1Mby1M Virtual Accelerator Investor Forum: With Clint Chao of Moment Ventures (Part 6)

Sramana Mitra: In our work, we place a lot of emphasis on TAM and on really trying to get to precise bottom-up TAM analysis. In doing so, one thing that I see constantly is ignoring the segmentation aspect. You can say that this applies to everybody, but that’s not true.

Often, solutions are perfect for a subset of the population that you think it applies to. That’s where it finds high velocity adoption, but if you go outside of that segment, it doesn’t have high velocity expansion. If that is the case, you better be aware of that. Better be aware of what your real TAM is versus overestimating the TAM.

Clint Chao: That aspect should be most clear in the traditional IT market. A lot of these startups initially create a white space opportunity not >>>

1Mby1M Virtual Accelerator Investor Forum: With Clint Chao of Moment Ventures (Part 5)

Sramana Mitra: How do you process the current investment climate where capital is moving further and further upstream? How does a seed investor mitigate the Series A gap?

Clint Chao: It’s a great question. It’s clear that your traditional Series A investors have raised the hurdle, if you will, on what qualifies as a viable investment.

Sramana Mitra: Today’s Series A is a Series B or C from 10 years ago.

Clint Chao: We try not to get caught up in the verbiage of what letter it is. The fact of the matter is these companies are being asked to do more >>>

1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures (Part 5)

Sramana Mitra: We are in 2018. A lot of stuff has already been built. Relative to the amount of capital that is available in the market, there are 700 plus micro-VCs in the market right now. There is a huge number of entrepreneurs who are starting companies. We can’t expect that every single venture out of this cauldron of creative energy is going to become a billion-dollar company. It’s just not mathematically viable.

Those are rare market opportunities but there are lots of opportunities for building smaller companies. If you’re looking at $200 million TAM, there are lots of niche opportunities. There are some funds that I’ve talked to who are taking note of that >>>

1Mby1M Virtual Accelerator Investor Forum: With Clint Chao of Moment Ventures (Part 4)

Sramana Mitra: How big is the fund?

Clint Chao: Our first fund is a small fund. It’s a $10 million fund. We launched that officially in 2015. We did a first close on our second fund late last year. That’s a $50 million fund. Our initial investment in fund one averaged around $250,000. We reserve about half the fund for follow-ons. In the new fund, we’ll increase that up to upwards of a million dollars with a similar reserve strategy.

Sramana Mitra: Do you position as a seed fund, pre-seed, post-seed? Where in the spectrum are you positioning the fund?

Clint Chao: We like to call our fund early stage. We deliberately like having that broad definition. These new definitions are great to help >>>

1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures (Part 4)

Sramana Mitra: When you look at the Indian geography, what is the distribution of deal flow that you’re seeing? Is there a bias towards Bangalore? I know Chennai and Pune have done well.

Ben Mathias: It’s pretty scattered. Bangalore, for sure, is the leader in terms of the number of companies. We do see a lot of companies coming from Chennai, Pune, and also from the NCR. Recently, we started to see a lot of startups in Hyderabad as well.

Sramana Mitra: What about the Series A gap? You just said that there are a lot of companies that are able to get to a million dollars ARR. How much of that pool is getting the Series A funding? What percentage is selling into the Series A gap? >>>

1Mby1M Virtual Accelerator Investor Forum: With Clint Chao of Moment Ventures (Part 3)

Sramana Mitra: We see a ton of companies outside of the Bay Area given what we do and our global nature. The other day, there was a security company from Capetown, South Africa pitching at the roundtable. It’s very encouraging and heartwarming to see how much of the knowledge of what we used to do as this cottage industry in Silicon Valley is spreading all over the world right now.

Clint Chao: The one cautionary tale we give to entrepreneurs if they are based in a different market is just to make sure that you can still recruit easily. That can be addressed in many cases. Many of these companies are based near universities that have talent and are eager to stay in town or stay in the area. We’re optimistic about the continuing trend. >>>

1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures (Part 3)

Sramana Mitra: In terms of deep technology companies, could you share one or two examples from your portfolio or from your radar that are interesting global potential.

Ben Mathias: I’ll talk a little bit about one of the companies I mentioned a few minutes ago, ActiveAI. This is a technology company that is building solutions for conversational banking. They are deployed in several large banks in India, one in Southeast Asia, and also one in North America. The use case here is for people to do their banking through a chat or voice interface. This could be transactional banking. This could be as simple as Q&As. >>>

1Mby1M Virtual Accelerator Investor Forum: With Clint Chao of Moment Ventures (Part 2)

Sramana Mitra: Double-click down for us into the B2B investments that you make. What sectors of B2B are particularly interesting? Where do you have expertise?

Clint Chao: When we say B2B, we’re essentially looking for companies that sell their product or service to other businesses. We’ve created our own investment thesis that we call Reimagine Work. We’re looking for entrepreneurs who are able to bring the efficiencies of IT into other industries that have not, previously, been able to benefit and enable them to create new categories of services or new capabilities that were previously not achievable.

We’re looking for entrepreneurs that have an understanding of specific verticals and industry domains and can take IT and create new >>>