1Mby1M AI Investor Forum: Anupam Rastogi, Managing Partner at Emergent Ventures (Part 3)

Sramana Mitra: So, what else are you looking at or investing in that are interesting case studies that we should discuss here that will trigger ideas and insights for the audience?

Anupam Rastogi: I feel in our role we have to be very bottom up, and the best ideas are the ones that we’ve not thought of. So, often a founder will pitch you an idea and that’s when it hits you that this makes a lot of sense as you get deeper into it with them. Especially I’d say with a lot of the mass widely known things, there’re tons of companies. The rate of startup formation has been just off the charts, especially in the last 24 months. There’re a lot of amazing people starting companies. So I’d say say the more obvious sector is where the exponentially higher number of companies that have started. These startups are by great teams that are well funded. So that’s why I think you refer to domain expertise earlier.

A lot of these startups are coming out of areas that I know nothing about, but you meet the entrepreneur and you then build expertise in those areas. We’re seeing a lot of under digitized sub-verticals areas, especially with the agentic model with human in the loop. We look more for some common threads that make sense. As an investor, we just see many more than I can ever imagine, and often the best ones come from areas I’ve not imagined.

Sramana Mitra: What are you seeing in terms of the team size and the stage at which they’re coming? I’ll preface that by explaining where I’m coming from. Because of all this AI copilot work that has gone in, there’s a tremendous amount that you can do with very few people. There’s a lot more orders of magnitude that you can achieve with fewer people. So we are seeing leaner startups. That lean startup trend has really gone on steroids right now.

As a pre-seed stage company, you can accomplish a lot more just because of all the all the infrastructure that is kicking in gear. This is going to keep maturing. I think the infrastructure is going to get orders of magnitude more mature every year. So, there will be fewer and fewer people who can accomplish more and more in terms of what they can come to the market with.

This is clearly the golden era of bootstrapping kicking into motion. So what leading indicators are you seeing of this in your deal flow right now?

Anupam Rastogi: There’re a few different questions there. Let me see if I can touch upon all of those or some of those. On what’s typically the stage that we are seeing companies, we do both pre-seed and seed, and it’s a wide spectrum. We see everything from inception stage – maybe 20% of the investments we do are at that stage. Then, all the way to pre series. We would come in, companies already raised seed and they have traction and momentum and all of that. And then everything in between.

To make it more actionable for the founders here, in the enterprise or B2B space, a good time to go to professional investors or institutional investors is when you have built an MVP and you’ve got customer feedback on the MVP.

I also recommend doing a meaningful market discovery. That actually doesn’t need having a product. A lot of the best entrepreneurs come in and say, “Hey, we have spoken with different people in our target persona.” Just through sheer hustle and reaching out on LinkedIn and cold emails through alumni network, they’ve gone and talked to sometimes a hundred people and formed a very good mental map of the ideal customer profile, the verticals that work, triggers for who would buy, and two or three segments that will not buy. If someone comes and says that the whole world is a buyer for this, that’s a sign that the entrepreneur has not spent time on understanding the persona.

So, if the initial persona is narrow, that is good because you have to have a view of who are the potential customers in the first couple of years. Then of course, over time, there has to be a really big market for it. As venture investors, that’s what we are looking for ultimately. But having that granularity really helps so that, and that can happen at any stage. So, at the inception stage, the ones that we invest in are when the founders have that kind of clarity.

This segment is part 3 in the series : 1Mby1M AI Investor Forum: Anupam Rastogi, Managing Partner at Emergent Ventures
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