Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Sumant Mandal was recorded in March 2019.
Sumant Mandal is Managing Director at March Capital Partners, a firm that invests largely in enterprise-facing businesses with deep technical differentiation. The conversation includes excellent insights into the changing dynamics of the networking space and how companies like Cisco and Juniper are managing their existential threats.
Sramana Mitra: Let’s start by having you introduce yourself as well as March Capital and your other early stage investment activities.
Sumant Mandal: I have been an investor in technology since 2000. I have invested broadly across the spectrum including very early stage companies. I have incubated more than 25 companies all the way to the pre-IPO stage. I have taken a few companies public, as well as sat on some public boards. March Capital was a fund I co-founded about five years ago.
We have about $700 billion dollars under management. We have about 50 companies in the portfolio already within five years. I also co-founded two incubators in the Bay Area. One is called The Hive with a gentleman that is a good friend of yours – T.M. Ravi.
The other one is an incubator called The Fabric. The Hive focuses on artificial intelligence-driven companies. Enterprise software using artificial intelligence is the focus thesis. The Fabric focuses on cloud and networking infrastructure software companies. I also co-founded a smaller early-stage venture fund in India. So, I’ve been active in investing in India for over a decade.
Sramana Mitra: Let’s double-click down on March since that’s your primary activity currently. What are you investing in? What is the investment thesis of March Capital?
Sumant Mandal: March Capital has a pretty broad mandate. We don’t have any focus. Our investors allow us to invest in stuff that we think is exciting in the next 5 to 10 year timeframe. If you look at our portfolio, you’ll see a mix of early stage versus Series A companies. Maybe in 15 to 20 companies in every fund, we will invest anywhere from $5 to $10 million.
80% of them will have a focus on the enterprise software. The vast majority of them are data-driven companies. The real way to think about it is, can you use these new data-driven technologies to create competitive differentiation in the market and have a winning differentiation? If you do that, today it gives you a leg up from legacy software and legacy cloud software too.
If you think about it, in the last 10 years, enterprise software companies that have grown more than the mean or the median are the ones that are using the cloud as a delivery platform. We believe that in the next 10 years, the companies that are using AI-driven technologies as well as machine learning, deep learning or data-driven technologies will have the same kind of growth on top of the cloud company.
You’ll see a vast majority of our companies have a flavor of that. Now, apply that into verticals. You can see that in cybersecurity, customer care, enterprise employee management, IT support, and ERP systems. Any process within an enterprise is now being redone with these technologies. We have quite a few companies around that.
Then we have a growth focus in our funds. We have companies that are raising anywhere from $50 million to $300 million dollars or we can write anywhere from $20 million to $50 million dollars into a company. We have a dozen such companies in our portfolio. Again, similar spaces but more mature companies.
We have companies in India because I live in India. Then a few consumer companies that are less than 20% of our portfolio’s consumer.