Strategic Investors: Profiles of investors with strategies to consider.
Sanjit Singh Dang and Ekta Dang, the founders of Santa Clara-based U First Capital, bring innovative technology companies, high-performing mentors and venture capitalists together in their Silicon Valley firm.
Ekta Dang, who serves as the CEO, is a mentor at Google Launchpad and the Center for Entrepreneurial Studies at Stanford Graduate School of Business. She is also an entrepreneur-in-residence at the University of California San Diego. Prior to U First Capital, she served in various leadership roles at Intel, including Intel Capital.
Her husband and co-founder, Sanjit, was a key player at Intel Capital, leading investments in DocuSign, Basic Science and other startups. He serves on Advisory Council of U.N.’s World Artificial Intelligence Organization.
In this interview with Karma Network’s Contributing Editor Michael Moran, they discuss their unique investment approach and the potential of their “venture-capital-as-a-service” model as a more cost-effective way for companies to get into startup investing with their tailored, laser-focused approach.
Michael Moran: What is venture-capital-as-a-service (VCAAS)?
Sanjit Singh Dang: U First Capital provides venture-capital-as-a-service for other companies. We want to be able to provide dedicated access to the companies in their areas of interest.
So if a corporation comes to us and says, “Hey, I am interested in new technologies that bring banking to the unbanked” as an example, then we have access to startup technologies that are addressing these paradigms in that specific area of interest.
And the way we structured it is through a venture capital fund, a single LP venture capital fund. The nominal target is $20 million, and it is created with market standard terms, but it is dedicated to the corporation in their areas of interest. We have years of experience in the corporate venture capital space, so we feel we have a unique proposition to help these corporates.
We also have tentacles in the startup and venture capital community, and hence we have deep access to new technologies that are coming up that are very valuable to these corporations.
We understand that for most corporations it is not easy to just create a new venture capital fund. It (usually) has to get approvals from CFOs, CEO, the board — and that takes six to nine months.
So we created a model for corporate partnership where the corporation would pay us X dollars per year like an innovation consultant, and we will do exactly what we would be doing if there was a fund in place. We bring them access to startups.
In addition to bringing access to startups, we also have deep tentacles with several universities including the University of California,Los Angeles, University of California,Berkeley, and University of California Santa Cruz. Ekta is an entrepreneur-in-residence at University of California San Diego, so we bring all of that access to (talent and startups) to our corporate partners as well.
Michael Moran: Why would a family office or corporation choose a venture-capital-as-a-service model for setting up a fund?
Ekta Dang: Based on their feedback, we are able to bring them a very tailored set of startups and technologies that are of interest to them in terms of going a level deeper. Then we add our diligence process to help them decide where to invest and how to strategically plan the investment while helping them monitor the health of those investments as well.
So instead of just limiting the sourcing options to our core team, we now have a very broad team of academia and industry advisors that help us very quickly come back with what is in their arsenal with regard to those technologies.
Michael Moran: What does U First Capital’s revenue model look like? How are you charging for your services?
Sanjit Singh Dang: Our goal is to eventually create a venture capital fund with each corporation and under that fund, we will try the traditional 2% management fee and 20% carried interest, which is very standard in the venture capital world.
We understand that it takes a few months for a corporation or a family office to create that. That’s why we created this service model where we say, “Hey we will come in as innovation consultants and we will start doing everything like we are a VC arm.” We will charge a consultant fee for providing that service.
Typically we are putting that number at $200,000 per year. That gets the discussion started. And if you look at $200,000 per year and compare it to somebody creating their own team where they will have at least two or five people in Silicon Valley, that’s going to cost a lot more than $200,000 plus the time to hire and ramp up the team.
So if you compare it to that option, $200,000 per year sounds pretty lucrative to most corporations. It’s more a question of whether the corporation or the family office is ready to do this.