1Mby1M Virtual Accelerator Investor Forum: With Yanev Suissa of SineWave Ventures (Part 4)

Sramana Mitra: That was my conclusion when you prefaced the conversation that you are focusing on these government networks. You have a special unfair advantage in government relationships. I guess I’m a little bit thrown off by your comment that very niche funds is not where your bet is, which is a contrary to what you’re saying.

Yanev Suissa: Absolutely not. That would be 100% of a wrong impression. So let me explain who our strategic network is. The strategic network that we work with is an ecosystem of partners, investors, and people that we bring our startups into both to be customers of and also to be partnered with. We work with the other big VC funds. The really interesting ones fall in four buckets. The first are your typical goverment tech folks like Lockheed.

All of them have massive private sector businesses as well. The second bucket are the big tech solutions firms like Booz, Deloitte, Accenture, and McKinsey. The third would be the big tech companies. We work with Amazon, Google, Cisco, and Samsung. We also work with industrials. All of these guys have massive public sector practices and massive commercial practices. They tend to be the same thing which people don’t always realize. Then the last bucket is the government agencies.

In terms of the kind of investments we make, think about the kinds of commercial companies that has to think about the public sector. In terms of looking at the public sector as a sales vertical, anything in enterprise tech applies – data, cloud, security, systems, edge, or IoT. Everything that is a software platform applies. In working with the government, we’re also working with commercial.

When I introduce a startup to Amazon, they’re working with both the commercial and public side. They’re getting both markets at the same time. Let’s say folks dealing with regulatory or non-dilutive free capital – everything in education, transportation, financial services, and health IT. We also deal with pharma and devices, but we don’t specialize in that as a firm. Our actual ability to invest across sectors is huge.

We don’t do pure consumer plays and we don’t do media. Those are probably the only two areas that don’t apply to us. Everything else does. One of the key pillars of our fund is, not only do we have to be able to help you in that ecosystem in both the commercial and public sector side, but you also have to be a commercial company.

If you’re focused on the government, built for the government, or from the government, that’s actually not something we’d invest in. We’re looking more for a Cisco as a startup and not a Lockheed as a startup.

Sramana Mitra: Let’s focus on the seed stage activity. As I said, there is a whole segmentation going on in the pre-Series A ecosystem. Where exactly do you peg your seed stage activities? How early are you willing to go and what metric do you use? Let’s take the example of B2B SaaS, which probably is your primary business model in the portfolio that you are looking at. What metrics would be a requirement for you to engage?

Yanev Suissa: The same metrics you look at any other stage or the same metric you look at a seed stage. Team is the most important thing.

Sramana Mitra: No, I’m talking about ARR, MRR kind of metrics. Team is standard.

Yanev Suissa: I think any investor who’s talking to you about revenue metrics at a seed stage is being stupid and ridiculous. It’s like putting a finger in the wind and saying, “This is going to be a billion dollar company tomorrow.” You could make a justification that it will be and a justification that it won’t, and neither any one of them is grounded in any kind of reality. In terms of a seed stage company, whether they have revenue or not is not the key thing. I don’t think there’s a single VC that I’ve worked with that I view highly of who focuses on revenue numbers at a seed stage.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Yanev Suissa of SineWave Ventures
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