1Mby1M Virtual Accelerator Investor Forum: With Gaurav Jain of Afore Capital (Part 3)

Sramana Mitra: For a B2B business, getting to hundred customers is not an easy thing to do.

Gaurav Jain: For B2B, if they’re paying you $10 a month, getting 5000 customers is not hard. If you’re charging $10,000, maybe one or two is great.

Sramana Mitra: Quickly, what about geography? Are you US-focused?

Gaurav Jain: We’re based in San Francisco, but our mandate doesn’t prevent us from investing anywhere in the world. I’d say our strong bias is towards US and Canada-based companies. I grew up in Canada so there’s a soft spot there. We can do a much better job for you in North America, but we have made investments outside like India.

We’re totally open to non-American investments as well. What we want to see are really mature founders that need less of our help and are able to tap into the local network and perhaps even raise money from Silicon Valley.

Sramana Mitra: The issue we see in India is that if you’re doing B2B SaaS out of India, you realize that you’re going to need to build it as a global business and you’re better off being based in the US for a lot of reasons. The access to capital in India is okay right now, especially in the early stages, but exits are few and far between.

From the point of view of exits, people are realizing that they’re better off being a US company with an India subsidiary. We’d like to learn a bit more about the highlights of your portfolio. Give us some of your thought process on how you decided on these particular companies. What was it about those companies that really struck you and attracted you?

Gaurav Jain: What we look are the founders and their product DNA. It’s not even clear what market you’re after. I know a lot of investors will tell you to go after a big market. For better or for worse, that’s not how we think just because our best companies tend to be in big markets, that wasn’t very clear when they got started.

Out of Founder Collective, some of the notable ones is Cruise Automation which was building driverless cars. That was eventually acquired by General Motors. It was a great exit for all the investors. We invested in seed and were acquired for close to a billion dollars. I remember Kyle drove me down the 101 here in San Francisco.

It was a pretty primitive product. It was a very rudimentary product. There were two people in the team at that time. Kyle worked at Google before. I know Google has been investing in driverless cars for a long time. They’re far along. This is 2014 or so. I said, “Help me understand how a startup is going to thrive and outcompete Google and Tesla.”

He said, “I understand that it’s really hard to build. It’s a very R&D-heavy company but all of those folks who are working on the product in the lab are trying to get a perfect product out there and then they’re going to scale. As a startup, I’m going to get a very small fraction of the final product out there in the market in the hands of the customer. I’m going to gather a lot of data and I’m going to learn a lot. When it comes to driverless cars, data is where we win or lose.

He said, “I’m going to gather a lot of data. All I’m going to launch by the end of the year is the ability to keep your car in between lanes and change lanes on highways.” It sounds very simple which a lot of cars already have. I’m going to give free carwashes. Every week when you come in for a free carwash, I’m going to download all the data.

There were insights that were not obvious and make a lot of sense. It was a very lofty vision, but I got that feeling that there was a lot of risk and could totally go to zero. If he’s right and if some of these things work out, this could be really massive. That’s what we look for in companies.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Gaurav Jain of Afore Capital
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