The Exchanges

Q And you have been for the firm with 13 years. Tell me, how did you see the firm evolve? What are the fund size when you came in? What are the different fund size that you have seen as your journey?

A Yeah. So, uh, fund 10 when I first joined was a hundred and fifty million dollar fund. Uh, this last one, fund 13 was a two hundred and seventy million dollar fund. So we've kind of, we've, uh, we've, uh, marginally increased the size of the fund to keep pace with round size and, uh, keep pace with kind of the growth of the B to B of the B to B world. And our take on it is the size that we're at while we want to keep kind of marginally increasing to keep pace with inflation and keep pace with the growth of the space. Um, to do early stage well, you gotta align your fund size with the stage of company that you're working with. And so it's always for us been a, been a core principle and a core, uh, core focus. Keep the fund size aligned with this, uh, with the stage you're working with. And ultimately that gives you two things. One, uh, it allows you to return capital. Uh, you can, your DPI numbers, uh, your DPI numbers look better. It gives you more flexibility in terms of the types of deals you can do, how you underwrite deals. And then the second, second thing it does is that, Uh, for a lot of the founders we meet with, I think one of the challenges that they have to navigate in today's world, especially, is taking on too much capital at an early stage. And so we try to really help them think through and be methodical about how much capital they raise from the early stage. Tha…

AI assessment note: “fund 10 when I first joined was a hundred and fifty million dollar fund.”

Q And how many deals you do per fund?

A Yeah. So the, the, the fund strategy has been to, uh, focus the check size up front. So we try to write two to seven million dollar checks up front and take 30 to 35 shots on goal. So two to seven million dollar initial check, and then we'll reserve, call it roughly 50% for follow on. But the goal for us is two to seven million dollar checks, take 30 to 35 really high quality shots on goal. And that Ultimately we think is the right formula to return a, return a really big outcome on, on the funds that we raise. Obviously as we've, as our funds have increased in size, the, the range has also gotten a little bit bigger. We're able to write slightly larger initial checks. Um, but we've really tried to stay disciplined around that entry point check. And we think that that's the right way to manage risk and manage, uh, and, and ultimately get the most upside.

AI assessment note: “take 30 to 35 shots on goal”

Q So let's say for in case of solution from smallest, because he is the most recent, he'll just help our audience with Indian founder. What would help move the needle to write a decent size check?

A I gotta be honest, that one was a very easy. Everybody just said, yeah, you should go back. And so I don't know if that's a helpful, helpful story. Um, you know, but I, but I joking aside, like the, the thing about Sudarshan that really, really, really shines through are two things. One that you can just tell he's really sharp, smart guy, just the way he answers questions, how methodical he was, how, how well he handled and presented. Uh, in the, in the, in the partnership meeting was, was impressive, number one. Number two, one of the things he did really well was he was hyper-responsive, just like, 24 seven, just aggressive, like, moved quickly, and I think those two things are the, are the things that matter a lot. You know, a lot of times in these meetings, there are questions that come up that can be a little bit abstract and are kind of, Thinking is like, let's just see how the founders react on their feet. And, you know, we, we, we obviously want to help our founders. And so we try to prep them a little bit, but you know, we all kind of talk about this is like, we don't want to coach the founders too much. We want to see them how they are, see how raw they are, see how they present, how they handle themselves. And so for us, um, I think in Sudarshan's case, he just had a really, really good presence and he was able to really articulate why he could build a big company an…

AI assessment note: “the thing about Sudarshan that really, really, really shines through are two things.”

Q So you know, published a market map of voice agents. So what are the bets that you have taken this voice AI space apart from smallest?

A Yeah. Smallest, I would say is the, is the, is the biggest bet we've taken, uh, we've taken so far. Um, interestingly enough, we've actually had some of our existing portfolios starting to break into voice. So reify as an example, because they run their call, their, their clinical trials business, they're actually trying to implement voice into their, uh, implement voice into their stack. Uh, we have a stealth company that we haven't, uh, announced yet, but in the CRM space, that's rethinking how, how voice is, uh, how voice is being done. Um, we also have a company that called Blazel, um, that's leveraging voice internally to help, uh, they're, uh, they're basically a marketing agency for founders, um, help create content and stuff like that. They use voice, voice agents internally to capture, uh, recordings and then take the recordings and help turn that into content. Um, so those are the, the bets that we've made. We've obviously seen a ton of companies across the board though, from a voice perspective.

AI assessment note: “we've actually had some of our existing portfolios starting to break into voice.”

Q What has kept you for 13 years at Sierra? Where has your peers in your industry keep on changing roles every two or three years?

A Yeah. Um, Look, I actually think Sierra is a little bit of a special and unique platform. Um, like I was mentioning to you earlier, I was the second person that joined Sierra two point O. So I've, I have a lot of, uh, sense of pride of ownership of, you know, being one of the earliest folks on the team, having helped with a lot of the processes, having helped kind of get the firm to where it is today. And so there's just a part of me and I'm a very loyal person. Like I, I, I just think I, I owe it to them who gave me a shot in the first place to make sure that the fund is successful, and we, um, we make our LPs money, we make ourselves money, and, uh, we are successful, so that's part of it. Um, the other thing that, that I like is one of the things that we, we talk to LPs, we often describe is this concept of majors and minors, so majors are the stuff we know well, like your CRM, your enterprise software kind of stuff, or enterprise AI in today's world. And, uh, and so it's like the stuff we know well. So like a bulk of the fund is going to go there, but miners are things that we can try and be like, get smart about and learn. And there's no, uh, there's no, uh, uh, stepping on other people's toes to go try new things, right? Like if you find a space that you like, you spend the time, you do the work, you bring in a deal. And again, it makes sense within kind of the parameters…

AI assessment note: “I have a lot of, uh, sense of pride of ownership”

Q How many of your founders are second time versus first time in your portfolio?

A That's a good question. I don't, I don't know the data across every fund, so I'll just comment on the latest fund. Yeah, I'll just comment on the latest one. It's probably about fifty-fifty repeat versus versus first-time founder. Um, obviously we, we really like the repeat founder. I mean, I think everybody does, but we think we have actually a lot of the expertise to help first-time founders go and, and, and build great companies. I mean, it's kind of why we just, we look for just raw horsepower. If like we see a founder that just has that raw horsepower, that ability to go and like just get things done, do things, we can give them the access to the enterprise and whatever they need to be able to go and scale and build a big company, but they just have to have that raw horsepower. So it's about fifty-fifty.

AI assessment note: “It's probably about fifty-fifty repeat versus versus first-time founder.”