Earlier this week Texture, led by CEO & co-founder Sanjiv Sanghavi, announced its $7.5m seed round of fundraising with participation from Abstract Ventures, Day One Ventures, Equal Ventures, Lerer Hippeau, and a handful of angels. Dorothy and I feel fortunate to count ourselves among the “handful of angels.” We didn’t invest just because Sanjiv is a close friend - though knowing him for over a decade has given us a lot of insight into his mind and how he operates. We invested for a lot of the typical reasons a VC would - big market, macro shifts, product-founder fit, etc. Here’s a breakdown from an investor’s perspective.
Solving big problems with big potential returns
Venture investments only make sense if they have the chance to make massive returns. That doesn’t mean that companies tackling smaller problems aren’t worthy of investment - they’re just more suitable for a different type of investor. As an asset class, venture capital is very risky - it makes bets on companies that are not proven yet. Since the large majority will not make meaningful returns, the winners have to have the potential to make up for the whole portfolio a few times over. That means every single investment has to have the potential to hit it big - like unicorn big.
VCs and angels may decline to invest because your startup’s potential market size and their investment return doesn’t fit the outcomes they need to see in their portfolio.
Texture is building the data infrastructure for energy networks - becoming a common data collection and sharing platform for every player in the energy grid, no matter the type of energy. There is already a huge gaping problem and a huge market here.
Building for an inevitable future
On a macro level, as a society, we are moving more and more toward complex, interconnected energy sources as we optimize for the right balance of efficiency, sustainability and costs.
Investors can make bets on which type of battery or solar technology is going to become standard for however many years and who is going to produce it. But we feel more excited about the platform that is connecting them and improving data-driven efficiency and capacity for all. No matter the makeup of a local energy network, Texture is bringing value to each player in it. This feels like an inevitable solution and it’s hard to imagine a future where it wouldn’t continue to be valuable.
Unique insight and founder-market fit
A question investors often ask is what is the unique insight this founder has into the problem they are solving? Do they have a unique set of experiences or knowledge that gives them insight into a market that others do not have?
At a first glance, Texture seems like a big departure from what we originally knew Sanjiv from, as a Co-Founder of ClassPass. But since then, he has also played roles as the Chief Product officer at Arcadia, a successful energy data company (Arcadia’s CEO is also an investor in Texture) as well as an investor at Day One Ventures, investing in the energy/climate tech sector. While at Day One, he developed a thesis around this concept and looked for a startup to invest in - but none existed. So he started to build it.
Given he was both a builder and investor in this very market, and has a strong understanding of the landscape, we feel pretty confident that he has a compelling perspective.
A track record of excellence & growth
Sanjiv started his career in finance and made his way into the startup world. He’s had ups and downs, but the common denominator in his career is that he’s been able to demonstrated excellence and resourcefulness in his experience. Some people just have a knack for “figuring it out” and excelling regardless of their starting position.
That relentless drive tends to be the X factor when founders hit the wall and the number and size of problems to solve becomes overwhelming. We know he’s got it.
Being an experienced founder & investor are huge advantages
Undoubtedly, Sanjiv’s track record as a successfully exited founder gives him a big advantage when running his startup and fundraising. Where we find that experience to be the most valuable is his perspective on how to build teams and attract talent; knowing what matters and what doesn’t in the earliest stages. Additionally, as a former investor, he brings a perspective to the fundraising process that is hard to gain if you’ve only sat on one side of the table.
Of course, not every investment is going to check all of these boxes. But for us, this one was a no-brainer. We’re excited and grateful to be part of the Texture journey.
Note: Next week we are hosting a talk between Equal Ventures' Chelsea Zhang and one of their portfolio company founders, Michelle Liao (Co-Founder, DayZero). We'll hear from both their perspectives about how Equal Ventures led the pre-seed investment round of DayZero. RSVP