1Mby1M Virtual Accelerator Investor Forum: With Vivek Ladsariya of SineWave Ventures (Part 5)

Sramana Mitra: Two of my favorite unicorn companies are Veeva and Fortinet. These are multi-billion dollar market cap companies. Veeva, in its entire history, raised $7 million in capital of which $4 million was not necessary. They just had so much revenue and momentum. It was basically a company built with revenues and traction. Fortinet was an incredibly capital-efficient company that scaled tremendously. Today, it’s over $1.5 billion in revenue with a tremendous market cap.

Vivek Ladsariya: I agree. I’ll add Salesforce to that list as well. It’s not as capital-efficient as Veeva may be, but they didn’t raise the kind of money a standard unicorn might have.

Sramana Mitra: In some sense, Salesforce didn’t raise as much money but if it did, it would be more justified because they created the cloud market. There was a tremendous pushback on cloud when Salesforce came into the market. People were not willing to put data on the cloud. They made the market happen. Those kinds of deals can be much more capital-intensive as opposed to capital-efficient.

Even so, they didn’t spend as much. Nowadays, where the cloud market is ready, everybody assumes that it’s a cloud deal. Why are people raising so much money and being so capital inefficient and so callous? I don’t like these kinds of deals at all.

Vivek Ladsariya: I agree. A little bit of that is trying to use money to capture market, which obviously is not sustainable. The deeper issue there is, often, you run into entrepreneurs who are in it for the wrong reasons. I don’t think that that’s the kind of entrepreneur we are trying to back.

Sramana Mitra: Last question, what are the trends in your deal flow over the last 15 months? I’m sure you’ve seen a lot of deals. Everybody talks about AI. We know that AI is one of the dominating trends of the current cycle. What else do you see?

Vivek Ladsariya: Deal flow trends also tend to vary from fund to fund based on team background and what your history in investing is. I think smarter entrepreneurs tend to dive deep into that before approaching investors. A lot of our deal flow tends to be in enterprise tech where we’ve made quite a few security investments. We tend to talk to a lot of security entrepreneurs.

Sramana Mitra: Security is an interest for you.

Vivek Ladsariya: It is. Within enterprise, a few areas that we tend to focus on quite a bit is computing. Computing is changing from becoming a fairly generic processor for everything to very hyper-specialized chips. Even in the cloud, security is key for us. Different kinds of data processing and the likes are very important to us. Since those are what are important to us, both our outward marketing and inbound deal flow tend to be in those worlds. I don’t think that’s representative of the broad trends in US. I think that’s very specific to what we tend to look at.

Sramana Mitra: In the venture cycle, enterprise software is a tremendously important and active segment. It has always been from the beginning of time and it will be, at least for the foreseeable future. Within enterprise software, cyber security does continue to be a great trend. Cyber security is probably one of the consistently active areas of venture investments from the beginning of time.

Vivek Ladsariya: That’s just because it’s a massive, ever-changing problem. The issue is the nature of threats and malicious players keep evolving. We are fortunate to be able to see good deals in that world. Of late, we’ve seen a lot of deals in the mobility space partly because of our investment in that space and partly because there is just a lot of activity there. We see some amount in various financial services. A lot of what we tend to find interesting there is more international-facing. There are lot of things in the international markets that are still unsolved.

Sramana Mitra: What is your presence or interest in the healthcare space?

Vivek Ladsariya: The US healthcare market requires a lot of change. A lot of it is going to come from the tech world largely because tech, traditionally, has been fairly consumer-focused. The US healthcare hasn’t been. The tech approach to that is going to come soon. We’ve been exploring the space for a while. It’s a space that requires a lot of tech analysis. Insurance is something we’ve looked at. It’s broken as far as incentive alignments go. There are a few different things we’ve been trying to play with in that world.

Sramana Mitra: That was a good introduction to SineWave for our audience. Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Vivek Ladsariya of SineWave Ventures
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