Sramana Mitra: We make a distinction between fat startups and lean startups. Cyber security is a very good example of an area where some startups tend to be fat startups. It takes time to build the product. The enterprise sales cycles are very long. Cyber security sales cycles can go on for months.
In our portfolio, we have excellent companies that have built very interesting cyber security products. In one case, it’s pre-revenue because it’s negotiating these very long sales cycle deals.
In another case, we have a cyber security company that has solid customers already in the Indian market. They have a good pipeline that will get them to a million dollars in revenue in the next six to nine months.
As you said, enterprise investing is diverse. These are all scenarios that are coming up in our practice. Let’s talk about geography since we just started touching upon that. Tell us where you’re comfortable investing in.
Deepak Jeevankumar: We do invest globally, but not equally in all countries. Venture capital is not easily scalable. We are active investors. We take board seats. We lead and co-lead rounds. We need to be in a place where we can help the company. We have a team in Palo Alto. We have one of our managing directors in Boston. We have a couple of people in Israel. We mostly invest in the US and Israel. Israel is a big ecosystem for cyber security. We also made a few investments in the UK.
Three years ago, we invested in this AI chip company. They are building a faster version of an AI chip that can hopefully create another quantum leap in deep learning.
Sramana Mitra: Talk a little bit about some other portfolio companies that are representative of your investment thesis. As you do that, help us understand how you encounter them. What did they have by way of proof points? What is it about those companies that attracted you enough to make those investments.
What I’m trying to get to is help our audience understand your process around evaluating investments.
Deepak Jeevankumar: Let me take a couple of different options. Number one is how do we source deals? Sourcing deals comes from trusted networks that we have from angel networks, other entrepreneurs, and customers as well.
We have a strong network of CIOs and CISOs. Many good entrepreneurs go and find customers first before they raise money. These are the three sources. Then there’s another source. This includes the rising projects in GitHub.
We have systems in place to understand if there are second-time entrepreneurs who are part of big companies because the first companies have been acquired. Now they’re starting a second company. We invest both in first-time and second-time entrepreneurs. Both are tricky in their own ways.
We’ve had equal success with first time and second time entrepreneurs. One of our companies in the cyber security space called RiskRecon was acquired by Mastercard. We heard of RiskRecon through an angel investor in cyber security and through one of the top five banks that was using them.