1Mby1M Virtual Accelerator AI Investor Forum: Lisa Chai, General Partner at Interwoven Ventures (Part 6)

Sramana Mitra: So, Lisa, what are you seeing in your deal flow? You are obviously soliciting AI ventures, robotics ventures, Vertical AI ventures, and maybe some other things as well. What trends are you picking up from the deal flow?

Lisa Chai: We’re seeing a lot of generative AI companies right now. Obviously, you read a lot about Agentic platforms, but you don’t see a ton that’s really ready.

Sramana Mitra: It’s a little bit early still, I think.

Lisa Chai: I think so. If you look through the data center builders and AI platform companies and look what they’re building, you can see that we’re in that early stage and building the infrastructure required to run GenAI type of applications. Because of that, I think we’re still in the infrastructure build mode in AI companies. So, we are meeting a lot of semiconductor companies and edge devices there. There’re some amazing, very high quality, impressive companies right now.

Sramana Mitra: Is That something you do invest in semiconductor?

Lisa Chai: Yes, we do.

Sramana Mitra: That’s a very specialized area.

Lisa Chai: It is. Our investment thesis is to look for builders and developers of AI, but not necessarily the companies are building data infrastructure like the data centers. We don’t have the kind of capital to provide that. We’re not unhappy that we have a bunch of VCs that are willing to pay hundreds of millions to help support that infrastructure bill. We’re looking for more of AI tool companies. I’m seeing a lot of great multimodal software companies.

Sramana Mitra: Software is doable in a leaner fashion. Semiconductor is a fat startup effectively. If you distinguish between lean startups and fat startups, semiconductors tend to be fat startups and those are hard to manage unless you have very specialized expertise.

Lisa Chai: Yes, we agree. We’re looking at some AI application companies, but we’re a little bit pickier with the AI application because we have to understand what is their defensibility, right? Are you just automating the workflow and saving operational expenses? The kind of AI companies we’re looking for are the ones that’re going to go beyond not just helping reduce costs in the opex but also help customers monetize, generate revenue, and capture market share while improving the productivity. I think those kinds of companies are going to be valued higher than the ones that are just automating intelligently using AI.

We’ve already gone through that phase. Enterprise customers want solutions that could do beyond just cost savings and efficiencies. You need to help them generate revenues. Everyone’s going through revenue growth issues right now. They want to take market share and expand to new areas of growth. They have a strong idea of what they’re looking for.

They just don’t know where they are in the AI stage. Do we invest now? Do we invest later? Do we continue to assess what we’re trying to achieve?

So, you’re seeing a lot of these discussions and I think it’s important to make sure you’re not just part of an AI project, but you have to be part of the workflow the entire.

Sramana Mitra: One of the things I’m seeing both from investors and entrepreneurs is there’re a lot of services that are going on inside of these AI product companies that are like products and services.

A lot of the agentic AI work is happening in those kinds of companies where there is a lot of domain knowledge, customer relationships, and a lot of automation to accomplish. And that is done in services mode often and then productized as people go along. So, I’m seeing multimillion dollar contracts being written to vendors within the vertical AI space that are cost saving contracts, but it is heavy duty automation.

That gives me a very good idea and we can start working together and, and we’ll send you entrepreneurs as we go along.

Is there anything else that you want to add to our listeners before we uh, switch to the entrepreneur pitches?

Lisa Chai: I want to stress on power of networking. I think a lot of times founders believe that if I just keep my head down and build my product and then get a couple customers, my numbers will really impress people.

But I always tell founders that if you go network and meet people, because you don’t know who your partner or your investor could be. For a lot of my portfolio companies, I didn’t meet them because some of my VC friends called and asked to look at it. I met them naturally at conferences, at events, and we took out some time together to learn about what they’re working on and what they’re building.

Those are companies I and a lot of VCs get really excited about. We all like to think like, we’ve discovered this on our own.

So, networking is really important. If you can’t do it yourself because you’re shy and introvert, that’s okay. You then hire someone or have a co-founder who can do that. I think a very important part of the story right now, is to go out there and try to meet as many investors and partners that you can, and then just keep an eye on them. Even if they’re later stage, you never know if they leave and start their own fund. So, maintain that relationship, whether it’s a newsletter, whether you have events or attending conferences, you have to show that you’re around and that you’re relevant and that you’re building something amazing.

Sramana Mitra: All right. Thank you, Lisa. Good to meet you. And we’ll be in touch.

This segment is part 6 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: Lisa Chai, General Partner at Interwoven Ventures
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