B2B Revenue Acceleration
B2B Revenue Acceleration

Episode · 1 year ago

71: What Venture Capitalists Look for When Investing in Tech Companies w/ Anoushka Vaswani

ABOUT THIS EPISODE

It’s a confusing world for tech companies. Especially for new tech startups looking for venture capital.

How do you set yourself apart from the rest of the tech companies out there? How do you make your company stand apart so that you ensure that you get that crucial injection of venture capital? 

Thankfully it’s not quite as much of a mystery as it may seem. 

On a recent episode of the B2B Revenue Acceleration podcast, we sat down with Anoushka Vaswani, a partner at Lightspeed Venture Partners for a discussion all around:

  • What her firm looks for
  • How tech companies can set themselves apart
  • The hot technologies that are set to disrupt the market

To hear this interview, and many more like it, you can subscribe to The B2B Revenue Acceleration Podcast on Apple Podcasts, on Spotify, or on our website.

You Ere listening to be to B RevenueAcceleration, a podcast dedicated helping software executives stay on thecutting edge of sales and marketing in their industry. Let's get into the show hi welcome to be to be a revenewacceleration. My name is Oni Withya and amior today, with Ans Anushka, firstWenny Boutno at lat, ped ventor partners. How are you today, but Miscon,I'm doing very well very excited to be on the show, it's a pleasure to haveyou so today we will be talking about what venture capitalist look for wheninvesting in tech companies, which is probably a very wey topic, but well seehow we can tackle that. But before we get into the conversation in Tiste,could you please introduce yourself a little bit mortoligience as well as thecompanyaso represent a speed, aventure Partnos, so first on light, speed,lightspeed is a nine billion dollar Benthur fun based in Menlo Park wereglobal. We have officees, then India, China, Europe and Israel too, andactively invest in all of those geographies were also a fullstackbenchureof fun. So we're investing out of a seven hundred and fifty milliondollar venturefund and a one point: four billion dollar growth fun todayand so internally. The mission is to be able to partner, with every great techfounder, looking to build the next generation public company, whether it'syou know, t e, your first round of funding, your seedround or your preidalround, and then the other thing internally. The one standard we holdourselves to is that if we invest, we want the Entreprenaur to be able to saythat we've meaningfully impacted the traductory of their business. So, inaddition for investment team that you know works day to day with a particularcompany, we have a whole services or such as a marketing team, a businessdevelopment team to help you know be to be company potentially crack s or incustomers that they haven't been able...

...to get into, let's leverae the Lege,beed that Werk, a talent, talent, infrastructure team and then a networkof two thousand CIOS, okay, and so that's kind of Lihe. To be mybackground, so I'm a partner here where I focus on our growth stage, inbestingefforts- and so I typically kind of got involved once a company as boundproduct market that it is really thinking about go to market scaling.You know when you're at twenty million and era and looking to get to a hundred.What does that journey? Look like Iare the light speed. I worked at an earlystage, firm, called Matrix partners. Where again I was predominantly focusedon enterprise software andtent. I also got to spend some time as a product onthe dered master class as the company scaled from fifty to eighty employees,and then I started my career covering tech clients at mckinzi and Golden, andthen you know personal background for me. Like I come from a family, that'smoved around at ton, so was born in dubay lived in Istanbo for severalyears did a short student Brussels before moving to the state and sodefinitely have like a big appreciation or different people. Differentbackgrounds, different personalities and really do feel like there isn't Yiuknow one founder archetype that can create a great business that makessense and then definitely an interesting background. I think you dona lot when you, when you, when you travel potcally at an early age fromfrom countries to Confry, so yeah definitely can interest in background.So UNUCA LACPIT is, as invested of you knowthe three hundred and fiftycompanies in the past twenty years and obviously immudity Pol technoogy sector.So, while I'm Sur there is Nimeral sedliments that you would take intoconsideration in your assestment before you, you een make a move or you decirecompanyes. What intis mean you know it would be good if you could just take ashougit from your perspective, othose Ki Lemens, that you are looking at whatmakes a company warswile the investment...

...yeah. So I think it defers a little biton early in growth, eternally and so early. You know. Sometimes there isn'teven a product. You know you're just going based on a team and we spend alot of time thinking through founder product bit, and so you know whatknowledge or skill set. Can You bring tosolving this problem that maybe fiftyother people can? Are you uniquely kind of situated to build something here andthen you know. Ultimately, the success of a company is often dependent on thepeople you hire and you as a founding team. You know, hire and attract aworld past team. You know, are you going after a big market and you knowif you do have a product? What does that initial product? Look like youknow? How does it function? Where does it fit on proash at Lighe speed, Ithink very different from you know other brod stage, investors. We take avery venturae oriented lens everything we do here again, where it really isabout kind of team product market first, and then we also will look at you knowmetric understand. You know some of the business and performance fundamentalshistorically and then internally we actually spend a lot of time talkingabout outliour businesses, and so one thing my partners will really push youon when you're bringing in a company is. Can this be an iconic? You Know Company,so I think kind of part of that Bush led us to invest in companies likeStaffchat, Mule, Sal, AP dynamics, new tengs, which you know have reallyreshate the spaces that they're in and so that's kind of a question. That'soften assed through the process. Okay and when it comes to evaluation. Sowe've seen Ou we've weitnessed some valuation and I guess R M from peopleat outside of the VC world. We tend to look atvaluation of Company and Wow. That's a big valuation for Companyat may nothave done. You know Turnyet in the...

...market, or maybe we consider thatrevenue and and only look at that. So what's your take on thet, because we dofeel that sometimes the thevaluation can be Litte bith inflated. But wouldyou agree with you disagree with Wut you what a your sout Om that I mean Imean. I definitely think one thing that's true and it comes to valuationis, it is pretty dependent on kind of where you are in the market and themarket cycle, and I would say the past couple of years. You know: We've beenin a really heated market, and so you know we will look for examplee atpublic bomps when looking at either a growth or subetimes an early stage deal,but than you spend a lot of time. Also looking at kind of private cons andlike four companies in this category, you know what has that look like, andso it's definitely been a very, veryheatid, competitive barket, I would say, and then at the early stage, I thinkfolks often think about you know being like a core partner through the founderand think about valuation in terms of a company wants to raise x amount.Ideally, we want to own x amount, which will imply avaluation at the grossstage. We don't really have ownership, bargets or threshhold. It really isabout being part of a great company and then at the growth stage. I think youdo start to look a little bit more. You know high growth, public bumps and eventhouhthose public comts. If you, you know, think about software are brading. You know at all time highsright now, and you know it does fluctuate month Ofer month, but butyeah. I think that's something we struggle with. I think it's aninteresting evaluation is depending from where you look at it. You know, Iguess, if you look at it from the Omtu Prono tevaluation is goot to be veryhigh. Should egate from your perspective is good to be fair. Youknow, I guess floind is got to be I's, good, deepdifficult, Oem and I'mgetting into it. Bu mynex question is...

...really around Ron Technology. You knowtrends and wats. You know that he innovated wit, was distruptive at. Iguess it's good to be even more complex when you are looking at a thisraptistic noty, that is, we have some vendors that we wolk with in differentspace could be big data. It could disybe. It could be. You know evenanolytics or whatever were really kind of creating the marketplace. Tharcreating Dhen Ish- and you know when there is at the market. Yet it's got tobe even more difficult. was s really what Pas e actual potential of thatcompanion and Tar Texan Wat eveluation is but but getting into that thatquestion I mean one of this Lugin that I looked at online when doing myresearch Fon Onlahe spece tomorrow bill today, and I expect that one of laspsmission is to be able to Aontif. I use IUNOVATIVE technoy companies that canjis from the market. So from your perspective, what are the trends thatyou look out for to understoned if a distructive ID will actually strive ofFam Yeah? One question: We spend a lot of time in during any indestmentdiscussion is around. Why Now? And so, why can this be a massive company todayand why hasn't this been created before and you know what does that look like,and so what is that dislocation change trend in the market that is enablingyou know this business and, and that comes up you know all the time. So, forexample, in the UK and Europe SD two is a huge kind of regulation, that's takenover fintack and so then now need to allow other companies to basically readsomeone's kind of account, history and readand right transactions to theiraccount, and so the proprietary advantage banks had in terms of beingable to underwrite or offer a CO customer product because they were thesole older of all the customers, data...

...no longer exxept, and so you know thatthat change will enable and is enabling a whole new generation of intechcompanies being created, which is fascinating to watch. And so I thinkthose dislocations are things we definitely follow and think about whenevaluating and looking at companieis. Okay, that makes sense. So syocussionsis bit more Specia Qob from your perspective, what arethe the ArTechnologies that are out there at the moment that Wen tis from the marketyeah, I think I mean I think thethere are number, so I mean one area. I'vebeen very focused on. Is You know over the past, like ten fifteen yearsthere's been this col rise of application, software and differentschools and act that individuals use? You know as a consumer or in theenterprise, and you know one fascinating stap to watch is if youlook at the number of the apts for employee being used within a differentcompany. Ouo actually puts out an annual survey on this and that thatnumber is just like steadily risen, and so now one really interesting questionis Wenh. You know this Kuch potifal respiration of Ou. Today, there aren'treally great ways to make these applications talk to each other orintegrate or create Workflos, and so we're now seeing a bunch of reallyinteresting earlier stage companies, whether it's Zapeer, whether it's you know, werecauto a number of other, really interesting companies that are doingthis integration work and enabling that- and I think we'll continue to see thatif from like a Pur technology perspective, one really interestingtrend, that's playing out is around streaming data, and so typically, whena company would you know, incorporate data or analyze it, it would typicallydon be done in batches youuld analyze,...

...laweur data grab insidts from ad, butthere's so many things that are continuously gathering ongoing data,whether it's like a censor, an a troc or you know even website Flix, andthere are a lot more companies now enabling others to work with streamingdata and to derive actions and atalytics from them and that asomething that previously you know, company struggled with. How do youstore manage, monitor the data, and so, if you didn't have kind of thatfoundation doing analytics on screwing Datais very, very hard. But that's kindof this really interesting, like back change, that's continuing to take place.Naturally, you know everyone talks about like enable tin, an AI andmachine learning. Yeswe think there are a lot of you know: Applicationsincorporating you know those types of technologies indifferent ways. We have an investment in this. You know we have a multipleinvestments in the space. One of our investments in the space is a coupancalled any vision. That's operating in the world tatl recognition, which is,you know, increasingly being used in a public safety. You know security context with kind ofcameras and doing sfacial identification and that's kind ofbecoming this emerging trend, and so I think there are a number of thingsdependent on kind of what space you're looking at that are kind of changing inthe molding that area yeah, yea now tha that that's like fascinating space soiwould, I would conquer with what you you just said. I'm sure we have lots ofpeople due to the WHO you are and the company yourepresent, I'm sure will ever surf. Ceus of Tondes of companies or peopleare in a start. UPAN different spots and position of maybe people who areeven invested and show r those Af that sort of Companyeta listening to thepodcast or this podcast. So if you ade an anadvice for those people, what would you tell them? Is You knowwhat avice would you give to a started...

...fonder that is looking to get fomthingfor Thet Company wher? Should thes start? What do they need to think aboutand I'll do the get in Tuchon and then stun the process? So I think,regardless of stage, you want to be very, very friss on your story toarticulate kind of where you are as a company and where you're going, and Ithink that's kind of the first step and then the second step is to kind of comeup with a list of investors. You think could be great partners for you who,specifically you thinks, would be a great partner for you and kind of theright introduction in and then at the early stage. You know, I think a lot offounders get get advice about, like you know, don't spend too many cyclestalking to investors. You know pick one time to do your fundraising. Get theright intro in kind of speak to a bunch of investors close the round. Then youknow you can go back to focusing on her business, which I think I think is trueat both tiges. I think one thing that's more true. I think at the later stateis that oftentimes it is based on longer term relationship. So yeahgrowth investors will know you know all the company for long periods of time. Ithink they'll often be like multiple touchpoints, an an ongoing dialogue andit is kind of a much larger check size and so it's very helpful to kind ofhave an ongoing kidence with a couple of firms or people that you might beinterested in partnering with down the road. That's definitely how I thinkabout you know think about Youn Ebirorlatdo. Would nit mean that, forexample, you you may speak to a company that you think is interesting, but you,you probably are maybe six months twelve months, eighteen months down thelane from innvesting with it, because you want to Bilu the relationship youwant to see. Ther journey and basically you can aomost- do a bit of diligenceprior to th the proper conversetion, a whit you're saying you know, I think,that's true and often times like the companies we might be speaking to onthe growth stage. Don't need to raise...

...money. You know some companies might beprofitable, so might have raised a large round and you know aren'tthinking about raising any time soon, and so I think that often often drivesit or you might you know dypically. You know we wouldn't on the growth stage. Acompany typically finds PROLYC market fit, and then we get involved at aslightly later stage, but having that longstanding relationship from thoseearly stages is just kind of Nice to build the relationship because in ayeson on our end, were partner going ith, the ofte nor but on theentrepreneurs, and you know you're, making a lifetime commitment or a tenyear commitment with an investor, and so you want to feel really comfortableabout your fit with an you know. Life is too short and youwant to surround yourself with kind of the right people and people you enjoy.You know having that regular padence with, and so I think it's superimportant on both side. Yeah, no, no agree with you and I think it's almostlike brining. You can not bring a new bomb member as well as o. They will beour voice that will be consantly with you for the for the forseabl future. Soit's it's like any relationship. WOR, you need to make sure H, shoot. Youknow exactly where you are getting on, engage with em and I think it's good tobe the probably the best setup is when you've got the Entropreno, reallyselecting the universitaate univers, it's kind of almost like a marriage. Ifyou will and and everybodyis at everybody wants to get together, whichis which is good and what about thes advice from I'mspending the money Imean wel. I know that you guys say you say you mentioned early on and WichKeat, you've, Gon different element like Business Development, marketingand you've got probably a ton of people that can support you, which mean thatyou probably don't just loo at the investment from a sprendship despect oyou, but but also you've got some some human power, the Backen to suport theYon Taprenautyoare Roun. But you have like set of Rues in time of out theinvestment needs to be invested, or do...

...you let Teonte pronot completely go? Isit just ACA BA pace, bycase basis? I think it really depends on the entrenorso ultimately kind of they're, the one running a reelement day to day of theBisdet and thinking through you know the right way to allogate that capital, and so somebusinesses you need to spend. You know significant amounts in sales andmarketing. I think that's true for a lot of businesses and Om. You knowthere might be like a big rnd leman or you know as success element, and so Ithink it really depends on kind of each company and where they're at in theirlifesycle agree with Ou. Think that makes sense.I was just wondering if there is some sort of a formula, but there is not soI'm glad you? U, you can for Mesollet me. Nowyeahelyou know it would be withthis woing t efiious just want you to thank you fo for your insight to theAMISHCA. I really appreciate the FAAT. You take the time. Unfortunately, weget into geneol to session today, but if anyone was listening to the licepostcast would like to get in touch with you. You know ongage WIS, latespinventor. What was the best way to tones WITYOUANISCA, I think email isusually easias Manashka at lsbpcom yeah affect well once again. Thank you vermuch forar time today. It was absolutely a pleasure t o Ho on theshow yeah thanks so much for I really enjoyed this too operatics has redefined the meaning ofrevenue generation for technology companies worldwide, while thetraditional concepts of building and managing inside sales teams in househas existed for many years. Companies are struggling with the lack of focus,agility and scale required in today's fast and complex world of enterprisetechnology sales see how operatics can help your company accelerate pipelineat operatics, dot net you've been listening to, b, to b revenueacceleration to ensure that you never...

...miss an episode subscribe to the showin your favorite podcast player. Thank you so much for listening until nexttime.

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