Sramana Mitra: What is the preferred check size for your fund?
Anand Rajaraman: We write about $2 million to $3 million checks, which means that we could co-lead in the US. In foreign geographies, we might even be the lead. In a B round, we follow.
Sramana Mitra: You said you do both B2B and B2C?
Anand Rajaraman: Yes.
Sramana Mitra: And you’re doing this globally?
Anand Rajaraman: We have no constraints on geography. In fund one, we did no investment in China. China is a geography that we don’t have experience, so we steer away from China. That requires very specific skills that we don’t have.
Sramana Mitra: Let’s take a few examples. I’m going to start you out with Cambrian Ventures investments. Give me an example of something that you thought was really cool. Help us think through and understand why you invested in that company.
At what stage did they come to you? What was it about that company that drew your attention and commitment? In these use cases, we try to understand the way you think about investing.
Anand Rajaraman: Cambrian’s investing model was somewhat different from what we do at rocketship. At Cambrian, we were doing seed investing. We were going earlier than we’re doing at rocketship. I’ll give you an example.
One was a company called Aster Data. Aster Data was one of the earliest Big Data companies. They started around 2004. It was started by three PhD students from Stanford. One of the students was actually my TA for the class that I teach.
During the class, we were talking about how it would be nice to combine MapReduce with traditional database technologies and create a new class of database systems that combine the new wave of Big Data with the old way of managing data. Lo and behold!, these three students wanted to do that company.
They built an initial prototype. They came to me. At Cambrian, we were looking at four companies that had deep and differentiated technologies. We ended up writing a seed check into that company. Back in 2004, you can do a seed for a million dollars. We put in a million and a half.
The company ended up winning a lot of early customers. Sequoia came in and led the Series A. The company continued to execute well and ended up getting acquired by Terradata for $400 million.
Sramana Mitra: How much capital did that company consume before finding its exit?
Anand Rajaraman: Maybe $20 million. The company in the 2000’s were reasonably capital-efficient compared to today.
Sramana Mitra: Yes, especially the period you’re talking about. It was this nuclear winter period of Silicon Valley. Let’s come to rocketship. From the first fund of rocketship, give us an example.
What I drew from your first example is you like deep tech, and people who have a similar background to yours who have this very deep computer science background and are applying that to some technology problems. Ideally data-oriented problems and probably increasingly more AI and ML.
Anand Rajaraman: That’s a correct conclusion for Cambrian. But remember Cambrian was 15 years in the past. Another of my investments that I did just after Cambrian but before rocketship was in 2006. It’s Facebook. We invested in Facebook in Series A.
By this time, Cambrian didn’t exist. We already started Kosmix. When Facebook launched, the earlier universities they launched in was Stanford. We saw that this company was getting a lot of adoption amongst Stanford students. That convinced us that this company had product-market fit.