1Mby1M Virtual Accelerator Investor Forum: With Janam Mehta, Partner of Campus Fund and Venture Investments at JSW Ventures (Part 3)

Sramana Mitra: Tell us about Campus Fund and JSW Ventures.

Janam Mehta: JSW Ventures is a $40 million fund. We’re largely Series A focused. We do up to $2 million in the first check and around $4 million throughout the life of an investment. We are largely SaaS and platform focused covering enterprise health, consumer, finance, and agricultural industries. We are not a corporate venture capital. JSW is an anchor LP in the fund, but we’ve raised institutional capital. 20% to 30% comes from the general family of the JSW group. They are the largest steel manufacturers in India. They’re increasingly getting into different industries.

Sramana Mitra: You said you’re a Series A fund. What do you need to see in the deal to write that check?

Janam Mehta: What I look at are four to five things. The first thing we look at is the scale of the market and product-market fit. I look at the use of technology that creates differentiation. I’ll give an example. We’re largely a capital-efficient-focused fund. Our first fund was started seven years back. That was a $10 million fund. Today we’ve closed $40 million.

One of the key themes for us has been backing capital-efficient entrepreneurs. The other thing that I look at is the entrepreneur’s domain expertise and his tenacity to execute. I led a recent investment in a company called CureSkin which is a YC company. CureSkin uses AI to scan or diagnose your skin. It tells you what sort of blemish you have and gives you product recommendations.

It’s a very interesting use of technology to solve a serious problem like access to dermatology. Most dermatologists are Tier 1 focused. They live in the metros. What do the Tier 2 and Tier 3 people do? They have the propensity to pay. They would like to pay and get the right advice. They go to their chemist and end up experiencing something horrible. CUreSkin is using technology very well to solve this problem. It’s a B2C company.

Let’s take the other thing that I said which is market size. We back Purple.com. Today, it became India’s 102nd unicorn. They were valued at $1.1 billion. It’s our first unicorn in our portfolio. The market size is massive. When we invested in them, 20% or 30% of e-commerce transactions were happening in the beauty and personal care segment. The number was approximately 8 billion.

When we invested, there was only 5% to 6% internet penetration for the beauty segment. The market is expanding at such a rapid clip. That’s an example of market size that gives us comfort. For the next 10 years, it’s going to keep scaling at 20%.

Sramana Mitra: In terms of validation, where does a company need to be before you write your $2 million check?

Janam Mehta: This is a tough one. The way I look at product-market fit, I look at revenue as a sub-segment of the user behavior and traction that you’ve achieved. If I look at a SaaS company, I’m trying to look at what is the net dollar retention. I’m looking at cohort retention. I’ll look at usage patterns.

Sramana Mitra: Usage statistics matter a lot and not just the dollar or revenue amount.

Janam Mehta: For a Series A opportunity, I’m looking to understand if they’ve been able to hit critical mass or if they’ve been able to get enough traction for lift-off. Have they created this small cult that can’t live without their product? I’m interested in anything that helps me validate this concept of a small cult.

I’m not looking at the number of transactions. I’m looking at how many products you’ve been able to upsell and cross-sell. How have you used this data to create a platform network to ensure that you can compound your learning and create a unique offering? I evaluate platforms differently. In all of these, I look at whether you have been able to hit that critical mass for lift-off. Are you seeing your product being used in such a scale that you can’t keep up?

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Janam Mehta, Partner of Campus Fund and Venture Investments at JSW Ventures
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