1Mby1M Virtual Accelerator Investor Forum: With Alok Nandan of Emergent Ventures (Part 2)

Sramana Mitra: How do you define seed in your world view? I’m sure you’re watching this trend out there. The seed has fragmented. It’s pre-seed, seed, post-seed, pre-Series A, small Series A, large Series A. Where in that continuum have you positioned yourself?

Alok Nandan: You’re absolutely right. There’s a lot of noise around what exactly is seed. Our viewpoint is, if you think about the entrepreneur’s journey, the first round tends to be their own capital or some friends and family. Then there is a large gap to get to a Series A.

We operate in this large spectrum where they have raised friends and family, they are building a product, and they want to get to three to five customers so they can be ready for a Series A. That is the space we play in.

Some people in the Valley may call it pre-seed. A million dollars in the Valley today is probably pre-seed. We also do some cross-border stuff where startups are coming out of India. It depends on who you’re talking to. It also depends if it’s a B2C or B2B. In the enterprise space, $3 million seed round is common.

Sramana Mitra: Let me probe that for a moment. You said companies that have launched a product and are getting ready to get their product in the hands of three to five customers. Did I hear that right?

Alok Nandan: Ideally, they should have some MVP.

Sramana Mitra: But not necessarily customers.

Alok Nandan: Not necessarily customers. Having said that, there are exceptions. There may be founders who are repeat entrepreneurs that even if it’s a PowerPoint deck, we may come in. Typically, it is when they have a product. They may or may not have a customer.

Sramana Mitra: Our community is going to be largely first-time entrepreneurs. Very often, what we hear from investors is, they don’t want to invest in first-time entrepreneurs until they have some customer validation. That is just an observation that is happening. Repeat entrepreneurs are a very different story.

Alok Nandan: Yes.

Sramana Mitra: You said enterprise software is your primary focus. What trends are you seeing? What trends interest you? 

Alok Nandan: There are two specific areas that we look for. We broadly define the area that we look for as intelligent software, which is software that becomes better with use. In terms of specific sub-segments, we look at cloud infrastructure. That’s an area of interest for us.

Within the intelligent software space, we look for specific use cases, which have a business focus. For example, AI for a specific sales use case like sales forecasting. It could be marketing or customer support. It’s what we call applied AI. That is of interest to us.

We have done investments in all of these areas. There’s a company called boostup.ai. It’s in salesforcasting AI. There’s supportlogic.io. That’s AI for technical customer support. 

Sramana Mitra: You said you are doing cross-border with India. Does that mean you’re doing all of USA and India?

Alok Nandan: Yes. I’ll double-click on that a little bit. What we are looking for are entrepreneurs who have the ability to build teams outside the Bay Area. Bay Area has become super expensive, especially for hiring engineers.

With the check sizes we come in with, it’s very difficult to build a product. We are looking for entrepreneurs that can build a team outside the Bay Area. We have invested in companies that have teams in Atlanta, Austin, or Seattle. That’s fair game. Anywhere where there is talent as long as one of the founders is in the Bay Area.

India is interesting. There’s a lot of enterprise SaaS companies coming out of India. We find them here. Usually the founder is in Silicon Valley, and we need them here. We typically invest when they are already here. Part of their engineering team could be in Bangalore. That’s the model that is ideal for the companies we invest in.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Alok Nandan of Emergent Ventures
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