Sramana Mitra: You said you have companies in India. Does that mean that you invest globally? What’s the geographical coverage?
Sumant Mandal: We will never say that we won’t do something. But if you look at what we’ve done, 75% of our investments are in North America and about 25% is global. Out of that 25%, most of that is in India. The reason is for what we do, we need local presence. We have a partner in India. We have someone on the ground there to manage our investments.
We have a small presence in Brazil. We’re trying to see if we can expand. That may become more important five to ten years from now, but that’s a good place for us. We also have one company from Israel and one from Berlin, Germany.
These companies generally are maybe headquartered there, but our interest in investing is that they want to build their business in North America. We become their conduits to do that.
Sramana Mitra: In North America, do you have any geographical preference or are you investing all over North America?
Sumant Mandal: As you would see in most funds, North America also has these little known ecosystems outside of the Bay Area. That is represented in our portfolio.
We have companies in New York. We have a company in Boston. We have a few companies in Austin. But most companies will still be in California. A good two-thirds will be Northern and Southern California.
Sramana Mitra: In terms of stage, you said your early stage work begins at the series A level with a minimum $5 million check.
Sumant Mandal: I say average is $5 million. We’ve written smaller $1 million to $2 million checks as well. If you have a fund size between $300 million and $400 million, you need to have a specific type of investment. Small investments don’t necessarily fix it. For the seed stuff, I use our platforms at The Hive and Fabric to do more of that. Then those companies graduate to March.
Sramana Mitra: But on Hive, from what I understand through my conversations with Ravi, who has been on the show as well, is that he is trying to do a kind of bootstrap to exit with very small amounts of capital infusion.
He’s actually trying to drive his portfolio companies to an early exit, not necessarily working as a feeder into the venture ecosystem. Is that a correct observation?
Sumant Mandal: I think that can happen and it has happened. It’s been very lucrative for a small pool of capital like The Hive where you have an early exit and you don’t have a massive amount of capital on top of that. The structure lends itself to that very well. So he’s not wrong as that is one part of the strategy of The Hive and it has worked very well for us.
But having said that, a majority of the companies that have come out of The Hive and Fabric have gone out and raised venture money after The Hive.