1Mby1M Virtual Accelerator Investor Forum: With Gans Subramanian, Managing Partner at Hourglass Venture Partners (Part 1)

Gans Subramanian, Managing Partner at Hourglass Venture Partners, is a former 1Mby1M Premium member who has now formed his own venture fund.

Sramana Mitra: Let’s talk about Hourglass. What are you doing? What is the investment thesis?

Gans Subramanian: Hourglass Venture Partners is a new kid on the block in the world of venture capital. Our thesis is very simple – find mission-driven founders and back them with venture capital plus go-to-market help and access to customers.

Sramana Mitra: What is the size of the fund?

Gans Subramanian: $50 million.

Sramana Mitra: What sized checks do you write?

Gans Subramanian: As small as $250,000 to $2 million.

Sramana Mitra: How do you define when a venture is ready for your investment? What are you looking for?

Gans Subramanian: Pre-seed to pre-Series A. Given my experience as an entrepreneur, we look where they are in the journey in their product-market fit. Is there a roadmap for that? We look at that. In almost all cases, there’s an early traction or early product fit.

Sramana Mitra: Let me synthesize what you said. You are willing to fund companies that have not yet found product-market fit but have some customer interest and there is a roadmap to product-market fit.

Gans Subramanian: Absolutely. Just to add to that, in the pre-seed stage, they don’t necessarily have to have customers. We look at the problem they are going after and the founder’s clarity on the problem.

Sramana Mitra: What about geography? Where do you like to invest?

Gans Subramanian: Predominantly in US. We just made our first investment in Europe. We also have investments in India.

Sramana Mitra: All over the US?

Gans Subramanian: Yes.

Sramana Mitra: Let’s talk about what sectors you like to invest in.

Gans Subramanian: We launched in 2021. Our sweet spot is B2B. We started with a thematic investment. We identified seven themes. For example, video is the new data. As we went through the first year, we got 10 investments. We categorize them into five areas – fintech, crypto tech, health tech, AI/ML around digital transformation, and cybertech. We have one or two companies in each of those. We don’t want to be sector-focused.

Sramana Mitra: Double-click down for us on some of your pre-seed investments. How did you meet them? In what stage did you meet them? What is it about those companies that compelled you to write those checks?

Gans Subramanian: Almost all of our investments are referrals from LP’s or some VC’s we know. Our LP’s are all operators. We don’t raise money from family offices. What is the founder’s insight about the problem? Why are they best suited to solve that problem? Predominantly, product founders have a deeper insight into the problem, but go-to-market is not fleshed out yet. Also, do they have a path to a million-dollar run rate in 18 months?

Sramana Mitra: First and foremost, it’s the product founder. You need a technical founder to solve a problem that they have deep insights about.

Gans Subramanian: That’s correct.

Sramana Mitra: Then you want to see a path of how that problem gets translated into a product and product-market fit within 18 months leading up to a million dollars in revenue.

Gans Subramanian: That’s correct.

Sramana Mitra: Let’s take a few examples of what you’ve invested in that fits this bill.

Gans Subramanian: We invested in a company called Captanet. That’s the first check we wrote. All the founders have deep insights around the problem they’re solving. They’re Robinhood for corporate bonds. They said that the way it was done hasn’t changed for the last 30 years. They wanted to build a platform to democratize this. They didn’t have a strong technical founder. We saw the clarity. The risk for them was to get their license.

Sramana Mitra: You didn’t invest in a product founder in this case.

Gans Subramanian: When I see a product founder, they should have a problem they want to solve. Building product comes later.

Sramana Mitra: I see. What you invested, in this case, is a product manager who has a good understanding of the product that’s going to be built but not necessarily the mechanics of implementing that?

Gans Subramanian: Exactly.

Sramana Mitra: Your definition of a product founder doesn’t necessarily correlate with a technical founder.

Gans Subramanian: Right.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Gans Subramanian, Managing Partner at Hourglass Venture Partners
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