Decision Making Process as a VC

How do you spot trends and how do you research about companies to invest into?

Shruti: I invest in a specific domain of Enterprise Tech, Data and Machine Learning and look for startups that are problem oriented. With my experience in the space as an Engineer, and seeing my portfolio companies evolve over the years, there are quite a few areas in the enterprise side that are very clear to me. We thematically go into these areas and continue to build from it.

Secondly, I’ve been in venture for a decade and it’s a lot about relationships now. We have an expert network of about 500 people that we work very closely with. We have senior folks in the industry and also have founders that have started companies worth billions of dollars. It’s a unique set of people that are very excited to solve these problems in enterprise and a lot of us invest together.

How do you value a startup?

Shruti: At my stage, which is the first cheque stage, its a lot about the team and their expertise in the space. We look for founders who have spent years solving similar problems at another companies, and are now solving these problems in a very different way. We also combine it with tech talent to make sure that they can build the product in-house.

Valuation is a pretty relative thing, and there’s no standard method to it. It all depends on the founders, their experiences, their backgrounds, what problems are they solving, how hard it is and a bunch of different things. That said, there are market ranges of valuations at different stages as well.

Some decisions you took might have turned out well, while some might have not. What sort of feedback loop do you have to evaluate your decision making process?

Shruti: Often times, I reflect back into some of the investments we’ve made, how they’ve progressed, what I I’ve learned from the space, the sector, the founders, the founding team, and how they’ve grown. There’s so much to learn!

That is a VC’s curse, as the results don’t come for many years. You can get markups and up rounds, but you don’t see an exit for 7–10+ years. Having that long feedback loop is necessary, and everything else is just a question on whether I did the right thing or not. And then you have to make so many decisions based on no feedback loop, and that’s a trait and skill that not too many people can do well in. By the time you invest in the third fund, you’re still waiting for the results from the first two funds.

Your tips for someone who wants to build a brand?

Brand building is important in the world today, even if you’re a doctor and if you want to stand out in the world, it’s important to build a brand on social media somewhere. Some people just tweet for the sake of doing it, because they think that’s what is building a brand, but that’s unfortunate because they live in a vacuum, where no one’s listening. So you have to build something that’s meaningful and valuable to someone!

Whatever your profession is, and if you are passionate about it and are sharing a differentiated perspective that you have and if others are willing to listen to you, that’s how how you build a following first. You don’t build a brand, you build a following that comes from a place of offering something to the world that they don’t know. I am not going out there to build a brand, I am going out there to tell here’s what I know about my industry and let me tell you why this can benefit you as you’re going out there to raise capital as a founder or as a fellow manager.

You do a lot of different things from being a VC to teaching at Columbia University. How do you stay at the top of your game?

The top of the game for me is to focus on Venture. How do I get the most differentiated knowledge so that I invest in category creation companies before everyone is by staying connected in the academic world by teaching engineers and such. So all the things I do are around that, which is to gain perspective and insights into markets I want to invest in.

Rapid Fire Round

If not a VC, what else would you have been?

An Engineer, which I was.

One thing you love and hate about being a VC?

One thing I love is that I am a King maker. People start out with small ideas and build big companies. What I hate about VC is having to say no to a lot of people and it’s just the fact of the business, but it’s hard.

Average team with a great idea or a great team with an average idea?

Great team with an average idea. It’s always the team!

You host podcasts as well. Who’s your favorite guest that you have interviewed?

One of our portfolio founders, Auren Hoffman has a very unique way of thinking about the world and he himself shares a lot of perspectives about being a founder. When I interviewed him, his knowledge and insights into how he thinks about growing a business was pretty valuable.

There’s another one with Jonathan Abrams, the founder of Friendster and we talked about how the battle between Facebook and MySpace and Friendster played out around that time.

How do you learn and unlearn things?

Learning is easy, where you just have to remain really hungry and curious. Well, actually it is hard, but there are frameworks around it. Unlearning is harder, because the feedback loop is long and you can only look at hindsight and focus on things you think you did right or wrong, but there can be intangible things you did not focus on.

You hear in venture where people say that I don’t do this category or that category and its mostly because they have been burned in this category before and they haven’t unlearned it and for sure its a hard thing.

How do you unwind?

I have a little one, who makes sure I stay focussed on her.

What do you think is the purpose of your life?

To leave something meaningful behind. My last name is very popular, which is Gandhi and he has a very popular quote that “my life is my message” and I take it very personally. There are not a lot of women out there, especially not a lot of women running funds, especially not enough South Asian women running funds. I honestly don’t know many at our stage doing enterprise. So I have to continue to make an impact for future generations, who are aspiring and looking for role models. So I hopefully am able to get there and even if I make an impact in one person’s life, I would have made a difference!