Sramana Mitra: On the small fund team, one thing that we’ve heard is that they are exiting in the Series C and Series D round. Is that part of your game plan?
Sandeep Sardana: It’s not off the table. We haven’t done it, but it’s not off the table. It depends on your portfolio construction. If your portfolio is generating DPI early enough, you don’t necessarily need to start exiting. If you are able to get to it sufficiently without having to take positions off early, we’ll do that.
If we need to be proactive about it, we will be proactive about it. We don’t have a set plan on when we will take money off the table. We’ll see how our portfolio is developing and decide as it comes together.
Sramana Mitra: If your strategy is to focus on mostly capital-efficient deals, then it’s not necessary to do that. People who are doing small funds but are investing in these companies that raise hundreds of millions of dollars, that’s when it becomes an important question. How long do we want to stay in that and get diluted?
Sandeep Sardana: True. That’s an important consideration. If we see that market expanding for the company we’re invested in even if we’re diluted, our share price is still growing. As long as there’s meaningful growth in the share price, we’ll probably carry on. Founder vision is very important to us. If the founder stays with that vision and can create value, so be it. Time will tell. Over time, these patterns will be revealed to me. Live and learn.
Sramana Mitra: How do you view first-time entrepreneurs? If a first-time entrepreneur came to you with a good financial storytelling, would you invest in pre-seed or seed?
Sandeep Sardana: We’ve done quite a bit of first-time entrepreneurs. There is a certain amount of rawness and energy for first-time entrepreneurs. As long as they have fire in their belly and stars in their eyes and they can prove that they can do it, we’ll back them.
Sramana Mitra: So you would do a pre-seed deal with a first-time entrepreneur if there was a good financial storytelling, vision setting, and energy?
Sandeep Sardana: I have recently done one and I’m doing one now.
Sramana Mitra: Very good to hear that. That’s one of that gaps that we struggle with. The market is full of repeat entrepreneurs. Anybody who’s doing investment is looking for repeat entrepreneurs. Pre-seed for first-time entrepreneurs is a big gap in the market.
Sandeep Sardana: First-time entrepreneurs can be a little more reasonable in terms of their ask for valuation. As long as they have the ability to get a team together and articulate a great vision, I’m not sure why wouldn’t do it. Oftentimes, we work in syndicates. There’s always a reason to invest in first-time entrepreneurs and bring the energy of a syndicate to them.
Sramana Mitra: Thank you for sharing your thoughts