1Mby1M Virtual Accelerator Investor Forum: With Rajeev Madhavan, Founder and General Partner at Clear Ventures 2021 (Part 3)

Sramana Mitra: There are a couple of questions that come into my mind as I am listening to you. First in the battery company, how did you do technology validation in making this investment? What did the company come to you with? What was the decision to assume that this team can build this technology? What is that decision predicated upon?

Rajeev Madhavan: In this particular case, this is David Su and Masoud Zargari who were the founding engineers of a company called Atheros which everybody knows as the company that invented Wi-Fi. They were the first company that created the first Wi-Fi chips sold out of Teresa Meng’s lab.

David Su was in the Ph.D. team and all his work at Stanford was in that space. These were the guys who created Wi-Fi as we know it today. They have been a customer of mine. I have sold products to them in the past.

I have heard of them before that. They came in for a pitch and got the introduction through the lawyer because sometimes they are hesitant to call you back although they met you in the past. The lawyer asked us if I was willing to meet with someone. We had that meeting.

I don’t generally do semiconductor large chips investments. I have overlooked all of these AI chips in the past, because it’s just not the right area for a venture fund of $300 million to invest in a company that requires $200 million to $300 million-plus.

The first thing that I told David and Masoud was, “The chances of me investing is low but having been a semiconductor engineer, I would be happy to help you and work with you.” 45 minutes into the meeting I said, “David, I think I should invest in this.”

The complexity of the chip is big, but it is not very large. The team is a proven team that we knew could rinse and repeat on semiconductor design.

I am one of those gadget geeks who drives my wife and kids nuts because half of the time the batteries are out. I would get a call saying, “This is and that is not working papa.” From my own daily experience, I know the problem. When you talk to industry IoT customers, you immediately realize where you can solve the same problem. 

Sramana Mitra: The problem is obvious, but the technology is complex. I am curious about how it works. 

Rajeev Madhavan: I am not getting into the technology. Most of the projects that we take are fairly complex. None of them can be done in six months. It usually takes 12 months with an experienced team in that particular space.

We look for projects that have a big differentiation on an ongoing basis. It is unfair to say that there is a moat built by anybody walking in as a startup from day one. A moat gets built over a period of time. The question comes down to the capacity of the team to build that moat and what is it going to be long term. 

Sramana Mitra: If you can crack something like this on a technical level, that serves as a moat. 

Rajeev Madhavan: It’s a bigger execution problem. I agree with that. It then gets into the differentiation. We spend a lot of time looking at these deep technical things where the differentiation over a period of time grows. That is one hardware company. On the software side, we have companies that are doing a lot of things in security. We look at whether it’s software or hardware. It does not matter.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Rajeev Madhavan, Founder and General Partner at Clear Ventures 2021
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