Editor’s note: Rohan Puranik is a Partner at WestWave Capital. He previously worked at StartX, where he focused on long-term strategy and was a mentor to founders and early stage companies. He is also the Co-founder of MindSumo, a company backed by Google Ventures that was recently acquired by MBO Partners. Rohan earned his B.S. in computer science from Stanford University.
What was your path to joining WestWave Capital?
After graduating from Stanford, I co-founded a company called MindSumo with my freshman year roommate and another friend of ours. MindSumo connected students and companies for career and consulting opportunities. I eventually sold that business and went on to work at StartX, Stanford’s startup incubator and accelerator. Over the course of building my business, I learned everything from product development to enterprise sales and fundraising. I had met a lot of founders and venture capitalists, and had started working with them in various capacities already, so I decided that I wanted to become an investor myself.
My plan was to join one of the big VC firms in Silicon Valley, but then I met my partner Warren Weiss, or Bunny as everyone calls him. An industry veteran, Bunny had just founded WestWave Capital after having spent nearly 20 years at Foundation Capital and previously running four venture-backed companies. He has a tremendous amount of operational and investing experience and I quickly decided that joining him at WestWave Capital would be a terrific way to start my career in VC. Not long after, Gaurav Manglik, our other partner, came on board as well. He also has a similar background, having founded and sold a very successful business before getting into venture capital.
What is WestWave Capital’s investment thesis and what differentiates you from other VCs?
As a firm, we focus exclusively on pre-seed and seed investing. We’re generally the first institutional investor in deals and we are comfortable going in extremely early. It’s not uncommon for us to invest in founders when they’re still in brainstorming mode or have just come up with a great idea. We know strong entrepreneurs and engineers when we see them. If they have interesting ideas it’s easy for us to get excited.
In terms of industry focus, we invest in deep tech companies that sell to other businesses. We invest in areas like cloud infrastructure, data infrastructure, analytics, SaaS, and Web3. We also explore more over-the-horizon areas like quantum computing, robotics, and virtual reality.
I think one of most important differentiators though, particularly in terms of how the entrepreneurs we work with see us, is that Bunny, Gaurav, and I have all been successful founders in our own right. That’s important because it means that we have a lot of empathy for the entrepreneurs we work with, having been in their shoes ourselves. Even more important, those experiences have given us the insights and expertise to help them navigate whatever challenges or difficult decisions they’re facing.
I’d also point out that before investing in any category, we go really deep into developing an investment thesis around it. We might spend months or even years refining our thinking around a particular area and talking to founders who are uniquely capable of building technology solutions within that market. It’s the depth and breadth of that work that gives us the confidence to invest so early on in companies without feeling like we’re taking on any substantive risk.
You mentioned WestWave Capital’s focus is on deep tech. What areas of deep tech in particular are you most excited about and why?
There are numerous areas, but let’s look at security. We’re obviously collecting and storing more data now than ever before, which raises big questions about data privacy and security. Those issues have only been compounded by the fact that there’s also been a broad transition in how enterprise applications are built. We’re increasingly adopting cloud infrastructure, using novel infrastructure for edge applications, and introducing artificial intelligence and machine learning into the applications we build. All of that means that there are new data stores and new data infrastructure, as well as new ways to be attacked and other new security vulnerabilities.
For those reasons, we see a huge array of enterprise security issues that are worth exploring. That includes everything from firmware security to cloud data security issues around where and how enterprises store sensitive data and make it accessible. We’re also interested in how end users are interacting with applications and the security issues that can arise at the interface layer. Our investments in companies like Binarly, Stack Identity, and Sonet.io reflect that interest.
I’d also point out that while security is a really exciting and lucrative category, it’s also one where you need significant expertise to create meaningful outcomes given how much noise there is in the market. As an investor, you need strong relationships so that you can help your portfolio companies get their first customers. It also takes significant wherewithal with security engineers and executives so that you can help companies nail down the right messaging. We all know the pain points enterprises are facing. For every company you back, there will be five or six others getting funded that are solving the same problem. Success hinges on having the depth of expertise to navigate the nuances and cut through the noise.
Where else are you investing?
While we haven’t done much investing in it yet, robotics is another area that we’re very interested in. In our view, it’s a really exciting time to build robotics companies. The fact that both sophisticated AI and ML software models and tooling and equally sophisticated hardware are now widely available means that companies can build incredibly complex machinery right off the bat. Practically speaking that means that just about anyone can build autonomous robots to do things like clean factories. That’s pretty remarkable when you think about it. If those kinds of robots are now a commodity, imagine what else is possible.
And while it’s not a robotics company itself, here I’d point out our investment in a company called Koop, which is effectively an insurance product for robotic and autonomous vehicle companies. They’re enabling the adoption of those technologies by derisking them for governments and the enterprise. Koop is seeing remarkable customer growth, which is a pretty good indicator that the broader robotics and autonomous vehicle market is developing quickly.
2022 has been a unique year. What’s your take on the current VC landscape?
While it’s certainly been a challenging year, the fact is that we’ve seen a tremendous influx of high-caliber entrepreneurs starting companies that we want to fund. We think that uptick is because there are some very real problems these people want to solve and because they’ve become more comfortable with the idea of leaving their job to go off and start their own business.
That being said, fundraising has clearly gotten a lot harder, at least at the later stages. A year ago, if a company had some initial customer traction, there was a good chance that it would attract a high-quality Series A investor. Today, those same investors want to see around $1.5 million in ARR before they’ll linvest. Expectations have definitely shifted.
When it comes to super early stage companies, by contrast, investors are still excited to take on risk, particularly given that they aren’t expected to write the big checks you typically find with later stage companies. There’s also a lot of dry powder in the ecosystem and plenty of investors who remain confident in the risk-reward profile of these early stage investments. Overall, we feel pretty bullish about what’s to come.