Ramneek Gupta, Founder/Managing Partner PruVen Capital

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Transcription

Pemo Ah, welcome Ramneek so good to have you on the podcast today. I really appreciate that you’ve taken the time. I know we first connected when you were at Citi Ventures and you’ve invested in some amazing companies. Do you want to tell me a bit about your new venture firm and what are you looking at to invest in?

Ramneek Gupta Certainly First of all, thank you for the opportunity Pemo and good to reconnect. A little bit about Pruven capital. It’s a firm we founded about a year and a half back on a very unique principle that we call independent yet integrated. So On one hand we have a single LP which is Prudential financial the insurance company and what that allows us to do is have a lot of access to their businesses and functions, understand their roadmaps, their gaps and utilize that insight to identify interesting trends and companies in the startup ecosystem. When we do find them, We leverage their resources as appropriate to do due diligence and most importantly, when we do invest in these companies we work very hard to get them connected to the right places at Prudential to create that mutual win-win you know. Our companies get access to prudential ecosystem and revenue and distribution and opportunities there and prudential gets access to this these great companies or their technologies and capabilities that are important to them and in doing so you know what we’ve done is created this highly integrated model with prudential a large incumbent in the insurance and wealth management and asset management and property and real estate worlds but what we’ve also done at the same time Pemo is to make our structure independent from Prudential. So we are a traditional LP/GP relationship, an independent venture firm that happens to have 1 LP but our ownership of PruVen’s management company and our GP entities resides within this team and that allows us to make our decisions independently and move quickly. And most importantly, not be constrained by any control function type of issues that you tend to encounter when you’re in and around the orbit of a large incumbent? So it’s sort of best of both words that we’ve been able to bring together here at PruVen to get access to the Depth, domain and distribution of a large incumbent but not be constrained by some of the other things that come with that.

Pemo Yes, and I know in Corporate Venture there are a lot more restrictions so it sounds like you’ve got, as you said, the best of both worlds and obviously this is what smart money is all about isn’t it?. It’s about being able to provide the networks and the contacts and the information to the startups that you’re investing in, not just the money. 

Ramneek Gupta That’s exactly right? and our thesis Pemo has been that as the venture world is and the startup ecosystem has graduated from, technology for IT to technology for every vertical you know.

Pemo Yeah.

Ramneek Gupta Entrepreneurs are starting to face a whole different set of challenges and realities right? When you start to innovate and disrupt verticals like financial services, insurance, real estate, agriculture, climate and try to go beyond electrons to atoms.  There are lots of other things that you need to have in addition to just an amazing product and technology right? you need a very different kind of capital structure. You need access to compliance and regulatory know-how that are not a nice to have but a must have in these ecosystems.

Pemo Yes, yeah.

Ramneek Gupta Be able to have credibility with these ecosystems and last but not the least you need to be able to convert all of that into commercial revenue opportunities for yourself. And to do this we believe that as entrepreneurs enter into insurance, financial services, real estate, proptech & healthcare …. These are verticals where having an incumbent as a potential partner can be a big leg up and that’s where our platform at PruVen capital is designed to provide these entrepreneurs with the necessary support as they tackle these highly complex and regulated ecosystems.

Pemo It is fantastic and so what are you seeing and we’ll have to address the elephant in the room of course since the crisis. What interesting things and companies are you seeing to invest in?

Ramneek Gupta Yeah, so in my prior life I was very fortunate to have been part of the fintech revolution; actually got involved in fintech before that was even a word and was in iconic companies like Square, Docusign, Jet.com, Honey, Plaid, Grab.

Pemo Yeah, yeah. So fantastic.

Ramneek Gupta And we saw how these companies disrupted the financial services and the commerce and the retail ecosystem. Our sense was that similar scale of opportunities and very similar paths to disruption and innovation are possible in verticals like insurance and real estate and the like, so we have been very focused on those verticals Pemo. 

Pemo Okay.

Ramneek Gupta If you take insurance for example on the individual and life insurance side of those things, one theme that we’ve been spending a lot of time around is what we call actuarial to actual. Underwriting today is done at the  population level but we think it will evolve to adopt individual level data etc and that is the next big opportunity in the insurance ecosystem and to do so we have to obviously enable seamless, consent driven, Digital access to various kinds of Healthcare data on individuals and that’s something that we are exploring as a particular theme from an investment point of view 

Pemo Yeah.

Ramneek Gupta Similarly if you look at how distribution in the insurance ecosystem is evolving I think it is very comparable to how autonomous vehicles have been going on the journey from level 1 to level five. On level 1 you have just a driver assist systems type of stuff like cruise control and level five is full autonomy in any situation in any weather condition in any location, etc. And I think very similar things are happening in the insurance ecosystem in the way they sell to customers and the way they approach customers and the way they reach out to customers. So L1 in the insurance world to me is human mediated and sold by Advisors, Brokers Etc. Kind of products,  L2 is evolving to be done primarily through digital channels.  L3 is evolving that even further and saying that you could have some of these things embedded into a partner User experience. Not your own and therefore the UI UX starts to disappear and you are leveraging third party ecosystems to do both the distribution and the closing of the sale etc. L4  is what we call ambient insurance which is sort of switches on/off on its own like a utility by leveraging various conditions And data sources to verify those conditions very much like how the autonomous vehicle ecosystem is evolving from l1 to l five. Pulling the ecosystem from the L1 side of the world where a lot of the world is today to the L5 side of the world. So that’s another theme that we’ve been spending a lot of time around and I can talk to a number of similar themes in real estate prop tech or healthcare. Or financial services and asset management etc that we have been very focused on but hopefully that gives you an idea of where we are focused.

Pemo Yes, it’s a good parallel actually, so thank you for that. What do you think has happened with the crisis? Obviously there’s been massive changes in the ecosystem and obviously globally. What do you think are the opportunities that have come out of that because I’ve spoken to a few investors recently and when the crisis first happened I did a few podcasts then. But now they’ve actually had more experience of what actually manifested and a lot of them say investment is just booming. Basically so what’s your perspective of the opportunities that have come out of this crisis for startups?

Ramneek Gupta Absolutely Pemo, so like with most things there are positive and negative ramifications. On the positive side I think a few things that have definitely been notable. One is that for the entire world it has been a giant experiment in digitization right? The entire world in a matter of months or a few quarters has embraced digital as channels. As they were the only channels that were working fully through the conditions or the realities that we all went through during the lockdown

Pemo Yes.

Ramneek Gupta You know, a lot of people talk about Covid as the new and only Chief Digital Officer that actually has been successful!

Pemo Yes, yes.

Ramneek Gupta Ah, 5 or 6 years you know of adoption and the curve has been achieved in a single year or in the matter of quarters right? And that is going to have tremendous benefits for the tech and the tech enabled and the tech driven ecosystems across.

Pemo Yeah, yeah, yeah.

Ramneek Gupta All of these verticals. So that part has been very very positive. The second big positive thing in my mind has been, there was this very sort of a parochial local kind of view that the venture ecosystem had on funding.  Ah, great entrepreneurs and innovators right? So you always had to be in Silicon Valley if you wanted to be part or you had to come to live in Silicon Valley etc etc right and that I think has changed dramatically through this.

Pemo Yeah. So right.

Ramneek Gupta Just like all the entire world has gone through tremendous change in a matter of few quarters, The venture ecosystem has gone through some tremendous changes too. No longer are people sort of holding on to those beliefs that you have to be in their neighborhood. You have to be in their physical proximity etc for them to partner with you and fund you and invest in you and that has opened up venture funding. It has also become truly global in my mind. So earlier Venture was going global but in a local fashion, which is that investors in the US were focusing on opportunities in the US and they would have an offshoot or a team in India and they would do the India investments. 

Pemo Yes, yeah.

Ramneek Gupta But now lots of investors in the US are investing in Latam, lots of investors from Asia are investing in US startups etc so venture has truly become global and shifting location is no longer as big a determinant of where dollars are coming from or where they’re going. Which I think is a very very big net positive 

Pemo Yeah.

Ramneek Gupta Very rapidly throughout the crisis I think those are on the positive side. Some challenges, because Pemo as you know there are always, whenever massive changes are occurring and you see a thing that’s working almost always is a lot more capital rushes in than can be absorbed.

Pemo Okay.

Ramneek Gupta And that impacts the venture ecosystem through the amounts of dollars that are coming in, the impact that’s having on valuation and the number of companies that are getting funded.

Pemo Right, right, right.

Ramneek Gupta Efficiency of the ecosystem is going to go down a little bit as more and more dollars are attracted towards tech because it is one of the only few things that seem to be working through the pandemic. So to me that has been a little bit of a downside to all of this. but all in all I think the tech ecosystem and the venture ecosystem has benefited tremendously from this big dislocation.

Pemo So I know when I first came to Silicon Valley from Europe in 2010, it was a cottage industry – venture capital. And in the time I’ve been here that’s definitely changed. But yeah as you said the Covid crisis is a real equalizer and I only celebrate that because I’ve lived in quite a few countries and worked in quite a few countries and I just see that startups can happen anywhere. Everyone should have the opportunity to bring innovation to the world. So I think that’s a really good thing to celebrate.

Ramneek Gupta On that point as they say ability is distributed equally but opportunity is not and I think with the globalization of venture, opportunity is starting to get distributed much more!

Pemo Yes.

Ramneek Gupta Equally more than it was in the past and I think that’s going to be a very big positive for all of us.

Pemo Yes, yes. Yes, definitely and just to wind up, how do you feel again about the other elephant in the room? How do you feel about the global shipping crisis? What’s your perspective or wisdom that you could contribute? I know that people are now facing the Holiday season and getting a bit worried about not being able to get things on their shelves. 

Ramneek Gupta But I think again with something like that you know there are positives and there are challenges.  It is I mean I’ll give you a very direct example, we are in the process of building out our offices, physical offices and in Palo Alto and the timelines for that buildout have gotten pushed out continuously because of the supply chain challenges 

Pemo Okay, so. Yeah, yeah.

Ramneek Gupta But you see the impact of the supply chain challenges on the positive side as well: I don’t think supply chain was even on anybody’s mind before?  Right? So on the positive side I think it has brought all of this to the forefront. You know there is a lot of investment and innovation going into this world.

Pemo Yeah, so I would agree with that?

Ramneek Gupta You see this in the Semiconductor supply chain. There’s a lot of positive energy around building out capacity a lot closer onshore and making it more distributed than the Prior model where almost seventy percent of the world’s semiconductors are built by TSMC. Towards Just in Case versus Just in Time kind of supply chain. So mostly the driving mantra in the past was always Just in Time efficient supply chains. But those things as you know left us sort of vulnerable to the situation that we are all dealing with right now. Therefore there is a lot of rethinking going on the Just in Case kind of supply chains which is that you obviously optimize for the ninety nine percent case but you also have resilience built in for that 1 percent.

Pemo Yeah, yeah.

Ramneek Gupta Or more probability situation right? So that’s another big thing and last but not the least most of the supply chain today has been the evolution has been more in hardware than in software and by that I mean. You know our containers have gotten bigger, our ships moving those containers have gotten bigger, etc, etc. But if you had to figure out where exactly is your particular sort of consignment or or or something that you shipped from China. It’s very hard until once it’s left China and once just before it shows up in Long Beach. It’s very hard to know where it is, what they can do, how much longer it will be etc etc. So I think there is a lot of change coming.

Pemo Yes, yeah, yeah.

Ramneek Gupta To create that software and intelligence layer on top of this hardware based supply chain and that will allow a whole different level of digitization and visibility into the supply chain.  Entrepreneurs never thought of the supply chain as an opportunity area but a lot of that is happening now which is again, as I said, a good thing for us in the long run.

Pemo Yeah, yeah, yeah, yeah, yes, definitely I guess when there’s some sort of stress or pressure on well in this case, globally. Ah, innovation just gets a life of its own and it is really exciting to be a part of that so we always need to remember no matter how much suffering we’re all going through at certain times that there’s always like you said that other side to the sword. Which can be very positive and of course innovation always comes front and center then! Ramneek, its absolutely delightful to talk to you today. I hope you can come back sometime down the line and hope your officers in Palo Alto get built. Ah, my favorite location is Palo Alto! So all the best with everything. Thank you so much.

Ramneek Gupta Thank you Pemo really enjoyed the conversation and appreciate the opportunity.

Pemo Thank you.