1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri of Sierra Ventures (Part 2)

Sramana Mitra: Double-click for us on the stage question. You like to be the first institutional money in. What do you like to see? Let’s say you are doing a Series A deal. What do you like to see in it in terms of metrics and validation? What are the requirements to qualify for your definition of a Series A? Definitions are varying greatly these days.

Tim Guleri: It’s a very good question and a tough one to answer. I’ll try to frame it for you. If you look at our last fund, almost a third were seed investments. These are anything less than $2 million in initial check. It could be a $500,000 check or a $2 million check. What we call seed and what we look for are the very early companies with a team that is doing very interesting work, and if you give them some initial help and guidance, then we can see a way to a very large company.

The difference here is that our seeds are not flyers. We’re not saying, “Here’s some seed. We’re just going to let you wander in the forest yourself.” They’re very directed. We believe in our seed as much as we believe in our Series A. The ideas are a little unformed. They might have some technology but we believe, as ex-entrepreneurs, that there’s something there. Series A is much more evolved. These companies typically have a dozen to 30 customers.

A good example of that is one of the companies I’ve done in the cloud data processing space called Treasure Data. We led Series A back in 2013. This company already had 30 customers. They were looking to scale this. That was a prototypical Series A for us. Maybe the company at that time was doing $150,000 in MRR.

Sramana Mitra: You have some thematic expertise. What are those? If you look at where you have deep relationships, what sectors would those be?

Tim Guleri: I’ve been in the tech business since I graduated college. I’ve never been this excited by what’s going on in the industry. We talk about our interest in the space in three buckets. One is infrastructure. This would be cloud, edge, and wireless. These are next-generation technologies that are embedded in devices. An example that everybody could relate to could be the fingerprint sensor that was on the old iPhone and on the new iPad. My partner, Ben Yu, a Ph.D. in Physics from Princeton, is the specialist in edge computing. It takes very precise software to actually detect your fingerprint. It was our company that was bought by Apple. That’s what we call infrastructure at the edge.

Then, the next bucket is intelligence including big data, AI, and ML. We’ve been doing this for a long time. Teradata, which is the granddaddy of big data was our company. We did Green Plum. EMC acquired that.

We have a whole host of companies that are next generation AI and data processing companies. Infrastructure, intelligence, and industry, which is the point you were making – verticals. There is massive disruption that is going to happen in the business processes that are actually in these verticals. Those are the three buckets. The latter two are what typically people talk about.

I particularly do SaaS businesses. I’m on seven SaaS boards ranging from companies doing close to a $100 million in ARR all the way down to a new investment I just did. It’s a seed investment with three customers. Underlying those three buckets, we have CIO and CTO relationships. Depending on what business we are looking to invest in, we’ll match them with the right mentor to get advice on what’s going on in that particular vertical that could be helpful for the entrepreneur. The CIO advisory board is now 14 years old. We are very much specialists in B2B. I think it provides a fantastic resource for entrepreneurs.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Tim Guleri of Sierra Ventures
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