Anupam Rastogi transformed his passion for building and scaling startups into a career in venture capital over a decade ago. He saw venture as a way to bring his skill set to multiple companies at a time.
Currently, Anupam is a Partner at Emergent Ventures, which focuses on seed and early-stage ventures. He joined me on a recent episode of Startup Success to offer a VC’s perspective into the startup ecosystem.
Emerging Themes Across the Startup Landscape
A lot is happening in the startup space, and many opportunities are available. Anupam highlights two overarching themes happening today.
#1 Software Consumption
“Software is getting consumed at a scale that we have not seen before.”
— Anupam Rastogi
From enterprises to prosumers, businesses across the board are increasingly buying and paying for third-party software. And according to Anupam, that’s a significant shift from the recent past.
“It used to be that large Fortune 500 companies — 20 years back, or even 10 years back — would build a lot of the software custom in-house, and it would run on-premises on their servers,” he says.
A lot of that has moved into the cloud, and increasingly, companies are approaching third-party SaaS developers to provide it.
#2 Under-Digitized Segments
There’s also a lot of opportunity in areas that haven’t experienced much digitization or automation thus far. The food and beverage and daycare industries, for example, are looking for software that makes jobs easier. Typically, there hasn’t been much in the way of good software and automation available for those workers.
Another industry ripe for automation is logistics. It’s one of the largest industries globally, yet somehow also one of the most under-digitized.
Finding the Right Startups
“We typically look at anywhere between 600-800 companies a year, and we have the ability to invest in about 5-6 a year.”
— Anupam Rastogi
“Finding startups is not an issue at all,” Anupam says.
There’s a lot of opportunity and capital out there and many people are leaving their jobs to pursue dreams of growing their own companies.
“Finding the ones that you want to invest in, I think that’s where we spend a lot of our time,” he continues.
So as a VC, what does he look for?
Potential Venture-Scale Outcome
Anupam prioritizes startups with large upside potential. Sure, it’s also important that it’s something that he wants to work on personally, but what he’s really looking for are those companies that are hyperscalers.
“Something that grows five times or ten times in five or ten years, VCs are not that interested,” he says. “They want things that can be a hundred times or a thousand times. There has to be some potential path to being a very large outcome.”
Founding Team
When searching for the right startup to invest in, Anupam looks for a very particular skill set.
“We are looking for people that have done great things before,” he says, “But also a lot of softer skills.”
For example, he wants founders that look to be on a trajectory of rapid personal growth. Why is that important? Because he’s looking for people who learn fast from failures and successes. After all, they’ll likely end up doing so many things they’ve never done before during the entrepreneurial journey. As a startup founder, a person will go through more personal growth in a short time than most likely any other time during their lifetime.
He’s also looking for people who can maintain a delicate balance between a single-minded dedication to making things work and an understanding of when to try something else.
“The best entrepreneurs are the ones that can break down walls and tear through doors and just keep going and iterating. But there’s a balance, often they know when something is not working, and try something else.”
— Anupam Rastogi
The Future of Remote Work
Anupam is a big proponent of remote work and believes that startups will build all the systems and processes necessary to do remote work effectively. But he also believes that there is another option for companies.
Multi-Hub Model
For startups that absolutely need some version of in-person interaction, Anupam thinks the multi-hub model is the perfect solution.
It combines many of the benefits of in-person and remote work, but not in the traditional way most companies are approaching a hybrid environment. In fact, Anupam thinks that the traditional hybrid approach continues to be incredibly difficult to pull off adequately.
The multi-hub model involves a company maintaining multiple hubs in different locations. For example, many startups have their go-to-market hub in Silicon Valley. That’s where the CEO, and maybe the head of sales and marketing and their teams work. But then, there’s a hub for the tech and product team somewhere else, like Austin. The teams primarily work from home but can meet with their colleagues focused on the same company initiatives when needed.
Is the Bay Area Over?
“What this pandemic has done is accelerated what was already happening before,” says Anumpam. “The opportunities are just so large that the Bay Area on its own does not have enough space to actually get into all the market needs out there for how fast tech is growing.”
He sees a transition from a Bay Area-centric tech economy towards that multi-hub approach he highlighted. He foresees a time when different cities have different specializations and become hubs for different departments or industries.
That said, he believes the Bay Area will always be the best place in which to raise venture capital, simply because that’s where most of the money is.
Final Pieces of Advice for Early-Stage Founders
Anupam passed along some final pieces of advice at the end of our discussion:
- Do it for the right reasons — Because there’s so much capital available out there right now, he’s seeing a lot of people who aren’t necessarily getting into it for the right reasons.
- Entrepreneurship is hard — Along the same lines, you need to make sure you’re committed because the entrepreneurial journey is hard — and it doesn’t end when you raise your venture round. In fact, things just get harder.
- Explore other paths — Venture isn’t the only path to success. It’s the path that gets talked about and written about the most, but there are different ways to build a great business.
This discussion with Anupam Rastogi was taken from our show Startup Success. Browse all Burkland podcasts.