1Mby1M Virtual Accelerator AI Investor Forum: With Jishnu Bhattacharjee, Managing Partner at Nexus Venture Partners (Part 1)

Jishnu Bhattacharjee, Managing Partner at Nexus Venture Partners, has been investing in AI startups for over a decade. This is an excellent and insightful discussion about his AI investment thesis.

Sramana Mitra: Today, we have a repeat guest coming back – Jishnu Bhattacharjee from Nexus Venture Partners – a firm that I have been friends with for a very, very long time. Several of the partners have been here over and over again. The founder of Nexus was a very, very close friend of mine who passed away 2021 suddenly and unexpectedly. It really broke our hearts, but Jishnu has continued to lead Nexus. Nexus is a pioneering firm in the India-US corridor.

We will talk today about what’s happening in the AI investment world and what is Nexus’s and Jishnu’s perspective on the AI investment thesis. Welcome back, Jishnu. It’s great to have you.

Jishnu Bhattacharjee: Thank you, Sramana, for having me back.

Sramana Mitra: I know you guys have been investing in AI for a while, long before the craze kind of heated up.

I want to start by asking you not about the investment thesis today, which we’ll come to, but I want to first to double click down on one of your very successful case studies, which is H2O.ai. How did you get involved? How did that company come on your radar? What you’ve learned by investing in that company before AI became really hot?

Jishnu Bhattacharjee: Absolutely, Sramana. Thanks for asking. You’re right. Our AI journey started long ago. We invested in H2O in 2012. That was before AI was fashionable. Historically, AI and machine learning have been in the labs for 30-40 years. A lot of innovation has been happening on math and science.

The inflection point at that time, circa 2010-2012, was the advancement of infrastructure and cloud, which enabled all this science to be computed and run in ways that is meaningful and practical for applications that human beings need for their day-to-day work.

H2O was one of the very early pioneers in bringing in data science innovation and empower enterprises to make use of AI. I would also say consumer technology companies like Google and Facebook, at that time, had started using them, but the use cases were different. It was like finding out cats and dogs from a million images that JP Morgan may not care for much? So then the question was, how do you bring those to the enterprise?

So that was the inspiration, and everything we do, Sramana, hinges on unreasonable, crazy entrepreneurs who would see that it’s possible. The world might think that it’s not possible. There are ten different reasons to say why it’s not possible, but there would be one reason that that entrepreneur would see that it’s possible. We were fortunate to meet Sri Satish, and that’s how the journey started. It was such an interesting window for us to see the evolution of AI.

Now, I will go back to talk more about H2O, but to tie in the picture, over the last three years, AI has become real for many of us, thanks to generative AI. At that time, I would say AI was more about predictive AI, which means AI was running more in the background to recommend people something on what they should do, whether they’re buying things, or watching movies. Or AI was used to predict the trend line for the businesses for the next two-three years, or events that can have a disproportionate impact on what I’m doing or how I’m running my business. So that was kind of how AI was being used for pretty much a decade before ChatGPT happened.

When a new thing is introduced to the market, the most important thing is how you drive the trust and credibility. Sri took the path of open source. The idea was that people haven’t seen it before. So, they should be able to try it out in some form and let that in into the enterprise workflows and use cases, get that technology inside the enterprises without needing to talk about the commercial stuff before they can put their hands on the product and see what it can do for them.

So I think that helped in creating the market.

Sramana Mitra: I’m glad you brought that up, Jishnu. I remember many years ago when Sandeep was on this show, he discussed your firm’s open source strategy as a separate focus area. And I think, H2O is also interesting because it is in the confluence of both AI and open source.

Jishnu Bhattacharjee: That is correct. We have been fortunate to have backed by now over 20 really successful open source companies, including an IPO. Open source becomes very helpful in situations when things are getting created, newer markets come up, newer use cases come up, newer technologies get adopted. That’s when people want to try out things. Now, of course, I am building a business. I can’t do charity saying that it’s open source, you keep on using it. I have to eventually figure out how I make money out of it. But the beauty is that if you can really build something which people start using and get value from, there will be many ways to take part of that value because if you are running it, you have to sustain it and grow it.

So that has been one of the core DNA of our firm. That was also thanks to Naren, whom you mentioned earlier. He was on the board of Red Hat. From 2007 or the very first year, we have had open source investment, because we understood what all it can do. Now, of course, the open source wave has accelerated over the years. At that time, there were not many examples of open source other than Red Hat, but now we’ve had several IPOs. It’s almost has come to a point that for newer infrastructure technologies coming in, open source by and large remains a very important component, including this current generation of AI.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: With Jishnu Bhattacharjee, Managing Partner at Nexus Venture Partners
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