’re trying to build a product or they already have a product and are trying to get some distribution. With the cloud and new technologies that are coming out, you can build products pretty easily. Building is not as difficult.
What we are noticing now, and we are seeing this across the globe, is they have raised $50,000 to $100,000 before with an accelerator and built some kind of a product. They have some customers. They are trying to understand if this thing can scale.
Sramana Mitra: Scale and velocity.
Devdutt Yellurkar: Yes. That’s when they come in to raise a little bit of capital or go to some angel. Entrepreneurs typically raise $1.5 million to $2 million. That’s primarily to test distribution.
Sramana Mitra: The issue that a lot of entrepreneurs in SaaS are facing right now is that bulk of the investors are looking for a million ARR before they’re willing to write checks. It’s interesting to see your perspective on how you are looking on B2B SaaS.
Devdutt Yellurkar: People do write a lot. There’s a lot of material on Quora. There’s a lot of material on blogs. I’ve seen a lot of entrepreneurs come in saying that they’ve got to a million and are ready. That is a good milestone, but that’s not the only milestone. I would encourage people to look for some kind of velocity in the business.
Sramana Mitra: Absolutely. It depends on how long it has taken you to get to one million.
Devdutt Yellurkar: Also, what speed at which it is growing. It may take you 10 years to get to a million but if the revenues started two months ago and you’ve understood some distribution mechanics, then the question is how big this could get. Is this strategic enough? What is it that they know that nobody else knows? Those kinds of questions get asked. We look for entrepreneurs who have some kind of a secret. What do they know that not many other people know? If they are slightly ahead of the game, that is attractive.