1Mby1M Virtual Accelerator Investor Forum: With BV Jagadeesh, Managing Partner at KAAJ Ventures (Part 1)

BV Jagadeesh, Managing Partner at KAAJ Ventures, and a super accomplished serial entrepreneur, discusses funding Bootstrapping with Services ventures.

Sramana Mitra: BV is a very well-known and accomplished entrepreneur in Silicon Valley and I’ve known him for a very long time. It’s great to have you here.

BV Jagadeesh: Absolutely. It’s been a while since the two of us met. This is very much aligned with many of the things that I talk about in public as well as in many of the other speeches that I give.

Sramana Mitra: Take us through what you’re planning or doing with KAAJ Ventures. How are you positioning the fund?

BV Jagadeesh: Just a little background on myself, I came to the US in 1982. I started my first company in 1993 which is Exodus Communications. We pioneered the concept of internet data centers. Pretty much, all of the internet companies at that time used our infrastructure in order to reach out to millions of people around the world. We took that company public in 1998. We scaled to a billion dollars after six years of starting the company.

In 2000, I left Exodus to start Netscaler. After renavigating the company, we managed to scale that company as well and got to $60 million in revenue. We got an offer from Citrix in order to scale the company to the next level. Today, Netscaler is over a billion dollars in revenue. It’s one of the cornerstones for Citrix.

Later on, I tried one or two companies. One of them was a very high-risk company. It’s called 3Leaf Systems. Because of technology and market challenges, we failed in that. That was a great learning experience for me. Using that, I wanted to apply my experience to invest in the next generation of entrepreneurs. Because of my infrastructure and enterprise background, I’ve been focused on investing in infrastructure companies or enterprise-focused companies.

Sramana Mitra: What stage do you like to get involved in? Since you first started doing this, the industry has evolved quite a bit. Now people are doing pre-seed, seed, small Series A, large Series A.

BV Jagadeesh: Most of my investments are like seed investments. I’m the first person to write the check for many of the companies. It’s interesting that you talked about this. Last year, we’ve come together to start a seed fund. It’s not a real fund. We don’t have any fees or we don’t have any carry. A bunch of angel investors came together.

It’s called SVQuad [Silicon Valley Quad]. Think of it as seed plus where we want to invest up to $3 million. The purpose of doing this is as I was doing this is a lot of these entrepreneurs spend a lot of time raising money. As a company starts to pick up momentum, the entrepreneur has to be on the road to raising money.

Based on our experiences, we felt that if we can give enough money to the entrepreneur so that he just focuses on building the business to an extent where it is significant enough in terms of revenues, raising a Series A is easier. The goal is that our money should last for about 24 months.

The entrepreneur must have a story to pitch by the 18th month. It takes about three to four months to raise money. By the 18th month, you should have this kind of revenue – a million to $2 million – with marquee customers. That will help the entrepreneur to raise the Series A. We do about eight investments in a year.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With BV Jagadeesh, Managing Partner at KAAJ Ventures
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