1Mby1M Virtual Accelerator AI Investor Forum: David Evans, Sentiero Ventures (Part 2)

Sramana Mitra: Not anymore. That’s what the question is. If you look at what’s happening in the market right now, there is a product that was built on Lovable, and in 48 hours it went to 3 million ARR. Obviously, they’re using some no-code tool that has enough functionality for people to want to pay.

Now the question mark still is around: how stable is this product? Is this the final product? It may have to be rewritten, it may have to be rebuilt, re-architected. There are lots of question marks.

But it’s no longer “minimum sellable product is 18 months away” anymore, is what I’m seeing.

David Evans: In B2B software, I would argue that’s still the case — it’s still 18 months, because of the point that you just raised – how stable is it? How reliable is it to actually get to the point where you can sell into the enterprise, to sell into the middle market?

You’re asking people to take a risk on how they change their workflows, on what they buy off on software. So, you still have a time period where you need to bake in all of the underlying questions, because we all find this as entrepreneurs, right?

The MVP — part of the reason why Lean Startup became such a big trend in early-stage software — is because your view of the world is narrow. Even if you know the problem you’re solving intimately well, you always have a narrow lens on that problem.

So, you put it in front of multiple customers, and you’re going to learn new things about how the problem works. We can iterate more quickly, right?

But it’s still going to take us time to get to that 8 to 10 customers that give us a broad enough diversity of opinions and feedback to fully get to the point of what I would consider a truly commercialized product – and not just catching lightning in a bottle, but catching experimental budgets or speculative budgets.

Sramana Mitra: Yes, your point is well taken. But I think for proof of concepts and stuff that gets the conversation going for larger deals, this is a very interesting trend that is happening — including paid POCs and paid demo projects and paid test projects.

David Evans: Oh, absolutely. And it makes it easier to get started, but I think what we’re also seeing as investors is, we’re going to start to see the bar get raised in overall functionality. The demands on what the software does and what the tool does are going to get proportionally raised.

Sramana Mitra: Yeah. Which brings up the question about what should be venture funded. Because the counterpoint or the other side of the fast-build point is that copycats abound, right?

If there are too many copycats, that’s not conducive to venture capital funding. But then comes the question: where is the exit barrier? Where are the integrations that are going to create deeper longevity within the account — and not a quick flip into another, cheaper product?

So, good. This is the discussion I wanted to have.

Before we dive into AI, my other question about your fund is: what is your geographical preference in what you want to fund?

David Evans: Sure. We invest exclusively in the US and Canada.

Sramana Mitra: But all over the US and Canada, not regional?

David Evans: Yeah, we’re anywhere in the US and Canada. Given the size of our fund, we look to mitigate cross-border risk and currency risk as much as we possibly can.

Sramana Mitra: And where are you located?

David Evans: We’re based out of Dallas, Texas, but one of my partners is based in the Bay Area.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: David Evans, Sentiero Ventures
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