1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri of Sierra 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 Tim Guleri was recorded in April 2018.

Tim Guleri, Managing Director at Sierra Ventures, discusses at length his firm’s investment thesis, unique relationships with CIOs, and some of the industry trends he sees.

Sramana Mitra: We should start with you introducing yourself as well as Sierra to our audience. What is your investing focus today? How big is the fund? What are the things that you want to position the fund as that our audience should know about? >>>

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 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 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 Ben Mathias of Vertex Ventures (Part 2)

Sramana Mitra: Do you invest in B2B ventures that would be Indian B2B-facing?

Ben Mathias: We do. Most of our companies started with their initial customer base in India. At the end of the day, the Indian B2B market is limited. You could probably get to a $20 million ARR company if you focused on India, but if you want to get to the $100 million ARR, you need to be focused outside of India as well.

We fund two categories of companies. There are companies that have built solutions for emerging markets. They would typically expand out of India into Southeast Asia and the Middle East. There are companies that have built technology that are applicable in global markets. The quickest path to success there is to be able to start >>>

1Mby1M Virtual Accelerator Investor Forum: With Nate Redmond of Alpha Edison (Part 5)

Sramana Mitra: Comment on unicorn mania for me. We went a little bit crazy with this concept of unicorns. There’s just this very unfortunate twist that the industry has taken. How do you parse unicorn mania?

Nate Redmond: Unicorn status, if you will, became a marker of success that obviously is artificial in many ways.

Sramana Mitra: And flawed.

Nate Redmond: It’s flawed. It’s certainly evident of developing one measure of value which is reflective of an investor or a group of investors’ willingness to buy shares at a price. It doesn’t necessarily translate into long-term economic value. It can, but the correlation is lower than you would otherwise think and expect. The failure rate of unicorns is much higher than people realize. >>>

1Mby1M Virtual Accelerator Investor Forum: With Nate Redmond of Alpha Edison (Part 4)

Sramana Mitra: Talk about some of the highlights of your portfolio. What have you invested in that you’re excited about?

Nate Redmond: We have been fortunate to watch the early development of our portfolio. We have this company called House Canary. We have a belief and a thesis that residential real estate, as an asset class, is larger than equities in the United States. Despite its size and fragmentation, the level of opacity is fundamentally different than what you’d see in the equity or credit markets.

As transparency around pricing of underlying security, of how to trade, and how to transact has come to those markets, you see a very significant increase in velocity of transactions. When you look at residential real estate, the behaviors that people have exhibited around how >>>

1Mby1M Virtual Accelerator Investor Forum: With Nate Redmond of Alpha Edison (Part 3)

Sramana Mitra: What about stage? Are you investing in concept? Are you investing in a little bit of traction? What is comfortable?

Nate Redmond: Many investors have been using stage as a segmentation that is reflective in terms of process both in terms of sourcing and understanding of a business. We are early stage investors. By that, we mean we tend to be the first institutional investors in the company. In many cases, this company will have raised angel or seed money.

In some cases, that will have been called seed round. In some cases, A round. Most importantly, it’s understanding the type of risk that describes where this company is and the type of risk that we really want to own at this stage. We’re not religious about it being called Series A. We are focused >>>