If you have been bootstrapping and think you are ready for investors, you need to learn how investors think. First, please study our free Bootstrapping course and Investor Introductions page. Then start looking for entrepreneur – investor fit. Today I introduce you to Swapna Gupta.
Swapna Gupta, Senior Investment Manager at Qualcomm Ventures, explains the firm’s investment strategy. You can listen to a podcast of our conversation here or watch the roundtable video below:
Sramana Mitra: Let’s have you introduce the firm to our audience first.
Swapna Gupta: Qualcomm Ventures is a global billion-dollar fund. Qualcomm Ventures India is a $150 million dedicated fund for India for investing across sectors. We have been in India for the last 10 years. We have a healthy portfolio of about 25 plus companies. We have been investing in consumer, enterprise, and hardware companies. It’s an exciting time to be in the ecosystem.
In terms of investment thesis, it is unique in a way that we derive a lot of value out of the mother ship, which is Qualcomm Incorporated. We believe in what they believe in. They believe in creating world-changing transformation internally for the world to see. We also want to do that externally by aiding the startup system to actually create world-changing technology and transformation.
Sramana Mitra: It’s not necessarily Qualcomm-specific strategic investment. It’s a much broader investment thesis. Yes?
Swapna Gupta: That’s true. A lot of startups and entrepreneurs don’t understand this. It’s a lot different from a corporate VC. We act as financial investors. We don’t invest to acquire. We invest to make financial returns.
Sramana Mitra: You’re a sole limited partner still at Qualcomm, right?
Swapna Gupta: It’s a fun fact that we don’t need to raise capital.
Sramana Mitra: Let’s double-click down on stage. What stage is of interest to you? The early-stage ecosystem has really segmented at this point. We have friends and family, and then we have pre-seed, seed, post-seed, pre-series A, small series A, and traditional larger series A. There’s a whole lot of stuff going on in what used to be just called early stage seed investment. How do you play? What’s your sweet spot in this continuum?
Swapna Gupta: I think we continue to be what we were 10 years ago. We would like to play anywhere between Series A and Series B, and very early opportunistic Series C. Our check sizes are anywhere between $1 million to $5 million. We try to shy away from this region because we’d like the firm to settle the first series to fund all of that. We do some seed investment but majority is loaded towards Series A and Series B.
Sramana Mitra: How do you define Series A? What’s the check size for Series A?
Swapna Gupta: Our definitions have been changing over the years. Now, a typical series A would have a check size of anywhere between $3 million to $5 million. We would typically like to do a $1 million to $2 million investment in Series A.
Sramana Mitra: What do you need to see in terms of validation to write a $1 million to $3 million investment check? $1 million to $3 million is still a relatively small series A. In some cases, $1 million is considered a seed still. Obviously, the definition is one thing, but the check size is another.
Swapna Gupta: It has two different aspects. We look at consumer startups, enterprise startups, and hardware startups. In an enterprise startup, typically, you would expect that by the time a founder found a way to the series A stage, he has found the product-market fit. He’s not just struggling with the product to figure out who are going to be the first 5 or 10 customers, right? He has done all that stage by himself. This means he doesn’t have a large team doing it. But he builds the company so that they’re ready for the next level. That’s why he needs our capital.