Sramana Mitra: Talk about the companies themselves.
Rajeev Singh-Morales: Let me start with one that was just sold about two months ago. Returnly is a firm that we invested in five years ago. It was sold to Affirm for $300 million. It was founded in 2014 by an immigrant from Spain. We invested in 2015 in a convertible note. E-commerce is booming now. Most people buy stuff that they want to return.
For merchants other than the big ones, the return process is a pain point. This company enables the return process. When the company started, it was just software. They had a hypothesis that credit, at that point of return, might be an interesting play. As time went on, it became the most important part of the business. It’s the reason why it was bought by Affirm. The valuation when we went in was under $10 million. It sold at $300 million after five years. It was an interesting journey.
Sramana Mitra: Was this founded in the US?
Rajeev Singh-Morales: It was founded here in the US. The bulk of the technical team was based in Europe. We’ve seen a lot of companies that are started here and the technical team is in Spain or India. We’ve also worked with companies in Europe that had then come to the US.
Sramana Mitra: This is an interesting dynamic that we see a lot of especially in the context of Indian entrepreneurs using India as the development location and coming to market here. A lot of these companies are getting started in India and then they’re going for this global market kind of play. They want to move to the US. They do the product development and validation and then often come to the US with a ready product.
This is a dynamic we see a lot of. I’m very happy to see that you are also focusing on this dynamic in Europe. The Europe-Silicon Valley bridge is less well-built. If you’re doing B2B, the US market is one of the most prized market.
Rajeev Singh-Morales: Your observation is entirely right. Whether it’s Silicon Valley, Austin, or New York, the buyers here are amongst the most sophisticated. One observation I would make about B2B is that understanding the buying process of corporates, whether those are midsized or larger corporates, is one of the coefficients of success that can’t be underestimated. If you don’t understand the purchase decision dynamics, you’re going to get stuck.
Sramana Mitra: That’s right. We spend a lot of time on that topic in our accelerator. What are the dynamics of where you’re seeing the European teams? Is it all in Spain that you’re working with?
Rajeev Singh-Morales: We have investments in the UK and Switzerland. It’s a little distributed across Europe but mostly in Spain. The dynamics are roughly similar to what they are here. They lag a little bit in terms of the innovation. In terms of what’s interesting and what people are doing startups in, it’s almost the same as in the US.