1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri of Sierra Ventures (Part 3)

Sramana Mitra: In a lot of cases, businesses that are selling into the enterprise have the structure of a big deal. When you have larger ASPs, often, it is easier to build companies for less money because the cash flows differently.

Tim Guleri: When I was a CEO, I used to say to my sales guys and my company in general that revenues are really good deodorants. I don’t care what shape or size you bring me revenue in. I really encourage my portfolio companies saying that venture capital is interesting just to stabilize your business, but you can’t depend on that. You have to ultimately get revenues from customers. That’s what it’s all about.

Sramana Mitra: What about geography? You started by saying that you’re on the Board of a company that is an Indian-market facing company. It’s not just a company that originated in India but it’s Indian-facing. Is that within your investment thesis?

Tim Guleri: In the context of what is large, you could say at a minimum getting to $100 million in ARR. Ultimately, the public markets just care about two things – growth and EBITDA. Everything in the middle are things we care about with entrepreneurs. If you look at those metrics, you have to have a global perspective on the market in which you’re building a company.

For instance, if I’m about to invest in a company that’s building the next generation data processing engine, we currently are already selling in international markets. The engineering team for Treasure Data happen to be in Japan but they were building the core business in the US because US is the largest data market. Japan is number two. We don’t care where the company is physically based.

Our view is if we like the business and the entrepreneur has the gumption and the confidence to attack a global market, we want to be partners. It’s a very precise stance you have to do. Which markets you move into, when and how. We are sitting in Silicon Valley for 35 plus years. We’re completely agnostic to geography.

In fact, we were looking at Fund 10, which is fully invested now. Some 65% of the deal is outside of the Bay Area. In fact, I’m going to be in Tel Aviv in two weeks. We, as a partnership, have deals with Canada. My partner, Mark Fernandez, has done a couple of deals in Canada. We’re very open to global entrepreneurs, which is why it’s very exciting to be on your call, because this is a format for getting out to all those great entrepreneurs out there.

Sramana Mitra: You know Stephan Dietrich who’s the founder of Neolane that was one of those rare European enterprise software companies that made it global and then found an American exit into Adobe. It was a very solid exit. It’s good to see that it’s happening actually in different parts of the world now.

Tim Guleri: You mentioned something here which I want to touch on briefly. I’ll give you two quick 30-second examples. One of my first investments with my partner was a company called Sourcefire which is a security company based in Washington DC. I still remember when we wrote a check and won the deal.

One of the things we told Mardy is, “You keep doing what you do in DC. We’ll bring you all the networks.” Fast forward nine years from that investment, we took the company public. It ultimately got bought by Cisco right here in San Jose. I want to underscore what networks mean. Entrepreneurs need to be thinking beyond capital. The other is the value of how to think about what this company should be called in the context of the market is also something which we find we add incremental value in.

A CEO might come into the US market and think this is how they want to talk about this product and company, but knowing how the big players are moving and what the technology is and what other startups are in that sector that might become competitive, we give them advice. Those things matter  lot. It’s very nuanced. There are some great investors in the Valley that know what they’re doing. You have the benefit of that. I encourage entrepreneurs to go for those options.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri of Sierra Ventures
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