Ramneek Gupta is the founder of PruVen Capital, a Palo Alto-based multi-stage venture capital firm that supports leading entrepreneurs from garage to IPO. Ramneek is keen on achieving both strategic and financial returns for the startups in which he invests. He shares relatable insights for entrepreneurial success based on his experience investing in the fintech, insurtech, health tech, real estate tech, and enterprise IT areas.
Ramneek Gupta is the founder of PruVen Capital, a Palo Alto-based multi-stage venture capital firm that supports leading entrepreneurs from garage to IPO. Ramneek is keen on achieving both strategic and financial returns for the startups in which he invests. He shares relatable insights for entrepreneurial success based on his experience investing in the fintech, insurtech, health tech, real estate tech, and enterprise IT areas.
Highlights
[1:24] Why strategic and financial returns need to be synergistic
[9:45] Three questions I consider when evaluating an opportunity
[14:21] Investment decision making: The PruVen way
[20:05] What’s the line between early-stage and late-stage venture? Does it matter anymore?
Ramneek Gupta: [00:00:00] The first and the most important thing for me is trying to get a sense for what kind of opportunity exists here is it worth going into obviously, and that gives me the most energy and most excitement towards diving into a situation.
Gopi Rangan: You are listening to the sure shot entrepreneur. A podcast for founders with ambitious ideas, venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to the sure shot entrepreneur today's guest is Romney Gupta. The founder of proven capital proven capital is a platform created in partnership with Prudential.
To invest in transformational startups in FinTech, InsureTech, [00:01:00] health tech, real estate technologies, and enterprise it Remnick. Welcome to the show shot entrepreneur.
Ramneek Gupta: Great to be here and thank you for this.
Gopi Rangan: Let's start with you. Tell me about yourself, especially proven capital. How did you decide to start.
What's your mission for the firm?
Ramneek Gupta: So the context for proven capital gets clearer. If I shared a little bit about what I did immediately prior to that, which was, I was the co-founder and co lead for the venture investing efforts at city group for about a decade. During that period of time, we've built the team.
We've built the portfolio to about 120 odd companies. And most importantly, we were able to prove to ourselves and road at scale. That strategic and financial returns do not need to be, or they can actually be highly symbiotic that was proven on by some of the investments that I was able to drive on the world during my tenure there companies like square DocuSign's [00:02:00] dark, honey.
Data robot Feedzai and a number of others which created tremendous financial returns from a strategic perspective, a super majority of our portfolio done a POC pilot built out this platform at Citi ventures. Well-regarded and created tremendous outcomes on strategic exponentially. The only thing I could not achieve there was continue to evolve that structure of that platform to work more independence towards becoming a fund.
That was. Driver for the creation of proven capital, which is on one hand, it is able to leverage the depth domain distribution of a large incumbent who is running only LP, which is Prudential selection to create mutual value for them as well as our portfolio companies. But on the other hand structure, to me, it is a completely independent entity set up separately.
Potentially as I've gone in on the LT, but does not have [00:03:00] any ownership or economics. And I've mentioned confused GC entity, which is owned by the team. And that allows us that separation that ability to make decisions rapidly and independently and move quickly, just like a traditional venture firm. In many ways, we've been able to preserve the ability to live.
A large incumbent for all its strengths while improving upon through structural improvements here, in order to create this independence that tends to limit efforts in a nutshell is proven. Oh, this is great.
Gopi Rangan: The birth of a new VC firm is always a special moment and you are a very seasoned venture capital investor.
And it's great to see that there is this new style of a VC firm formed when partnerships with a large incumbent, what is your focus at proven? What are the topics that you get excited about? I'm particularly interested in what kind of companies you would like to.
Ramneek Gupta: Absolutely one key [00:04:00] thing for us is our ability to add value to our entrepreneurs. Therefore, we focus on verticals and areas where we can do so by leveraging the depth domain distribution of our LP. From that perspective, we have organized. Our focus and our investments interests into five big words that goes in one horizontal, the five big work because insurance and InsureTech for obvious reasons, given who Prudential is financial services and FinTech as an adjacency to insurance for distribution product development, as well as the domain that me and our team have in that area.
Third, big area of focus for us is asset management, Prudential. One of the largest asset management arms in the world called Prudential global investment management feature. That's just about 1.6, 5 trillion for third parties and therefore anything that's happening in the asset management board is of interest to us.
The fourth [00:05:00] big area of focus for us is digital health. Both from a delivery of care perspective, as well as access to digital data and exchange. And the last focus for us is real estate. And that's because our asset manager, Tom is one of the top three global investors and owners of real estate, and therefore very focused on innovations that are happening.
Commercial real estate. Multi-family single family logistics where houses, ag farms, et cetera, et cetera. So those are the five words. The horizontal is enterprise IP technologies around data analytics, machine learning, cloud DevOps, and for security automation, they should customer experience things that go into the infrastructure of a large global enterprise like Prudential.
Those are the focus areas that we have. Zeroed in on, based on our ability to tap into the expertise of our incumbents, launched with a bang with many new investments.
Gopi Rangan: Can you give an example of one of your investments? How did you meet the entrepreneur? How was [00:06:00] the first meeting? What questions did you ask them? What got you excited about this?
Ramneek Gupta: Certainly we have announced five and another four in various stages of closing or being announced nine completed and working on number 10 as starting it off to a reasonable start. If you look at, from a geographic lens, one of them is in Indonesia. One of them we were working on in the time and the rest are in the U S so it's also geographically.
Divorce. The things that we've been most excited about with most at these companies, as I mentioned, is our ability to be able to change the trajectory of these companies. From that perspective, one of the companies that we invested in as a company called very interesting concept where. Founders have this TCIs then the origination of the thesis is the following on one hand, close to $160 billion is spent on customer acquisition costs by the insurance industry [00:07:00] on a yearly basis.
And a lot of it obviously goes to the Googles Facebooks. And on the other hand, you have a significant percentage of the U S population being one event away from bankruptcy B. Then maybe that event there's a hospitalization, some illness or the car breaking down or whatever the case may be when you sort of think about the two as the founder of a Libra.
Why can't you take some of this customer acquisition dollars and targeted towards this ecosystem of folks and provide them with the premium coverage that is at the base level free and prevents them from getting into the situation. And to cause long-term harm based on that, create a better user experience, create a way for watching the engagement that these customers have with the free product and use that towards cross selling and upselling other insurance products down the line.
Very innovative dollar benefits store approach. [00:08:00] By what would you need for almost a $1 a week type of construct on one hand that you have all this marketing spend. On the other hand, you have now majority of the population being one minor event away from bankruptcy and the bridging those two by saying let's use some of the customer acquisition dollars to provide some base level of coverage that these large populations.
Being up in those situations with the engagement that we get through the free product, let us try and figure out situations where we can provide additional coverage across the, that upsell that and make it really simple to access through this dollar benefits store concept. That's an early stage investment.
But it describes the things that we are trying to do through this focus. The company is trying to change the group benefits ecosystem. They're also at the same time, creating a lot of good in a society, which is a worthy goal to go after. That's just one of the five or six that we've announced. [00:09:00]
Gopi Rangan: Yeah, he's an incredible entrepreneur. Indeed. I met him two years, three years ago when he was in the very early stages of launching a zebra, the company provides much needed solution to simplify and disarm people. While they're thinking about financial planning, it's a great service to provide to the world.
I'm curious, how long does it take for you to go from the first conversation to the point where you say, okay, let's make an investment.
Ramneek Gupta: It depends a lot on the investor and the opportunity. It's hard to draw generalizations, but in this particular situation, I would say, or in the case of me as an investor, I feel like I gravitate towards the first sprints, those types of approaches.
I try to form a view of that. The opportunity is how big can this company be? If things go the way we want them to go, et cetera, as the first. And the most important thing for me is trying to get a [00:10:00] sense for what kind of opportunity exists here is it worth going into obviously, and that gives me the most energy and most excitement towards diving into a situation.
If the opportunity is large, if the opportunity exists for this company to be. Significant player as a platform, as an enabler in that ecosystem, those things get me quite excited. Is there an opportunity to create a new market or significantly expand an existing market, et cetera. And once you have comfort on that or conviction on that, you start.
Peel into the next layer, which is 10, this group execute towards that opportunity. That's the immediate next set of things I try to think about and try to get some comfort around and do my due diligence around, which is oftentimes trying to understand the background of the founders, their ability. Build solutions that ability to react to the changing conditions and once their solutions that [00:11:00] are exposed to those conditions and that ability to take feedback and continue to move quickly, those sort of things you can either try and figure it out from a rear view mirror perspective.
Restaurants calls, et cetera, as well as do figure that out by spending time with those entrepreneurs and watching them motivated. Now, sometimes that's most sense these days, unfortunately, that may or may not be possible, but to the extent possible, I'd like to spend time, see how they. Progressing on their goals, meet folks earlier than when they are looking to raise capital, understand what goals they've set for themselves and see how they deliver towards those goals.
That's a very critical piece of diligence that helps you get comfortable with an opportunity. And once you have a sense. There is a great opportunity here. There is a team that is uniquely situated to execute towards that opportunity. Then you try and figure out all of the rest of the things is the deal structure amenable [00:12:00] is the valuation reasonable.
Do I have enough ownership, et cetera that I need to get, but those things come much later in my mind. I wanted to say the first thing that drives me is the opportunity. And the next is, can this team execute work?
Gopi Rangan: The way you described it. I can see that. The first thing is the idea. And the second thing is the team.
And the third thing is the deal dynamics of how practical is it for you? The opportunity helps you understand what is the problem to be solved. What's the opportunity in the market. How big is this? Once you form that conviction, then you look at whether this team has the right team. Do they need to add a few more people, any specific type of skills to make it possible for them to execute?
How fast can they grow? Those kinds of questions? And then you start looking at, okay, now let's look at the term sheet evaluation, all the other tangible details. It's a great way of you laid out these details and Remnick, feel free to give other examples of startups as well. [00:13:00] Roughly. How many companies do you meet in a year and how many companies do you end up in masks?
Ramneek Gupta: I would say a goal is to in less than between 10 to 15 new companies a year to get to that as a team, we would meet close to about 1500 to 2000 companies. And I'm not saying in each one of those companies that we've met, we've spent months. So diligence effort, et cetera. I would say about between 10 to 15% of those, you go pretty deep into, and you end up with 10 or 15 investments at about 1% or thereabouts where you end up at.
And I've seen that to be holding across my career and across various platforms that I've been at feed cycle reasoning. Set of metrics to share, because I feel comfortable given the history that I've had in it.
Gopi Rangan: When I look at your team, it's a small team. How do you collaborate? And [00:14:00] what can entrepreneurs do to prepare before they come to meet someone from proven?
And how do you make decisions together? I see that you're the founder of the managing partner, but you also have a few other partners and principals and senior associates and associates.
Ramneek Gupta: How do you - In terms of the collaboration model - the key thing to think about or know about as we are relatively small team and a young farm, majority of the group has a voice in the ultimate decision.
I would say everyone has a voice and then obviously the group, but the goal within our firm is for everyone to have a very strong opinion. And they're small enough that we can actually. Go down the table. We're actually physically in the future and try and understand what are the key areas you've led excited about?
What are the questions fairly collaborative from that perspective? And the reason for that right now is simply because we are a very smart team. I'm sure [00:15:00] when the scale of the suns and the number of people around the table goes up, those things become harder. But for now, That's the model we are tapping into just to be able to get as many diverse perspectives and as many ways to look at a particular opportunity as possible.
Gopi Rangan:
What happens if one person likes a startup, another person doesn't.
Ramneek Gupta: Which is almost always the situation you go. One of two ways. One thing that we try and do is try to understand why somebody is uncomfortable and the goal is to try and figure out how to answer those questions and see if they can get those folks comfortable.
The second thing is not everyone needs to be on board to make an investment. The lowest certain number one can always make an investment and beyond a certain dollar amount you need not the majority out of the three partners you need only two partners. Sign up to the extent possible. Our goal is to make sure we're able [00:16:00] to and respond to situations where somebody might have the conviction, but the rest of the group is not there yet, which is okay.
They can still move forward because oftentimes as they say, the greatest returns come from these country situations. Thing that we try and do is make sure the process is built up in such a way that these teams are going around, trying to understand what the challenges are, what the issues are that others are foreseeing and trying to address those upfront because that's valuable areas to look into, figure out due diligence around those areas, et cetera, et cetera.
We think about it from both perspectives, try and win people over, try and address the questions and issues they have. But at the end of the day, if you feel very strong conviction, and we also have mechanisms for enabling that too, this is very interesting.
Gopi Rangan: Venture capital is about finding these odd balls that other people do not see.
You have to have that conviction in something that is unproven. It's hard to [00:17:00] get a smart group of smart people to agree on, on that topic. And as a consensus that you must have to take some, no judgment call on it's okay.
Ramneek Gupta: Exactly. And those scenarios when I'm looking for my team is, or at least the dev team is that conviction that passion for that opportunity, you might not agree with the situation per se, because you might not have experience in it.
You might not have the depth or you simply do not see it the way the other person is seeing, but you certainly can get a pretty strong sense for the conviction of your team, of all your partners on the deal team for that situation in those scenarios. Fall back to that second line of defense, where if I don't see that strong conviction and passion on the team, of course we won't let that go through, but I might not see it completely.
But if I feel that passion and that conviction, we won't stand in the way.
Gopi Rangan: You've been in venture capital for many years. A lot of things have [00:18:00] changed. Things are evolving, some things for the good, some things for not so good. What do you think needs to happen for venture capital as an industry together?
Ramneek Gupta:
This will take us the rest of the podcast if we dive right into it, but let me try it a high level. One thing that is from a very selfish perspective, and that also happens to be perfectly aligned with the product. Change that needs to happen in the industry is diversity. I see that in the broadest sense of the word, age and gender and sure.
Backgrounds and experiences in countries of origin, et cetera, et cetera. The, the broader, the diversity is the better decision-making. When it comes to venture decisions, it may or may not hold for all types of activities and all types of situations. Some places command and control works better, but certainly in the venture ecosystem, [00:19:00] diversity is very partially because you, by definition, do not know everything or cannot profess to see every angle into a particular situation that you're trying to evaluate.
If there are more eyes that are attached to a brain that has a very different set of experiences because of who they are, your ability to evaluate these things and your ability to make the right calls and not miss out on things goes up dramatically in venture. It's a signal to noise ratio thing, reduce the noise by triangulation.
That is the opportunity that diversity. Gives you some very social reasons in addition to it being good in gender and for the industry and focused on it, not him. For example, the, as one of the three partners who is women, we have very different backgrounds from, does not look like the, the old school instead of venture firms that one might have seen online.
Right. Expect typically in the past, that is. Vector of change. That's a very necessary [00:20:00] one and a very important one that gives well underway. The other is that the lines that used to hold between different types of investors who focused and specialized in different classes do not hold today for very many reasons.
So there were people who specialize in seed and they are somewhat CDs. A and B. The growth stage investors. And then there was the hybrid crossovers and each ones had a reasonable, there was some mixing at the edges, but by and large, those, those lines are very clearly defined. I don't think any of that is true anymore today.
I'm not sure if that's a good or a bad thing in the long-term, but definitely something that. Firms need to evolve to or address actively. And you see different approaches. People are taking one set of approaches is for people to down even further and be really, really deep in the areas that they are in and try to hold to those lines.
The other approaches. These lines don't matter then. So we will [00:21:00] be cross stage, cross sector, et cetera, et cetera, and verified first run. Very clear answer on where you want to go or where you need to be heading the second change. I'm not sure what is the right approach if there is even one right approach, but certainly a big change coming where the old lines don't call it.
Gopi Rangan: Yeah, diversity is certainly an issue in the industry. We need more diversity for sure. And I hope more opportunities like proven come about in the industry where we have different types of partners with different skillsets and backgrounds can be in decision-making roles. And the other part you mentioned on what is venture is actually becoming fuzzy.
What is early stage venture who makes later stage investments? The way the industry is evolving? There is no clear demarcation on who is who, so we'll see how the market evolves in the next few years. I want to switch to the next part of this conversation and ask you about a nonprofit organization, your community involvement.
Is there [00:22:00] an organization you are passionate about?
Ramneek Gupta: I have some passion around figuring out a way, and I have not figured out the right way to do this yet, but we can add a way to leverage the immense amount of experience.
Talent capability that exists in the elderly population, the retired population, and finding a way to harness that towards education and helping the kids who are struggling, getting them, coaching, getting them folks who can help them through their work and through their learning processes. I feel like there is a very strong opportunity there.
I haven't. Right model to do so, but that is something that I would be very passionate about. And I've continuously been looking for that with zoo and with the fact that most of these geographical boundaries and location constraints that we used to have in making those matches work, that there is enough supply and [00:23:00] demand in the same region.
Those things do not need to be. Post the pandemic or through the pandemic, that's a very positive push towards enabling this future to happen. And I see that in my own family, my parents that are tired, highly, highly educated, intellectually curious, and highly capable folks who pretty much not leveraging or doing much with their capabilities anymore.
Now that they're retired. How amazing would that be? Their experience and knowledge and depth could be useful. Towards helping folks who need that and who are coming through a deficit on that front by enabling technology to be that platform, always that connection can be made.
Gopi Rangan: I see the opportunity for an entrepreneurial endeavor coming out of your thoughts here.
As we've seen many situations, these personal experiences and observations become very good foundations for new companies to be started. I think.
Ramneek Gupta: Excellent. And you are one of the audience. Find [00:24:00] something interesting there. Please think of me. I'd love to contribute and be a part of it in any way I can.
Oh, this is great.
Gopi Rangan: I'm really excited for proven. I know you are on the early days of this business venture firms take decades to see the success story. I'm very excited to see how you have launched successfully with the first fund. Good luck in your future. For building a lasting farm, and I'm very excited to share your nuggets of wisdom with the world.
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