1Mby1M AI Investor Forum: Angel Investor Raju Reddy (Part 5)

Sramana Mitra: What else are you looking at, thinking about, interested in investing in in terms of AI companies? What are you looking for?

Raju Reddy: For me, Sramana, pretty much all my investments have been at a very early seed stage.

Many of them actually was even the first check that the founder raised. Earlier I used to do this as an individual angel, but over the last three to three and a half years, I’ve been doing that with a couple of people that are great friends and I love working with them.

I’ve great respect for Kanwal Rekhi, who you probably know about anyway. He’s a legend in the Valley. Another person is BV Jagadeesh, who is also very well known. Then there’s Rajan, an operating partner. The four of us have been investing in the name of what’s called Silicon Valley Quad (SVQ). We typically invest $2-$3 million as a seed stage.

Again, nothing has really changed, whether it is AI or whatever, in terms of the sort of philosophy of how I look at startups that I invest in. It’s always a bet on the people, the founder, and his or her leadership team. Now, clearly, you want to go after a market that’s large enough.

As I mentioned, if somebody comes to me with too much of AI, then I’m a bit more skeptical. This is not to say I won’t invest in that, but it works better if they talk to me more about the business problems they’re addressing.

One of the things I look for is answer to two questions. Why you and why now? What is it about your background that gives you unique insight into understanding this problem?

Sramana Mitra: Domain knowledge.

Raju Reddy: Exactly. Sometimes it’s understanding the problem. May be the problem is widely known, but you have a certain insight into addressing that problem that others won’t, right? That’s why you see a lot of very successful companies created by founders coming from a large company like Google or Oracle or VMware or whatever, right? Unless you’re at one of those places, you are unlikely to have seen that problem. I’m not saying it’s a necessary condition, not at all, but that’s one of the reasons why. So why you, that’s part of it.

The other is why now? So what’s happening in the industry that makes the need for this problem so compelling? For instance, when I talked about the AI, the infra required to support all this AI explosion, to me, I think that’s very real. Now within that, of course, there are various layers of whether it is security, speed or performance or storage.

So, the philosophy of how and why I invest in a startup has really not changed, but AI is, of course, just an integral part of any product idea people are working on.

Now, it’ll be interesting to see with the announcement yesterday of quantum computing by Microsoft, what that does. When you combine quantum computing capabilities with AI, it’s mind boggling.

Sramana Mitra: Where are we going? Absolutely.

Raju Reddy: Exactly. So both good and bad, by the way. Even with AI, it’s tough enough with all the ways that it can harm.

Sramana Mitra: I think both the combination of AI and quantum computing is a tremendous threat for cybersecurity as well.

Raju Reddy: Yes. That’s a big one.

Sramana Mitra: Anything can be cracked. In the hands of the bad actors, anything can be cracked. It’s a very dangerous thing.

Raju Reddy: Yes.

Sramana Mitra: Well, wonderful. It was great to see you and chat with you.

This segment is part 5 in the series : 1Mby1M AI Investor Forum: Angel Investor Raju Reddy
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