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.

When the company first came to us at their seed stage, we were not quite sure whether this thing would get adopted, but we’ve been very excited by the fact that several large banks have adopted this and gone live. This is technology that got built in India but is now being used in North America and several countries in Asia.

Sramana Mitra: What is the funding cycle of this company? How did the company build its technology? At what stage did it start raising money?

Ben Mathias: The first round was about two years ago. The company was started by three founders. One founder was from Singapore, and two of them were from Bangalore. We started talking to them in the middle of last year for the Series A. We led the round. The seed investors, IDG and Kalari, co-invested with us. We also got a couple of other investors to come in. This is about an $8 million Series A.

Sramana Mitra: That’s the only financing they have so far?

Ben Mathias: Yes.

Sramana Mitra: For a company like that to get to Series A, what are the metrics? Is there already significant revenue? What are we talking about?

Ben Mathias: They were at about a million dollars in revenue when they started talking to us. The metrics for us was, can this thing be adopted outside of India? As I mentioned, you can be very successful in India but only get to be a $20 million business. Number one is, the technology applicable? Are there non-Indian companies that will use this?

Number two is, are the founders capable of selling outside India? We see a lot of companies with great potential, but the founding team doesn’t have that experience to go into North America and start selling. This team proved it to us, because they sold both in Southeast Asia as well as in North America. We also have a similar investment called Flutura which is industrial IoT. When they came to us, they were at about a million in revenue and they already had Fortune 500 customers in several countries.

Sramana Mitra: It’s a reasonably fair statement to say that Series A deals in your geography are happening post-million dollar revenue run rate.

Ben Mathias: That’s correct. That good thing about starting a company in India is that the cost of developers is very low. You can build a company and get a product out with under half a million dollars in funding. There is a good number of incubators and accelerators in India. It’s a very healthy ecosystem for seed-funded companies right now. You have a lot of companies that come to use that have reached that million-dollar ARR. All are very attractive, but we can’t invest in all of them.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures
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