1Mby1M Virtual Accelerator Investor Forum: With BV Jagadeesh, Managing Partner at KAAJ Ventures (Part 2)

Sramana Mitra: Great! In terms of geography, you’ve invested in India and Silicon Valley. What is your group’s investment thesis in terms of geography?

BV Jagadeesh: Primarily because I like to spend more time with the entrepreneurs, I like to do more companies out of Silicon Valley. My heart is still in India. I do have about two or three companies in India. I want to limit myself with that. Otherwise, it starts to eat into my morning and evening times which are very important to me. SVQuad is primarily centered around US-based companies.

Sramana Mitra: I want to comment on this India-Silicon Valley corridor. If you’re investing in enterprise-facing companies in India, most of them are operating in a SaaS model. Most of them are doing global tech. Most of them are trying to get into the American customer base. Eventually, they become Silicon Valley companies.

BV Jagadeesh: It’s very true. Unlike 10 years ago, India is also a destination market for many of these companies. There are enough companies for these enterprise products to experiment and then win those customers. You just focus on the Indian market and get your product stable enough so that later on when you move to the US, you are not debugging your product.

Sramana Mitra: You can get $1 million ARR with Indian customers. We see that all the time with our ecosystem.

BV Jagadeesh: Not in all segments. In some, yes.

Sramana Mitra: Talk about these companies that you’ve invested in. Tell us about how you met them. What did you see? What did they have that prompted you to write the check?

BV Jagadeesh: Take Nutanix. They have pioneered the concept of hyper convergence. The founder, Dheeraj Pandey, approached me through an investor who already put money. He’s very smart. He was a first-time entrepreneur. He wanted to surround himself with people who have been there and done that. He wanted mentors who can help him through this journey. That’s how I got involved with Nutanix.

Sramana Mitra: When Dheeraj came to you, what did he have? There are so many first-time entrepreneurs coming to you. What convinced you?

BV Jagadeesh: Product and team are not there. Customers are not there. What you look for is clarity in the vision of the product and the market that the product is going after. Also very good clarity in why you are solving this problem. What differentiates you from other products in the market? In his case, it was clear.

The example that he took was around this whole Google filesystem. Google has done it themselves because they have engineers that can make that thing work and scale it. His whole thesis was that a solution like that was equally important to an enterprise that doesn’t have all those resources. Nutanix will simplify how a GFS can be brought into enterprises.

That was the selling point. You now have a differentiator. Here is brand new thinking. The team understands how to build this product. It’s a matter of building the product and finding the go-to-market. That is where the team excelled in figuring out the early-market adoption of this VDI space. That became their early market.

Sramana Mitra: Very early on, you had enough confidence that they could build this product?

BV Jagadeesh: Given his and his co-founders’ background, absolutely.

Sramana Mitra: The journey that you are discussing is the journey of a first-time entrepreneur doing a fat startup. That’s a space where first-time entrepreneurs always have difficulty. It’s great to hear the Nutanix story and the role that you played in enabling him to get to his next level. We always hear that it’s difficult to raise money for a fat startup.

BV Jagadeesh: Absolutely. There is another company I funded. It’s called Tetrate. The founders came from Google and Twitter and have built an open-source product. Tetrate brings this whole load balancing into the cloud given the complexity of how the applications that run in the cloud today including your on-premise data center. How do you balance the load across these applications?

These guys had developed and had built an open-source product. That’s what gave me confidence. It’s fascinating to see how much interest is there amongst the investment community to invest in this company as well as the customer base and how methodically these guys are executing in terms of winning the early set of customers and then expanding that into the next set of customers.

They were simple entrepreneurs with clarity to the core in terms of the problem they’re solving and the markets they’re going after.

Sramana Mitra: They went to market in the beginning as an open-source product and already got a bunch of customers?

BV Jagadeesh: These guys had built the open-source as part of Google and Twitter. They thought that a product like that is important in the enterprise segment. At the same time, even the open-source that many customers are using needs support.

Sramana Mitra: That go-to-market strategy of something already validated with an open-source model is very attractive to VCs these days.

BV Jagadeesh: Exactly. At some point in time, you start switching customers to the product you’ve built. You will have validation with your existing customer base providing open-source support. At the same time, you can start expanding by selling all the other functionalities to the same customer.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With BV Jagadeesh, Managing Partner at KAAJ Ventures
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