1Mby1M Virtual Accelerator Investor Forum: With Alok Nandan, Founder General Partner at First Rays Venture Partners (Part 1)

Alok Nandan, Founding General Partner, First Rays Venture Partners, discusses the firm’s investment thesis which is very well-defined and focused.

Sramana Mitra: Let’s start today’s session with a conversation with Alok Nandan, Founder and General Partner of First Rays Venture Partners.

Alok Nandan: Great to be back. Thanks for having me.

Sramana Mitra: You have been here with your previous partners, right?

Alok Nandan: Yes.

Sramana Mitra: What’s new? Looks like a lot of new things have happened to you.

Alok Nandan: Let me just quickly update you. COVID accelerated a lot of things. As you know, I was going on four years in my previous firm. The manager partner started the firm and I joined him. I was noodling on starting my own firm for the past couple of years. COVID just accelerated it. So late last year, I started First Rays Venture Partner. We were very busy for the last six months; we did ten investments. Fund one is fully deployed. Now, we are raising fund two and we are starting to invest out of fund two starting this summer.

Sramana Mitra: What are the vital statistics of the new fund? What size is it? What is the investment thesis?

Alok Nandan: Fund one was a $20 million vehicle. We were investing in B2B software companies with a specific focus on cloud and data infrastructure. This is the infrastructure layer and applications layer. We have done 10 investments.

Our median check size is $750,000. We are targeting the second fund to be a $50 million fund. We have raised more than 60% of that already. We will do 20 or so investments with a typical check size of $1 million with the reserves of similar amounts of follow-on in Series A.

Sramana Mitra: Talk about what you want to see before you are willing to write a $1 million check?

Alok Nandan: That is a very good question.

Sramana Mitra: Yes, that is the million-dollar question!

Alok Nandan: There are certain filters in which we look for entrepreneurs. At the seed stage, a lot of the data and metrics are not available. You don’t know much about revenue. You can’t talk to customers because sometimes startups may not have paying customers yet. What you are really betting on are the founders, the founding team, and the category in which they are playing. I will talk about both of them.

In terms of the founders, we look for founders who have demonstrated resilience and self-awareness. Why? The journey of a startup is a lot about internal matters and not just external ones. A typical journey takes seven to eight years and longer. If the founder or the founding team has demonstrated that resilience, self-awareness, and the ability to weather the ups and downs and push through everything that life throws at them. That is something that we actively look for. There are a certain number of ways in which you can look for those signals in what they have done in their past lives. You can see the trajectory that they had based on their past careers and so on. That is number one – the founder and the team. Secondly, the category of the space is important.

One of the areas that I am interested in is AI. AI is everywhere and it is going to become pervasive in the next ten years just like mobile. Nobody talks about mobile today. In 2010, everything was about mobile. I don’t know if you recall that. Now, everybody is talking about AI. Ten years from now, nobody is going to talk about AI, because it is going to become pervasive. It is going to be in every workflow, tool, and product.

We are not investing in AI per se. Our thesis is around more picks and shovels for AI. These include infrastructure tools, API tools, and cybersecurity. We invest in anything that enables somebody to build a faster and cheaper AI. That is something that we are actively looking for. Those are the categories. Within that, there’s data, cloud migration, and cybersecurity and privacy. Those are the big things that we look for within this picks and shovels play.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Alok Nandan, Founder General Partner at First Rays Venture Partners
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