Cervin Ventures, under the direction of Preetish Nijhawan and Neeraj Gupta, is announcing its latest $56 million fund. Built on the success of previous angel and micro-venture portfolios, Cervin is targeting seed-stage startups across the enterprise stack — running the full gamut of infrastructure, data and software.
Both Nijhawan and Gupta come from operational roles. Preetish Nijhawan helped start the now-public Akamai Technologies that specializes in cloud services. His partner, Neeraj Gupta, founded and ran Cymbal Corporation to exit before joining the executive team at the acquiring Patni, aka IGATE Corporation, an enterprise services company now run under Capgemini.
Every VC firm aims to differentiate itself by adding value to its portfolio companies; Cervin is no different. But where the firm really stands out is in its ability to appreciate large exits without fetishizing the “home run.” In non-VC speak, this means that, while Cervin would certainly love 10X+ exits from its portfolio, it’s willing to meaningfully support companies that wind up a bit shy of those metrics.
“There are many ways to skin this cat,” explains Nijhawan. “In the traditional VC model there’s a pyramid, lots of failures and then a few massive outcomes that account for most of the return. Instead we just have a diamond, lots of 3-5X companies and a few 10X.”
This might send red flags to seasoned investors that abide by 10X as a form of religion, but the model can work with the right strategy. A 3X return on an investment for a billion-dollar fund fails to move the needle and could easily be categorized as a failure, but with a $50-$100 million fund, the economics are a bit more forgiving.
In their previous funds, Nijhawan and Gupta invested in companies like Zephyr, a solution for test management, and SnapLogic, a tool to help enterprises connect cloud enterprise apps. Both of these companies have gone on to raise significant follow-on capital.
Moving forward, the firm is cautious about hype in VR and AI. There won’t be very many platform winners in virtual reality, and most of the money will be made from content. They further argue that artificial intelligence should be seen as a necessary part of every service, and the right question to ask AI founders is “what else do you do?”
As Cervin Ventures starts making more investments, Nijhawan recommends founders follow the traditional paradigm and get a warm intro from portfolio executives and friends of the firm. Of course, he was sure to elaborate that his firm is “young and hungry” and is willing to look at everything that comes its way.
Featured Image: Patrick George/Getty Images