Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Krishna Srinivasan was recorded in November 2018.
Krishna Srinivasan is Founding General Partner at LiveOak Venture Partners, a firm focused on investing in Texas. Great conversation!
Sramana Mitra: Let’s first get our audience acquainted with yourself as well as with LiveOak. Tell us about the fund. Tell us a bit about your background. What do you like to invest in? How do you think about your portfolio?
Krishna Srinivasan: I grew up in India. I graduated from one of the IITs. I came to the United States to get a Masters from the
University of Texas. I worked at Motorola in the mid-90’s. Following that, I went to business school at Wharton and started in the venture industry in 2000. I joined a firm called Austin Ventures, which was one of the well-respected firms. I joined Austin Ventures and spent a decade there and made partner in 2005. In the early part of this decade, I came out of Austin Ventures with two of my colleagues and started LiveOak Venture Partners.
Sramana Mitra: How big is LiveOak? What’s the size of the fund?
Krishna Srinivasan: The first fund was $105 million. We’re still yet to disclose the exact size of the second fund but it would be comparable to the first fund.
Sramana Mitra: Talk a little about what you like to invest in.
Krishna Srinivasan: Early-stage investing ends up being much more of a local neighborhood sport. With that as context, we can talk about our investing strategy in terms of four buckets. Number one, our companies are predominantly headquartered in Texas.
Number, two, they’re all in technology and technology-enabled services. We are the first institutional money in these companies. They might have raised some seed rounds before. We might be the seed investor too. First check could be as little as half a million dollars to as much as $4 million. Typically it’s between $1.5 million and $3 million for the first check and then we invest the whole lifecycle of the company up to $10 million. The fourth element is that in all these investments, we take board seats and we play the role of a local lead investor.
Sramana Mitra: Can you double-click down on stage? Early stage has gone through an evolution since you got into the business in 2000. I raised money for my startup all through the 90’s till 2000. That was a different game. It was seed and Series A. Nowadays, we are looking at pre-seed, seed, post-seed, pre-Series A, and small Series A. There’s a whole segmentation that has gone on in just seed. How do you fit in that spectrum?
Krishna Srinivasan: Not only has that evolved from a time dimension, it has also evolved geographically. For the rest of the normal world outside of Silicon Valley, it’s hard to put companies in a firm bucket. Let’s say for a completely unproven, first-time entrepreneur, the typical stage we get in is where they’ve got some level of early traction. They might have $30,000 to $40,000 of monthly revenues and some evidence of product/market fit. We might call it a seed investment. It might be $1.5 million to $2 million investment.
Let’s say for a successful repeat entrepreneur who’s coming up with the simplest idea where we might even be part of company formation with them, we might take earlier-stage risks. That might be a $2 million to $3 million investment into that company. It’s more about how we feel about the company’s ability to absorb that capital and do something meaningful with it.
Are we still at the stage of trying to figure out what product or market it needs to be? You are more forgiving and you somehow believe that somebody who has been there and done that can absorb the capital and do something expected of it. I would say comparable to Silicon Valley, we are a seed investor. Some of our companies could be called Series A.