1Mby1M Virtual Accelerator Investor Forum: With Jon Staenberg, Managing Partner at Staenberg Venture Partners (Part 4)

Sramana Mitra: Would you write the term sheet? Would you lead?

Jon Staenberg: I used to a lot. At this point, I am not. To help in a situation, I would rather see a focused institutional firm. For me, pricing is not the signal that I want to give to the market. I would like to find the furthest focus on that particular category, startup, or stage to price it so that people can get behind that where I can say, “Okay, they have done deep due diligence. They are going to be really involved. Let’s see what the market bears are saying.”

I don’t have good stats to back this up, but valuations have been all over the map. Compared to when I was pricing rounds, I still get a little heartache over valuations. I was asked to price recently and I thought that I was way too high. I said that I was going to invest, I liked the people a lot. It ended up rebounding amazingly and the price was higher. 

Sramana Mitra: There is valuation inflation going on, there is no question about that. 

Jon Staenberg: There is an ability to scale today like where we have never seen before so that has to be reflected in that price. 

Sramana Mitra: There is a lot of infrastructure already in place. There are ways to tap into that infrastructure to grow. It is an unprecedented situation. 

Jon Staenberg: For Rocketship, when they went in and started looking at the data, a lot of their data that they did not expect was that India represented most of the opportunities in the world.

Sramana Mitra: We know them very well. We are familiar with their work. I have been involved in the Indian startup ecosystem – the move from services-based industry to the product, and startup-based industries from the start. Our penetration into India is huge.

Jon Staenberg: Five years ago, it was under-invested. That is what is so interesting. With the introduction of the low-cost cellphone and other things, the change seemed like it was overnight. If you weren’t on top of that, you missed it. Not that there is not going to be the continuity of the opportunity, but that was a megatrend. 

Sramana Mitra: We are even seeing companies coming out of Africa these days. 

Jon Staenberg: 100%. We had our first unicorn out of Africa. I know several fund managers in Africa. Again, the world is shrinking. A year and a half ago, a friend who pointed out a trend to me. He said, “Another megatrend that people don’t realize is there are 7.5 billion people in the world. Half or 3.5 billion have Internet access but within five years, everybody will have Internet access.” Think about how that changes the world. The scaling opportunity doubled overnight. Five years is not that long and that rollout is happening. What a fascinating time. 

Sramana Mitra: The India story is interesting because the first wave of India facing B2C business was targeting the affluent consumer base. As they got into the game, hundreds of millions of lower-end consumers got blasted into the Internet. The game changed because they have no purchasing power so you have to market in ways that are interesting and different. There is a lot of opportunity for innovating business models there. 

Jon Staenberg: I think there was a stage of tech rollout around the world that was basically copying what worked in the US and see if it worked in your own country. 

Sramana Mitra: That is no longer the case. Some of that might still be there, but I think that there is original work happening. I think the ecosystem has matured tremendously. The dynamics and trends are different. In that, there are opportunities for original ideas and innovation that are quite prolific at the moment. 

Jon Staenberg: This is profound because different places require different solutions. Different cultures are going to use the technology in different ways. 

Sramana Mitra: I think there is leapfrogging going on. The whole COVID-induced change is creating lots of opportunities in the western developed nations, but it has also helped the emerging markets leapfrog into that changed behavior of online learning, telehealth, and e-commerce. 

Jon Staenberg: I don’t think that is going to stop anytime soon. 

Sramana Mitra: No, not at all. It was great catching up with you. Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Jon Staenberg, Managing Partner at Staenberg Venture Partners
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