Ajay Agarwal just got a billion new reasons to be excited about investing in startups.
Bain Capital Ventures, the investment arm of Bain Capital whose investments include DocuSign, SurveyMonkey and Rent the Runway, last month raised $1 billion to put into early- and growth-stage startups, and now has $4.9 billion in assets under management. Other high-profile companies that were in the firm’s portfolio at one time or another include LinkedIn and Jet.com.
Agarwal, one of the firm’s managing directors in the Bay Area, invests in companies focused on the cloud, artificial intelligence and autonomous systems.
The Mercury News chatted with Agarwal, who spends most of his time at the firm’s San Francisco office about startups, Bain’s approach to funding and what’s hot and what’s not. This interview has been edited for length and clarity.
Q: What companies are you most excited about? What are they doing?
A: You’re seeing companies in every single industry adopt the cloud. It’s really setting the stage and foundation for the next decade of opportunity. And it really starts with AI. There’s access to so much data. The power of machine learning — it can ingest data and gain insights.
One example is FourKites. Trucks of any kind — tractor trailer, delivery vehicle — can have a GPS sensor that allows for tracking where they are. The company sells software to large shippers that can integrate into internal systems. They know exactly which inventory is in which trucks, and where those trucks are. They can predict if a truck is going to be late. That’s a great example of an old-school industry getting transformed by AI.
Elsewhere, AI can look at which medical procedures are actually driving outcomes, and it’s driving a set of changes in the healthcare system. The cloud, plus machine learning, are transforming the economy.
Q: You invest in providers of autonomous systems. Can you talk a little bit more about that?
A: We were the first institutional investor in Kiva Systems, which was bought by Amazon. The beauty of the Kiva system was that it eliminated humans having to walk up and down the aisles to pick the items in a fulfillment center. That basic concept is how we’re approaching autonomy going forward. Machines will do parts of the job that are monotonous, but still rely on humans for some aspects. Giving lower-level tasks to machines only increases the value of human capabilities.
Q: You’ve been with Bain since 2003. What’s different now in terms of your approach to funding?
A: We now have a national footprint. We opened our first West Coast office seven years ago, now half of our team is on the West Coast and 50 percent of our investments are
is in California. We also launched an office in New York. We have a physical presence where large VC-backed companies are created, and that puts us in an incredible position.
Also, we’re unique in that we get so much value from the rest of the Bain Capital network. We can help founders and startups get plugged in to the most senior people running companies in their fields. Sometimes in Silicon Valley, networks don’t extend past Highway 280 or 101. Whether it’s AI and machine learning, healthcare, payments or fintech, the Bain relationships and networks are unparalleled.
Q: Has any of the backlash against the bigger tech companies affected the way you look at startups in which to invest?
A: Independent of what’s happened in this current climate, we take these issues seriously as related to security, privacy, data and dealing with sensitive information. An important part of every board conversation should be “Do we have the right policies and controls?” One of our managing directors, Enrique Salem, was CEO of Symantec, was on Obama’s tech council and has been security adviser to the government of England. His investments are in companies that focus on security.
For example, LeapYear specializes in differential privacy. With all the individuals who have access to private information, how do you make sure customer service folks are seeing just enough data to solve your problem, but not enough to steal your information?
Q: Is there a sector that’s overhyped right now?
A: In general, it’s a timing issue. Usually, the reason there’s excitement about something in the first place is based on some good fundamentals. There are different levels of excitement about crypto. The concepts behind it, the idea that there’s a number of use cases for a currency of some kind that’s not controlled by any one government, and a distributed ledger that’s incredibly secure, is very powerful. How will that play out and in what time frame? Just like ideas from 1999 — some ideas were fundamentally sound, but they didn’t gain traction for another 10 years.
Q: You are the national board chair for BUILD, a nonprofit dedicated to helping underprivileged high school students attend college. Why is that important to you?
A: Entrepreneurship and startups have changed my life. I worked on my first software startup when I was a sophomore in college. BUILD helps high school students from disadvantaged communities experience entrepreneurship through the creation of businesses the students conceive of and run. Through this entrepreneurial journey, our students learn presentation, financial and sales skills – all of which are important life skills. Close to 100 percent of BUILD graduates go on to a vocational school or four-year college.
Position: Managing director, Bain Capital Ventures
Previous jobs: SVP sales and marketing, Trilogy
Education: B.S. EE Stanford, MBA Harvard
Family: Wife, three children
FIVE THINGS TO KNOW ABOUT AJAY AGARWAL
- I was born in Cardiff, Wales.
- When I was a child in Pittsburgh, I participated in a toddler fashion show and got to meet Mr. Rogers.
- I worked on a startup company with the founder of Trilogy when we were both undergraduates at Stanford.
- Prior to doing software startups, I was a satellite design engineer for Hughes Aircraft.
- I am an avid reader of fiction and some of my recent favorites include “Pachinko,” “Manhattan Beach” and “Orphan Master’s Son.”