Shruti Gandhi wants to dispel a misconception in early stage fundraising: Every founder doesn’t need their early career investors to be a shoulder to them, they just need their investor to understand their business in a way that others don’t. Most of the entrepreneurs in her portfolio for Array Ventures, a fund she set up five years ago to back businesses, are regular founders with nearly a decade of experience in the field.
“The things we invest in require a lot of industry experience and customer experience,” she said. “And you don’t just figure that out overnight as a college dropout – the kind of stuff we invest in isn’t something you dream of after a year of work experience.” Franchise in mind, Gandhi just landed tens of millions to invest in what she calls “the hard corporate space.”
Array Ventures’ new $56.1 million fund, which closed last week, plans to invest in 30 startups working on core enterprise technology. Since its first fund, Array Ventures has increased its check size from $150,000 to now $1.2 million to $1.5 million. Gandhi says the firm will now target a 15% stake in each of its deals, up from 10% from its second fund.
“While most companies claim to have invested in enterprise technology, they are primarily focused on bottom-up SaaS businesses, especially at the first-verification stage,” Gandhi said. “Very few companies are actually technical enough to invest in core enterprise technology for the new era of business.” That’s not to say Array doesn’t support vertical SaaS products (it does), but it does look for companies with “highly differentiated” fundamentals.
But what does that really mean? Gandhi puts it this way: Everything you see on the front end today needs stronger supporting technology that can handle Big Data, create [users] more secure and migrate to the cloud. Array thus invests in startups working beyond the application layer, focusing on security, data and cloud infrastructure. Think Snowflake, Okta, Twilio and Databricks, not Dropbox or Salesforce.
This new tech stack has resulted in Array pumping money into startups working on issues like automated threat detection and response, data orchestration, and licensed media discovery.
The impact of Gandhi’s orientation hits differently given that only 1.9% of venture capital investments go to female business founders, according to a Work-Bench report. More than a third of Array’s portfolio is led by female founders. The investor says her portfolio provides a contrast to some of the biases that women in tech often receive.
“When a woman starts a business, people assume she’s going to start a consumer business – that’s the bias we have in the market,” she said. “And the same goes for me, who manages an enterprise fund.”
While Gandhi’s less bustling niche may mean she can’t catch the deal flow of today’s top accelerators, the hard corporate community seems to be well connected. More than half of the founders in his portfolio have invested in all of his funds, including Peter Fishman of MozartData, Noam Ben-Zvi of Placer.ai, Analisa Goodin of Catch&Release, and Madhu Mathihalli and Mohan Gummalam of Hermis.
Other Array Ventures sponsors include Dan Wright of Data Robot, Elias Torres of Drift, Jaynti Kanani of Polygon, Vanderbilt University, MPowered Capital and NSV Wolf.