1Mby1M Virtual Accelerator Investor Forum: With Nitin Rai of Elevate Capital (Part 2)

Sramana Mitra: What about industry trends?

Nitin Rai: We see a very diverse group of entrepreneurs. Between 40% and 60% are technology. On the technology side, we see SaaS, VR/AR, IoT. We see a fair amount of medical device type of companies. We see apparel. We see sports.

Sramana Mitra: Let me double-click down. We are exclusively focused on IT and IT-enabled services. I’m going to double-click down on your activity in that sector. I have a few questions based on what you said. What are you seeing in AR/VR? Are these content deals? Are these equipment deals?

Nitin Rai: Most of them have been software deals. I can’t disclose the details yet because the investment is not closed, but it’s actually B2B AR/VR. It’s a platform that helps people build things directed primarily towards the architects and designers. There is a deal that we couldn’t invest in which was more of a platform to build applications on AR/VR. We haven’t seen a whole lot of content. A lot of that activity is down in Southern California but not much in Oregon.

Sramana Mitra: Let’s talk about a few of your highlights. You started off with the legal tech company. I’d love to learn more about that. What did you see in that company at the beginning that gave you the confidence that this was going to go?

Nitin Rai: Monica Enand is a former Intel employee. She got an MBA at Cornell. Around 2006, she left IBM because she wanted to be an entrepreneur and had an idea. The idea was that Zapproved was a B2B type of play. It was a workflow product. It’s a known fact that we get overwhelmed with email.

As CEOs and executives, we get a lot of emails for approvals. She created a very simple system where any email for approval would come through her system and you’d say approved or not approved. I loved the idea. I became one of her early customers. She launched the product sometime in 2008. There was a lot of interest from venture capitalists. The market took a dip. That funding ran out. So she was looking for capital.

She called me and said, “I need some angel money. I’m pivoting.” During the process, she ran into this opportunity of actually pivoting towards legal where when companies get sued, they need to hold everything back. Any kind of interaction around that lawsuit, they’d need to hold back the communication. Her system was a natural fit in that problem space. She was pivoting. She wanted to raise some money. I made some introductions into the TiE network.

We didn’t have an angel program back then. Little did I know, she raised half a million from TiE. It got her started. Over time, she raised about $1.7 million. That’s all she raised. She built a great business. She hired a great team. She started getting a lot of corporate clients like Yahoo. Over the years, she got to about a few million in revenue. Then a big private equity came in and bought half of her shares out. It allowed it to grow even more. This year, Vista came in and made a big offer and bought everybody out.

Sramana Mitra: All right. How far did she reach from a revenue point of view?

Nitin Rai: I think she was close to $10 million.

Sramana Mitra: Turning $1.7 million investment into $10 million revenue run rate, that’s a very well-executed story.

Nitin Rai: Absolutely. Vista gave a nice markup and we’re all happy. She’s now on to do even bigger and better things because Vista is the largest SaaS private equity in the world. She’s a big story in Portland. She had no venture capital. She raised zero VC money. It was all angel funding.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Nitin Rai of Elevate Capital
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