Sramana Mitra: Are all the names that you rattled off seed investments?
Preeti Rathi: Yes, most of them. We’re seed investors in Splunk and DocuSign. Not everyone of them is a seed investment. Like I said, we partner. Series A is a very good place for us to start with as well. If it’s something we’re absolutely drooling over, we’ll start a partnership with a company at series B. But primarily we’re early stage investors where we say we want to spend time helping you build a company. So seed and series A is where we focus.
Sramana Mitra: This probably is going to be hard for you to answer but I’m curious. Your partner from Ignition who invested in DocuSign or Docker or one of those companies that have really taken off, what did they see at the seed stage to make that bet?
Preeti Rathi: I can answer that generally. Obviously, as you pointed out, it’s some other partner who invested in these companies. There are actually different answers. There isn’t one standard answer as such. So let me just say. Large markets are always important. If you’re looking for a large company, you need large markets.
But if you focus on some kind of a vertical, the vertical is as big as it is. So if you’re looking at a company that’s focused on some vertical, then we try to understand what kind of domain expertise the team has. Do they really understand the true pain points of the industry? What kind of a product are they working on? Do they really understand the workflows? Do they understand what the buying patterns of the team are? What would they be resistant to? I guess just basically trying to understand if this product would get adopted on a massive level or scale.
Sramana Mitra: The algorithm that we use when we talk to our entrepreneur community about what VCs are looking for, VCs are looking to build a company from zero to $100 million in five to seven years. So velocity is a high priority and market size too. To do that, you need a large market. This is the traditional venture model.
Of course, there are other things emerging now which are focused more on niches, early exits, and stuffs that are more on the micro-VC side and so forth. We’re hashing all that out at the moment. I’ll have a lot of conversations going on that topic. But Ignition is a traditional venture fund that has that criteria of having to go from zero to $100 million in five to seven years.
What you’re pointing out on domain knowledge is actually very much on our radar. If you’re trying to do something that is vertical or that has that required deep domain knowledge, that is a winning formula for a founder to be able to convince an investor.
Preeti Rathi: I was just adding to your domain knowledge point. Across geographies, we have really smart people and smart engineers building some really high tech products.