Sajan Pillai, founder of Season Two Ventures, a $100 million venture-capital fund based in India and California, is not searching for the next unicorn, which is a privately held start-up company valued at over $1 billion.
Instead, his fund’s objective is to identify and invest in leading edge start-up companies, help them grow over a three-year period to a valuation of about $150 million and sell them to strategic or financial buyers.
It seems simple, but the devil can be found in the details. One of Mr. Pillai’s advantages is his previous career as a successful entrepreneur who founded and built UST Global, a technology solutions provider to Forbes 500 companies, into an international powerhouse.
After retiring from his longtime position as CEO of UST Global, which is based in Aliso Viejo, California, Mr. Pillai decided to leverage his experience to help startups succeed.
Q: There are thousands of VC firms, why did you decide to launch Season Two Ventures?
A: While it’s true the VC world is composed of many firms, we have identified an underserved segment and designed a different method for improving the rate of success. Our competitive advantages include a decided focus on business-to-business companies in India. Despite the economic development of the country, it remains underserviced by venture capital. There are literally millions of budding entrepreneurs with innovative B-to-B technology solutions, but who lack access to international customers.
Q: So, investors should view Season Two Ventures as a pure play on India’s economy?
A: Well, at least a segment of India’s business economy. For investors it is important to understand that Indian companies have a considerably lower cost structure than Western companies. A lower operating cost structure provides for huge operational leverage, which translates into a massive financial advantage.
Q: Are there specific niches within the business-to-business sector where the fund is focused?
A: Season Two Ventures is laser-focused on three primary verticals where we see new technology solutions providing large and international companies with business operating efficiencies. These sectors are banking and financial services, healthcare and health tech and supply chain management for the retail industry.
Q: Why the name Season Two Ventures?
Before launching the VC fund, I had planned to have my family office act as the funding platform for the investment in Indian B-to-B startups. But I soon realized entrepreneurs didn’t understand the family-office model. They are more familiar with venture capital firms. But my family office has provided about 20% of the total funds raised, so our interests are completely aligned with the fund’s limited partners. As for the name, we are seeking companies on the leading edge of technology innovation with a differentiated solution. Season Two seemed like an apt metaphor to express this idea.
Q: What experiences from your UST Global days are you drawing upon to help the portfolio companies in Season Two Ventures?
A: I grew up in the state of Kerala, the southern-most part of India. It’s similar to Hawaii only the vegetation is even more lush. Upon completing my education in computer science, I left India to join MCI Telecommunications, and later returned to India and founded UST Global, providing global companies with digital technology solutions to improve operating efficiencies. But the idea of UST Global started in a garage, literally! Later, we moved to California. The business lessons and experiences I have brought to the start-up companies in which Season Two invests include a decided belief in constantly innovating your product set, maintaining a low-cost operating structure, targeting global companies where you can sell more product to fewer customers and providing top-class customer service. Those are the building blocks of business success.
Q: How do start-up companies in India gain access to global business customers?
A: We expanded Season Two’s arsenal with McLaren Strategic Ventures, a built-in advisory firm to help our portfolio companies scale through targeted introductions to global enterprises. McLaren also helps to multiply the inherent value of these companies by employing top management consulting talent with backgrounds at leading firms such as PwC and McKinsey, and technology companies like Microsoft
. We believe we can industrialize any start-up’s business by bringing to the equation a global distribution network capable of assisting companies to forge new business relationships.
Q: How many companies are currently in the fund’s portfolio?
A: Currently, there are six, but the fund will eventually include between 20 and 25 startups, with an average investment of $1 million to $3 million each, and on the high end we will be making investments of $5 million to $6 million. We believe we can geometrically amplify the valuation of these portfolio companies, with an occasional $500 million success story, but more typically we’re seeking to achieve a $100 million to $150 million valuation.
Q: Tell me about one of the six business-to-business companies comprising the portfolio.
A: There is a unifying theme connecting all of our portfolio companies. Each brings a high degree of applied mathematics to the product or service innovation. Ambee, for instance, is harnessing data and analytics to map, at a very localized level, air quality. This will be accomplished globally. There is a high correlation between air quality and illness, especially respiratory health. According to the data, a 10% increase in air pollution causes roughly a 20% increase in the incidence of cancer. Just imagine the applications of this technology. If you’re buying a home, for instance, don’t you want to know the level of air quality?
Q: Tell me about Uvik Technologies?
A: Uvik Technologies has developed an app-based point-of-sale (POS) solution requiring no new hardware terminal. The app is simply installed on smartphones, which becomes the POS device to accept card payments, providing ease of use and saving the merchant from investing in terminal hardware. Before taking this disruptive innovation on the world stage, we are conducting massive testing in India where we quickly obtain large volumes of data and then finetune the technology, if required. That is an added benefit to being in India.
Q: What is Warehouse Now?
A: Warehouse Now is the Airbnb of warehousing. The company connects demand and supply for sharing warehousing capacity and price negotiates with warehouse owners for available storage space. The valuation on Warehouse Now increased considerably due to the approaching need for Covid-19 vaccine storage, particularly cold storage.
Q: What does HiLabs do?
A: HiLabs provides artificial intelligence and machine learning solutions to correct data errors in healthcare records. By mitigating data-quality issues, health insurance carriers, for instance, are better able to ensure policy payments are accurate.
Q: How about Ozone, Sajan?
A: Ozone is developing a private data marketplace for consumers to control and monetize personal internet data. It’s a freemium model, meaning it provides free access to basic features of the software service, then charges for upgrades to the introductory package. In return, businesses gain access to subsections of customer data, offering enterprises high conversion marketing opportunities.
Q: And lastly, how about Cleareye?
A: Cleareye.ai simplifies banking by leveraging artificial intelligence to deliver exceptional customer service to help bring banking to people everywhere.
Q: I’m interested in checking back to see how these companies perform, Sajan. Let’s remain in touch. Thank you.