1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures (Part 5)

Nihal Mehta: We like un-sexy industries. I’m looking at a construction company that’s storing construction history on the Blockchain. When people say they’re using Blockchain, more often than not, you can say, “You probably don’t need to use Blockchain for this.” There are some really interesting native use cases of Blockchain that we’re excited to learn about and invest in.

Sramana Mitra: Very interesting. It’s something that has come up in some of the talks that I’ve given recently about this whole automation thing. India’s development, to a very large extent, depended on this massive BPO industry. I think that’s going to go away in the next decade or two.

Nihal Mehta: Human commoditized action is being replaced by machines. In the next few decades, AI will be augmented intelligence. It’s working with humans to make our jobs a lot easier before it potentially disrupts industries. People thought the industrial revolution would eliminate categories of jobs. In fact, it created brand new jobs. There’s an argument around AI and automation. Are we looking at massive disruption? Are we looking at augmentation? I think it’s going to be augmentation before disruption. It’s a theme you can apply to anything.

Sramana Mitra: That’s a much longer discussion. My assessment is that it’s going to be a massive disruption in the long run. For those of you who are interested in this topic, you can go to the blog and read “Man and Superman.” Feel free to discuss.

I have one last question for you. It’s about unicorns. Are you chasing unicorns? What is your assessment of the dynamics of the investment climate right now? As you said, you like unsexy industries. The truth is there are lots of opportunities to build great businesses in some of these unsexy industries by being capital efficient. You can still build good sizeable businesses and sell them for smaller exits. That’s a different type of venture investing.

Nihal Mehta: We invest in about 40 companies in every fund. Every investment needs to have the potential to reach a billion dollar market cap. It needs to reach a unicorn threshold to be able to return the fund. Every investment that we make, we like to think that it has the potential to be a unicorn. With that being said, probably only three to five will get there. The vast majority will not. That’s typically how these funds are constructed.

Sramana Mitra: It’s typical venture capital model.

Nihal Mehta: Yes. When entrepreneurs shoot for the stars, they often land on the moon. You want to invest in companies that have this massively ambitious trajectory. Things change. Things pivot. If they’re that ambitious and if they have that much acceleration coming off that start, they’re probably going to end up in a decent place even if they fail.

Sramana Mitra: Not necessarily. We have a series on the blog called “Death by Overfunding.” That is also a phenomenon.

Nihal Mehta: That is true. We’ve had our share of those as well. We’re unicorn hunting with every investment.

Sramana Mitra: Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Nihal Mehta of ENIAC Ventures
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