In this episode of The BARE Ventures Podcast, Samir Vig welcomes Apoorva Pandhi, Partner at Foundation Capital. Samir discusses how Pandhi's operator and founder background bring a commitment to nurturing founders from seed to liquidation
Apoorva Pandhi's Background
Apoorva Pandhi's venture experience spans decades in enterprise investing. Pandhi is an engineer by training and is experienced as an operator and a founder. His journey has led him full-circle to becoming a partner at Foundation Capital (FC). One of the company's many strengths in the marketplace is summed up quickly. "Foundation Capital is a 25-year-old venture fund. We are currently investing out of our 10th fund. We've survived so many funds, we must be doing something right. It is a $500 million-dollar fund," said Pandhi.
Listen to Samir Vig's and Apoorva's discussion on the Bare Ventures Podacst at Mission Matters
Who is Foundation Capital?
Foundation Capital (FC) has been an early-stage venture capital firm since the mid-nineties. Building and scaling businesses is the passion that drives the seasoned operators and former founders that drive the success of FC. Enduring through recessions, the dotcom bubble to the rise of big data and The Cloud, FC has continued to thrive. Their evolution, foresight, ability to navigate opportunities and commitment to technology strengthen their partnerships. They are committed to founders and investing in their startup vision, transporting the world into sustainability, efficiency, and toward a future with never-ending possibilities.
Nurturing early stage companies: More than just a capital relationship
As Pandhi decided to close the loop and find a venture company, Foundation stood out because the partners mostly come from operating backgrounds. This effort is a value-add for their investment partners, "We don't want to invest in early stage for optionality or for exiting too early. If we are investing early on, it is for the long haul. We really want to work closely with those companies. We help them in multiple ways. We leverage the experiences that we have had. We help them from that functional point of view," added Pandhi. He further explained how the partners use their backgrounds collectively to guide their portfolio companies from "reinventing the wheel... It is not a passive investment for us," confirming their commitment to their founder partner.
Market insights for investing in optionality or support?
The concept of optionality according to Pandhi, "would just be making a financial bet and seeing if any of these graduates to the next level...Then I will double down. I will help them in any way possible. But, this is not the approach we want to take. When we invest early on...this is where the need in the market is and these are the founders well-equipped to address that need...we have full confidence in what we are investing in."
"Growth stage investors in today's market are taking a lot of shots on goal and not sure how much bandwidth that they will have for each of the investments that they are making. This is what I term optionality. Compared to making a fewer number of bets, fewer convictions on those bets and seeing them through to liquidity, says Pandhi. He added, "The true test of an investor is if you ask those companies who are no longer there or are still trying, how helpful has the investor been? This is a good testament of whether or not you are an investor for optionality or are you really there for supporting the founders?
The impacts of Covid-19 on seed-stage funding process
Moving forward, the last two years have provided a unique opportunity. Pandhi feels many investors took a back seat to watching how the market would evolve. He was making great deals at great prices and then the market completely changed in late 2020 and 2021. "The number of decacons (Unicorns) that were created are more in the last decade. There's been a lot of capital in the market. Everyone is trying to go as upstream as possible,'' said Pandhi.
Pandhi explains that seed rounds, Series A, Series B, Series C makes it really hard for early-stage investors to stand out and win deals. But, he believes that the market is starting to turn given how public markets are behaving.
How can founders meet early-stage investors?
As the world halted and in-person meetings shifted, the Foundation did too. "It completely unrooted the investment paradigm," said Pandhi. He relates venture to serendipitous experiences because you get to know your founders in elevators, golf courses and in different places...but, you at least met them. "Being remote changed everything! Everyone had to completely rethink how they should approach sourcing, building relationships and how to think about evaluating those companies. You can't meet people in person. Conviction is built by meeting people. But, we have made so many investments that I can't even count them...That were completely remote! Fully on Zoom, from starting to finish," recalls Pandhi.
Pandhi further reflected that, "It really pushed the partners to understand the founders and talking to more of the team...How do you make those deals in a remote-first world? It's all about using LinkedIn and Slack communities in the most creative ways possible."
What is your advice to early-stage founders?
Pandhi feels the onus is on the investor to identify potential funders. His advice to early stage founders says, "It is less about knowing investors or knowing people who know investors. It's about standing out! How do you stand out uniquely? ...Using different platforms to publish content...If you are consistently standing out on different channels...works well for developers or companies being built for developers." He further explains that these tools are adopted by individual contributors. The ability to resonate with the founder's community, makes them stand out. Other considerations include how much resonance a founder is getting within their communities," said Pandhi. His last piece of advice to founders is to "play to your strengths."
Bringing together founder, operator and investor experience, BARE Ventures as a firm strives for a well-balanced approach to fund management. With an institutional investment background, BARE Ventures focuses on proven traditional methodologies combined with emerging learnings in the ever-changing venture capital landscape.
Learn more at https://www.barevc.com/.
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