Karthee Madasamy is the Founder and Managing Partner at Mobile Foundation Ventures. We discuss the nuances of Deep Tech investing.
Sramana Mitra: Karthee has been here before. We are going to catch up and level set on how COVID has been and how the ecosystem around us is evolving. Welcome back. It’s great to see you.
Karthee Madasamy: It’s great to see you too. Thank you.
Sramana Mitra: It is wonderful that the US is turning the corner on COVID. India is a whole different story. I have several family members who are infected. We had a death earlier in the week. We have another aunt that is critical at the moment. It’s really a bad situation in India. I am very sorry for those of you who are in India experiencing the same horrible situation with your friends and family. Be careful and be safe. Let’s get started. Let’s catch up. How have things been? What are the highlights of your last 15 months?
Karthee Madasamy: It’s definitely been a weird 15 months, but we have been fortunate to be doing our work during that time. We are aware of our situation in India. We lost our high school classmate as well earlier this week. Hopefully, everybody is safe, and that India turns a corner as well. We decided to be active through the pandemic period. We did not take a step back.
In the first six months of the pandemic, there were a lot of investors who took a little bit of a step back. Since last fall, everyone has come back in. Everyone has realized that technology is the way to go forward. That is where the value creation and wealth creation opportunities are. It has come back roaring in a way that nobody expected a year ago. We have stayed even-keeled and invested through the process since the start of the pandemic.
We have made four investments during that time. That number is our annual active base, which is four to five companies a year. Today, the activity level is high across the board. We do deep tech. Deep tech is probably a bit more even-keeled, especially at our stages because we understand the technology. We evaluate the technology and get answers as to why such a technology would work. There is a little less of a frantic pace in deep tech, but it has gone up across the board.
Sramana Mitra: Let’s do two things before anything else. Let’s talk about the companies that you invested in before the four companies. How have they fared during COVID? What are you learning based on the trends and the behavior of your portfolio companies?
Karthee Madasamy: They have gone through a roller coaster ride. Initially, during the first three or four months of the pandemic, sales stalled. You couldn’t do a real-life demo. You couldn’t get the conversation moving from pilot to an advance discussion and getting through a PO process. It was slow at the time.
A lot of the focus for the companies was to make sure that cash would last for a longer time. There was a lot of proactive management in terms of staff reduction or salary reduction to make sure that the cash would last for a longer time. A lot of it has changed. The behavior has changed from the customer as well. This is true even in big enterprise customers as well.
Starting last fall, you could complete a sales process completely on Zoom. You could have real-life conversations and meet-ups on Zoom to get the sales to a close. Things started to pick up. Everybody has figured out a way to work around that. As a venture capitalist, it is relatively easy to do this through Zoom. Managing a company with 100 employees through remote tools like Zoom has its own challenges, but I think the portfolio companies have done a good job.
They all have figured out their working arrangement to get the best setup. Our customers started to come back in terms of their behavioral change and are going to the finish line just through Zoom. This meant that the pipeline started flowing through. Deals started closing as a result. Starting this year, it almost feels like they are back to normal in terms of their position and their goals. There is no badly neglected hold-up in terms of their projections and their sales velocity.