1Mby1M Virtual Accelerator Investor Forum: With Naganand Doraswamy, Managing Partner and Founder at Ideaspring Capital (Part 3)

Sramana Mitra: Our observation is that all deep tech out of India is going to be global companies, even the non-enterprise facing. What we are seeing though is people can validate with customers in India. They can get a dozen customers, get the product validated, get some revenue before coming out to the Valley. Especially in COVID, entrepreneurs love the fact that people are willing to buy without meeting them.

Naganand Doraswamy: Absolutely. The sales mechanism has changed. For most of our companies, we are not targeting large enterprises only. We have a couple of companies in our portfolio where you’re targeting large enterprises. Those are hard to come by even in today’s world. It’s hard to convert those when you are selling to Fortune 250 companies. That’s not an easy sale.

When you’re selling to SME’s, it’s a golden age to sell remotely. To your point, India is an awesome playground to get their product validated and find that $750,000 revenue. The environment is the same. AWS is where you’re going to be deploying. The environment in which you’re deploying your products is very similar.

Number two, when you’re selling to Indian customers, they become referrers to other parts of the world. When you start selling in the US, they ask if you have customers in the US.

Sramana Mitra: Talk about some of the companies that you’re invested in. At what stage did they come to you? What did you see that made you want to write the check?

Naganand Doraswamy: If you look at our fund one, 12 were pre-revenue. Founders come to us in various stages. Our investment cycle varies anywhere from three months to a year. When I say a year, founders come to us with a business model and product, but we tell them that it has to be different. If they agree with us, we are willing to work with them. We do love working with entrepreneurs.

We don’t have the attitude of if I work with you, you have to take money from me. The duration has changed significantly depending on the stage the entrepreneurs come to us. In a couple of cases, they come in early. We help them in their journey. We will give them potential customers. When we believe they have something tangible is when we put the money.

What do we look for in entrepreneurs? If one of the founders is not implementing the product, then we are not investing. We are investing in tech and I don’t think we can invest in a group of founders where one person is not building the product.

Sramana Mitra: How else are you going to do deep tech if you’re not a technologist?

Naganand Doraswamy: I consider product innovation more than deep tech. In my portfolio, deep tech is a confluence of multiple different disciplines. One company in our portfolio is building a simulation to catch EMI EMC issues early in the design cycle. That is deep tech to me. In other cases, the founders could have a great product idea, but none of them might be implementing that. If it’s deep tech, yes. If it’s product innovation, it’s borderline.

Number two is we look for domain knowledge. Sometimes they say that it is better to not have domain knowledge. We go with the thought process that you need to have domain knowledge and you also come in with some customer connection. The first few sales always happen with connects. Third, for the money we give you, where are you going to be by the time you want to raise the next round? Can you generate enough traction?

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Naganand Doraswamy, Managing Partner and Founder at Ideaspring Capital
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