Sri Chandrasekar, the Managing Partner of Point72 Ventures, head of Deep Tech investments, and Co-Managing Partner of Point72 Hyperscale, spoke to us about his roles at the Firm, the growth of the Ventures business, and the importance of having a diverse team.
What is your day-to-day like?
I’m the co-Managing Partner of Point72 Hyperscale. Last year, I was heavily involved in the fundraise for our first Point72 Hyperscale fund, but most of the job is assisting in the thematic research and overseeing some of the investments we’ve made. I’m also on the board of two Point72 Hyperscale company investments – Agio and Made & Modern.
In my role as Managing Partner of Point72 Ventures, I bring our investment partners across our Fintech, Enterprise and Deep Tech groups together to ensure we are building a cohesive, collaborative business.
In the third part of my job, as the senior partner overseeing deep tech investments in Point72 Ventures, I work with a small and dedicated team of folks who are investing in startups that are using the latest advancements in science and engineering across a range of industries, and we work with those companies to help them scale.
What was the genesis of Point72 Hyperscale?
We created Point72 Hyperscale because we were seeing time and time again that AI companies weren’t getting to multi-billion-dollar scale quickly. The problem, we discovered, was that machine learning startups need data to build algorithms but can’t get data to develop algorithms unless they have customers with data to analyze. But without a differentiated algorithm, the company has nothing to sell. We believe this chicken and egg problem is at the heart of all AI companies. Our solution is to combine AI startups with existing companies that already deliver the service, and therefore have customers and the data.
What are the growth areas for Point72 Ventures?
For one, we’re stretching our mandates. We changed the name of our AI/machine learning sleeve to Deep Tech because our team’s strength is to understand quickly how technology can impact a new market, and there’s no reason that can’t be with quantum compute or robotics or drones. It’s not just AI. That’s a broader mandate that’s come naturally.
As the Fintech team thought about where their investment theses were going, they saw an opportunity for crypto to change how the largest FinTech companies get built. Our early investments in this area are focused on companies that are building solutions that enable traditional financial institutions, enterprises, and consumers to adopt crypto.
One of the things we’re seeing happening in the venture capital industry is professionalization and scale. The best deals are increasingly concentrated with very, very large funds that are stage agnostic. If you’ve got something in your portfolio that’s doing extraordinarily well, we believe you should add to that investment rather than letting it go to another fund. Essentially, we’re growing up with some of our portfolio companies and participating in their later stage funding rounds.
I know you’ve spent a lot of time thinking about diversity. Why is that so important for Point72 Ventures?
The ventures industry hasn’t historically focused on ensuring that its investment teams are diverse, and we feel it’s led to chronic underinvestment in areas where multi-billion-dollar companies could have been built. If you don’t have a diverse team considering what companies to invest in, you could find yourself investing in the same kinds of companies and founders over and over again.
We think diversity of thought is critical for success in our business, so it is embedded in everything we do, from hiring to sourcing and doing due diligence of companies. There are businesses that we would not have looked at or invested in if we didn’t have people on our team that brought different views to the table. It’s been incredibly valuable.
How important is geographic diversity?
Historically, if you look at where venture capital spend has gone, it’s been Silicon Valley by a huge margin and then New York, LA, Boston. But, looking at how the world changed over the last year and a half because of Covid, the first people to leave Silicon Valley were all tech people.
People escaped to lower cost areas where their dollar will stretch more – to Miami, Austin, Seattle, Salt Lake City, Portland. As early-stage investors, we care about following the tech talent, and to do so, we must find founders early in their thought process and tell them that they have a capital partner in us. That means having boots on the ground, having coffee with them, meeting with them. If you’re a ventures fund and you believe you only need to be in San Francisco now, you’re missing an opportunity.
That’s why we’ve opened an office in Seattle and we’re experimenting in locations such as Salt Lake City, Washington DC, and Miami.
Will that enable Point72 Ventures to find more diverse founders, as well?
This is certainly my hope. A significant amount of funding in Silicon Valley tends to follow a set of norms – folks who went to a small set of schools, worked at a small set of companies, and have ‘seen it’ before. But that means that whole industries and sub-sectors are under-invested because the backgrounds of founders are so similar. One of the benefits of having boots on the ground across the country is that it opens us up to a set of founders who we otherwise wouldn’t have met.
Last question: I know you have an ever-changing set of interests outside of work. What are you into now?
That is definitely a point-in-time question! Every year or so I change hobbies. I bought a ping pong table and recently I’ve been teaching my eight-year-old how to play. My big Covid hobby was learning how to roast coffee. I still do that. It’s my Saturday morning Zen exercise. I like the smell of freshly roasting coffee.
Right now, what free time I do have, I try to spend with my wife and our two lovely children. As a parent, one of the most pleasurable things is watching how quickly kids get better at things, and then surpass you. It’s one of the small joys in life. My son’s really into origami these days and I’m just not dexterous enough. He found some YouTube channel that shows him how to make these super complicated things. I come home and there are these little origami figures everywhere.