On March 25, Startup Grind Austin welcomed Krishna Srinivasan to the guest chair at Startup Grind. Our conversation ranged from why he and his partners started LiveOak Venture Partners to their approach to investing and what they look for in a company.
Srinivasan and his partners have encouraged numerous aspiring entrepreneurs to take the plunge and start their own companies. They have a long track record of helping entrepreneurs build strong standalone companies with revenues of $50MM to $100MM often from a standing start. However, after 10 years at an established firm it was also time for them to look in the mirror, give themselves the same talk and “walk the talk”. They also felt that there was a strong missing need in the Texas venture capital community. This was the need for an early stage focused venture capital firm that would also invest across the full lifecycle of a company’s growth and be committed to helping build strong standalone companies. Srinivasan and his partners work closely with the companies in which they invest helping them with strategy, team, anything that they need to make their company successful. They also felt that a right sized fund would yield better returns for their investors. If you have a fund of 1B you need 3B in returns to make it the economics work, and there just aren’t that many large exits re that large each year.
And for the question that most of our audience had “what does a firm like Live Oak look for in an investment?” Just like in real estate, there are three important things: team, team and team. After team, there is the big question “Why now?” Srinivasan is looking for companies in interesting market segments where there is room for disruption and an opportunity to build a big company. In short, have a great team, a great answer to “Why now?” and an interesting segment and then prepare to present your company.
Don’t send a 60-page business plan. Have some hypotheses on what are the requisites from a product, technology, market and team to build your company, understand what the risks involved are and how you would use capital investment to resolve them. Srinivasan said, for entrepreneurs, there are always 20+ things that need to be done any time, good entrepreneurs understand which of these are the most important and how they would use capital most efficiently to address them in the right sequence. Here is where a hypothesis based approach is most relevant. If you aren’t sure exactly what the risks that you need to tackle and in what sequence, have a hypothesis, prioritize and keep iterating to make progress.
It was a great evening and Srinivasan was an engaging, informative guest. The companies LiveOak Venture Partners invest with are clearly in good hands. You can find more information at: http://www.liveoakvp.com
