1Mby1M Virtual Accelerator Investor Forum: With Anupam Rastogi, General Partner of Emergent Ventures (Part 2)

Sramana Mitra: Can you elaborate on what it would take for you to do the concept stage? We see very few investors who do the concept stage.

Anupam Rastogi: Along with the other criteria, we are looking to see how much market development the founder has done. We come across entrepreneurs who have gone to 20 to 50 customers and they have processed that information in a structured manner. It’s not just based on just one empirical experience. It’s often based on 20 to 50 people.

There’s domain expertise and prior background that the entrepreneur has in that space. What kind of network do they have in that space? A lot of the things are the same. The only thing different is the market development. That helps a lot. That helps the entrepreneur figure out if this is an idea you want to do. Often, it helps you pivot into specific pockets. That could be a big differentiating factor.

Sramana Mitra: Just for the benefit of the audience, I’ll summarize what I’ve heard that is probably relevant to this discussion. Market development and pre-validating the market – usually the founder and the team come in with a solid understanding of the problem domain. Much of the market development is because of that domain relationship and domain knowledge. People who are doing concept-stage ventures are assuming that, with that domain knowledge, the product can be built.

What about geography?

Anupam Rastogi: We are focused on companies that have the US as the primary market. They could be building products anywhere else. We like this model. We’ve been doing this for the past five-plus years. What that does is a dollar could go three to five times further if you’re building teams and products in other places.

It ends up being a significant unfair advantage where you can build three to five times more products for the same amount of money. You can serve customers better for the same amount of money. That has been our thesis. We do have a fair number of companies that have the US-India model. We also have companies that have teams in places like Germany, Nebraska, and Atlanta.

Sramana Mitra: Let’s do some case studies. Pick some of your companies that are representative of how you invest. Tell us how you met them and how they came to you. What did they have that gave you the conviction to write the checks?

Anupam Rastogi: One of our companies that is on a good trajectory is Observe.ai. It does contact center automation. That was a very early-stage investment. It was concept stage. We made that investment in 2017. My partner led that deal.

The company is helping automate more of the customer contact center experience. That experience has a lot of friction areas. Not a lot of people end up being happy with that today. The people serving those calls don’t have a lot of good tools. Observe.ai is really helping solve some of those issues. They have a voice AI solution that can listen in to calls and can pick up issues around quality and compliance.

They have hundreds of enterprise customers now. They have 200 employees with a very strong product-market fit. What we saw was a very high-quality team. There was a lot to like in the team. The founder was, previously, an engineer at Twitter. They had developed a keen understanding of the space they were targeting. The specific use case morphed over time. That is one company.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Anupam Rastogi, General Partner of Emergent Ventures
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