Next in the Seed Series we speak with Accel partner Vas Natarajan, who invests out of the early stage fund.
We talk about how Accel does seed inside a venture firm that recently raised $2.5 billion across three funds.
We find out that Accel invented the EIR model 20 to 25 years ago, how the founders philosophy carries over in this generation of investors, and how Accel is focused on productivity and the rise of the API economy.
Gené: Welcome to Vas Natarajan a partner at Accel since 2010?
They gave you a platform to learn about company creation, and the impact of software technology on business problems worldwide.
Gené: Are the skills of an operator a different skill set from an investor?
Vas: Jim and Arthur, our founders, would always say the people you hire is the company.
I think that is a valuable skill set for an operator, because ultimately, the company you’re going to build is based on people.
Vas: The commonality between those two sides of the business are that we want to be the first institutional investor.
Whether we are coming in at a seed stage level, where we are writing a $2 to $3 million check and it’s literally the first capital into business.
Early stage and late stage might seem like conflicting ideologies to certain firms, but I think the most important thread there is that we want to be the founding investor.
We spend a lot of time understanding and dissecting markets, talking to customers, meeting with CIOs. We share that data.
It’s the idea of delivering technology abstractions to non-technical users so that they can build products and services.
If we have the conviction to do a deal, we want to put as much money into it and potentially even take a board seat and work actively like a Series A investment.
It’s not 50 seed investments that we hope five work out, and then we’ll maybe lead Series A in a couple of them.
We treat our seeds like Series As. And so for a certain set of founder, I think they appreciate that philosophy.
Gené: Is there a framework for how many seed versus Series A investments?
Vas: We’d like to target 30 to 35 new investments out of a fund, whether those are 30 to 35 seeds or 30 to 35 Series A.
And the goal would be to seed them, and build a small team to go out and prosecute an idea that they have.
Vas: We work with a handful of operators within our network, who will invest on our behalf.
Vas: I have inherited a wonderful portfolio of companies that have been invested in, and founded before I got started here.
We spend a lot of time thinking about the future of work, the rise of new collaboration productivity systems, and how the cloud has been a major enabler for that.
I led an investment, along with my partner Steve, in a company called Ironclad, which is a cloud platform for contract management.
We think the combination of those two is going to create a next set of cloud companies, both at the application tier, but also the APIs themselves will become interesting businesses.
I led an investment in Segment which is in the customer data infrastructure space.
They’re collecting, and cohering all the customer data that a company will collect.
And so between Segment, MessageBird, Algolia, Scale, and Checkr, we’ve probably invested in five to ten API companies that are becoming big businesses.
Gené: Two of the areas you invest in are collaboration software and workflow automation.
Vas: Collaboration software to me is how do you stitch together users, data, and conversation in one single pane of glass so that they can be well coordinated and in sync.
I led the seed and Series A in Frame.io, which is a video post production collaboration system.
If you layer on cloud software plus APIs, what you now have is the opportunity to automate workflows.
That software can now speak to other systems, and so work exists across multiple different subsystems.
Vas: Ironclad is going after legal operations teams, general counsels, the legal team within a technology company like Dropbox, which is one of the early customers.
And that’s what’s really exciting about collaboration software companies is they almost sub-propagate within organizations.
You solve a workflow for a specific set of power users, but then those power users ultimately have to speak with other people in the company.
Gené: Are there any other companies that you’re excited by and why?
Vas: I led the seed in a company called Blameless, which is a site reliability engineering platform.
Gené: And another portfolio company you are excited by?
Vas: I also led the seed investment in a very interesting company called Transcend.
Every one of our companies that ends up being a long term investment, by year four or five of their journey, they’re probably doing 20 to 40 percent of their revenue or have 20 to 40 percent of their users in global markets.
My partner Ryan and I led the Series A in a company called VSCO, which is a consumer photography platform.