1Mby1M Virtual Accelerator Investor Forum: With Ken Elefant of Sorenson Ventures (Part 2)

Sramana Mitra: What about geography?

Ken Elefant: We’re focused on the United States since we are doing so much in security. We do spend a lot of time in Israel as well. In the past, I have done investments in India, China, Japan, both Western and Eastern Europe. There’s no problem with that. I’ve been involved with companies around the world.

I would say that we do have a proclivity of investing in the United States and in Israel. I’m based in Palo Alto and Sorenson Ventures is based in Palo Alto. Sorenson Capital is based in Salt Lake City. They have really good networks and deal flow from Utah, New Mexico, Arizona, and the entire mountain region.

Sramana Mitra: Talk a little bit about your current portfolio. What have you invested in? How do you decide what to invest in? As you are talking about your portfolio, point out how you analyze those deals. This gives us a flavor of how you analyze the ones that you have invested in.

Ken Elefant: For Sorenson Ventures, we’ve invested in two companies so far. We’re about to do our third. They’re all in stealth mode. So I can’t talk about them specifically, but what I can say is what we look for. I can give you some parameters of these opportunities.

The first thing that we look for is, entrepreneurs that have phenomenal domain experience for the problems that they’re trying to solve. So, if you’re trying to do something on security around Microservices, you should have a security background like out of Palo Alto Networks or Checkpoint or some other high-security company in the past because you would understand where the gaps are in the current market.

So the main experience is critically important. It’s always better if you have a team that knows how to recruit people and has had success in the past. In our first investment, these are founders on their third startup together and they sold their last startup for about $400 million. They’re very, very good in terms of cloud and cloud data, and the opportunities that they’re going after completely leverages their past. That’s a good example of team dynamics.

The deal that we are going to close in the next 30 days or so is with a first time entrepreneur who has phenomenal domain experience in security penetration from the outside of the enterprise. This is exactly what he’s done in the past and I’m very confident that we can help them build a team around him. That’s what we look for – number one is team and number two is what is the market opportunity.

We like to go after opportunities in small, but rapidly-growing, markets because, by definition, if you’re going after a large market, there’re already large competitors in the market. The startups need to find a market where they think that they are going to be the category leader in, and where this market is going to be a large market over several years.

Then the third thing that we look for is the differentiation of the company – sometimes it’s technical differentiation, sometimes it is channel or marketing differentiation. It’s really important for startups to have a long-term differentiation that they can move forward with.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ken Elefant of Sorenson Ventures
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