1Mby1M Virtual Accelerator Investor Forum: With Shruti Gandhi of Array Ventures (Part 3)

Shruti Gandhi: The reason we don’t talk about our fund size is because of LP issues. We are a smaller fund. Those smaller exits are great for us in terms of returning the capital.

Oftentimes when you start a company and you’re thinking about a $15 million exit, that could be your ceiling in some ways. You figure out the market is too crowded and then you say, “If I raise another round, will I price myself out of an acquisition conversation?”

We definitely want to support founders that go that route. I believe that if you, as a founder, feel that you can’t take the company further, then you should definitely do that. We’re not just sitting out here saying, “Let’s go invest in companies that are just $10 million to $15 million.”

Sramana Mitra: It is a philosophy question. Ashmit is a good example. He is not looking for the smaller exits. He is looking to be the seeder into these acquirers and the larger funds. He’s doing traditional VC but he’s doing it at the early stages. I think that’s what you’re doing as well.

If an exit happens and it needs to happen at a smaller price, that’s fine. But that’s not what you’re aiming for. There are firms that are aiming for that. A much larger number of exits happen at the sub-$50 million range. It’s easier and a lot faster to do those exits from a deal point of view.

There are investors who are looking at that and controlling the amount of money that goes into a company to not price themselves out. Another question is on geography. Are you based in New York?

Shruti Gandhi: I’m based in San Francisco.

Sramana Mitra Where do deals need to be located for you to be interested?

Shruti Gandhi: We are location-agnostic. We are investing across the United States. We have companies in Philadelphia, Texas, San Diego, and Bay Area. Over half of our portfolio companies have subsidiaries in other countries like India and Israel. Since we do a lot of deep tech, web security, cloud infrastructure, a lot of the founders also have relationships in their countries. 

Sramana Mitra: Let’s talk about some of your portfolio companies that are a good representative for the way you think about investment. Give us a couple of examples and take us through the thought process. Why did you choose to invest in them? What’s special about them?

Shruti Gandhi: There are a ton of microservices that have come up over the last decade. There is a lot of spend in these microservices. It could be things like Salesforce, Marketo, to Hubspot. We have a company that helps manage SaaS within the organization. That’s representative of the type of company we invest in.

Another one is a company called ERDB. It’s a database company. We believe that databases today need to evolve to handle the kind of data that is high-cardinality, high-fidelity. The founder was a founder of another database company. 

Sramana Mitra: So any of the workflow microservices that hinge on data is attractive to you, and the horizontal services as well hinging on data.

Shruti Gandhi: Exactly.

Sramana Mitra: Great, thank you for your time. `

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shruti Gandhi of Array Ventures
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