Multi-step process one key to finding the companies with “real” AI technology, venture capitalist says
Multi-step process one key to finding the companies with “real” AI technology, venture capitalist says
TIM LEEMASTER
Umesh Padval, partner at family office Thomvest Ventures
Investments in AI driven startups require a multi-step due diligence process to separate standout companies from those paying lip service to the technology, says Umesh Padval, partner at family office Thomvest.
Technology, customers and its corporate network all have an equally critical role to play when the USD 500m fund is considering making a bet on a startup.
“When you look at a company’s background in technology and computer science [within the] first ten minutes of people talking that’s when you know the big boys from the kids,” says Padval, who oversees the cybersecurity and cloud technology portfolio at the fund.
While he and the fund will road test any technology a potential portfolio company has developed, Padval values the input from customers the fund knows through their past and existing investment network even more. “They give honest feedback,” he says. “We can never develop that [kind of] testing in-house.”
Finally, in-depth talks with companies in the cybersecurity and cloud sectors can bring out clear “pain points” in business development and execution that the fund looks for in any startup to address and scale up.
The fund recently led a USD 10m investment along with Crosslink Capital in RedMarlin, a corporate fraud prevention platform using AI. The Los Altos, California-based startup was founded two years ago by ex-Cisco executives. [Read our interview with the two founders here.]
“When they described what they were doing I didn’t believe they that could do it,” Padval says. “No one else had done it and they were claiming they were using computer vision and deep learning.”
His opinion changed, however, when he saw the technology at work. Padval concedes that with “hard tech” like cyber, such as RedMarlin, and the cloud the technology is usually more clearly defined than with a software as a service startup, which can be more consumer or end-user focused.
Thomvest Ventures is the family office of Peter Thomson, the co-chairman of the holding company that controls the Thomson Reuters media firm. Bloomberg puts his net worth at USD 6.5bn.
The fund invests across three primary areas: financial and real estate technology, cybersecurity and cloud infrastructure, and sales and marketing technology.
Padval has held operational roles at four startups. His last saw him CEO of C-Cube Microsystems, which designed and made semiconductors and systems for digital video applications. Following that he spent eight years at Bessemer Venture Capital and joined Thomvest four years ago.