1Mby1M Virtual Accelerator Investor Forum: With Jonathan Lewy of Investo (Part 5)

Sramana Mitra: I’m asking a question where the entrepreneurs, by definition of the type of opportunity, would not be raising money from the big funds. In this case, the opportunity is not to act as a seeder. The opportunity is to fund some entrepreneurs and then exit straight away.

Jonathan Lewy: I guess that depends on the fund.

Sramana Mitra: That’s what I’m asking. Is this part of your strategy or do you only act as seeders into the larger funds? >>>

1Mby1M Virtual Accelerator Investor Forum: With Eric Benhamou of Benhamou Global Ventures (Part 4)

Sramana Mitra: You said you argue with a lot of your industry colleagues on this topic. You have to manage how much capital is required to ride that curve. You have to do it somewhat capital efficiently. You can’t raise $100 million and have a $100 million exit. That is not going to give you the return that you’re looking for.

You have to manage it within a reasonable amount of capital. Let’s say you do the Series A. Maybe the company does require a Series B. Where will that Series B entrepreneur go? Who will think the way you are thinking?

Eric Benhamou: That’s an excellent point. We have to look at the entire lifecycle of the company. If we make a mistake of starting a company which requires $100 million of capital, we’ve made the wrong choice. We focus on capital-efficient companies. >>>

1Mby1M Virtual Accelerator Investor Forum: With Jonathan Lewy of Investo (Part 4)

Sramana Mitra: How do you parse unicorn mania? As a pre-seed investor, you could get buried under later-stage liquidation preferences. Even with your special investment vehicle, you could get buried under later-stage liquidation preferences. How do you protect yourself?

Jonathan Lewy: We know the risk. We believe in the relationship we’ve built with the founders. I know it’s not always in the hands of founders. That depends on the term sheet. We hope to invest in the right people that would end up doing the right thing.

Sramana Mitra: As it stands, some of the funds of your size are looking at these opportunities very carefully. They don’t really go beyond Series B. When a Series B is being raised, they take their multiples and just sell out to the Series B investors. That mitigates the risk there. >>>

1Mby1M Virtual Accelerator Investor Forum: With Eric Benhamou of Benhamou Global Ventures (Part 3)

Eric Benhamou: A third trend is the fact that we are now moving, very fast, to the world of mobile commerce where many transactions are being carried out. Apple Pay is going to change the game. Nevertheless, you still have other opportunities for cybercrime. The point is mobile commerce continues to have a very steep ascending trajectory.

Transaction fraud is a big threat for all these mobile commerce companies. We’re very focused on that space. It’s a challenging space because even if you have a really great solution to reduce the rate of fraud in mobile commerce, you have to affect the entire ecosystem for your tools to have an impact. It’s not enough to demonstrate on a small sample. This is something which we think will be addressed by small startup companies as opposed to big players. >>>

1Mby1M Virtual Accelerator Investor Forum: With Jonathan Lewy of Investo (Part 3)

Sramana Mitra: Let me try to parse what you are saying. In some cases, you go after Latin American companies where you can add value by introducing them into your Silicon Valley network. That is one of your value propositions to Latin American companies in the pre-seed stage. That’s one sector. You just provided an example of that.

You also invest in pure Silicon Valley companies where you provide Latin American networks in case they want to get into Latin America. That is another differentiated value proposition where you’re offering pre-seed financing and a Latin American network. These are two differentiated strategies in your investment that I have picked up so far. It seems like you also have a third kind of focus which is to find random good companies where you want to be pre-seed investors.

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1Mby1M Virtual Accelerator Investor Forum: With Eric Benhamou of Benhamou Global Ventures (Part 2)

Sramana Mitra: One other area along the lines of what you’re talking about that we are seeing is the notion of connectors. There are so many modular technologies in use right now. Enterprises are using so many different tools and so many cloud services. Connecting all these things together is a nightmare. It seems like there’s a whole connection layer opening up which also needs an infrastructure-level handling.

Eric Benhamou: We totally agree with that. It’s the same, general kind of opportunities. It’s dealing with contemporary, totally distributed, virtualized data centers where dependencies are extraordinarily complex and provisioning orchestration is also very complex. >>>

1Mby1M Virtual Accelerator Investor Forum: With Jonathan Lewy of Investo (Part 2)

Sramana Mitra: Can you elaborate on what kinds of businesses you are investing in? Are these B2B or B2C?

Jonathan Lewy: We are agnostic. Initially, we invested in companies that had a global focus where we could help them enter the Latin American market. That was back in 2013. It was a way for us to be able to enter deals that were maybe difficult to enter but we could add value by helping them launch in Latin America. On the sector, we are completely agnostic. We have invested in different kinds of sectors.

Today, I would say we are more focused on bringing huge returns to our investors. It’s not really important if the market is US or Latin America. We’re trying to find the best potential deals to invest in as early as possible and also to bring a lot of value to

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1Mby1M Virtual Accelerator Investor Forum: With Eric Benhamou of Benhamou Global Ventures (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Eric Benhamou was recorded in November 2014. 

Eric Benhamou, Managing Partner of Benhamou Global Ventures, was the CEO of 3Com, a pioneer in the networking space, and the key competitor to Cisco. He also ran Palm, the first Smartphone maker, that 3Com acquired, then spun out, and took it public. He provides an insightful window into the opportunities in the enterprise cloud infrastructure space, and in Cyber Security, and also explains why he is not necessarily looking for Unicorn companies to invest in. This, I might point out, is a highly unusual perspective in today’s VC universe, so you may want to pay attention to his analysis of the market. >>>