Draper Associates’ principal investor Siri Srinivas expects sustainable investing to return as quality over quantity gains ground

Seed-stage venture capital (VC) firm Draper Associates is known for its early investments in companies such as Tesla, Angelist, Coinbase, Switch, Skype and Hotmail. It has now backed an early-stage hardware start-up in Bengaluru, Up, that builds smart-home appliances. 

In 2020, the VC firm led a $5 million round in crypto exchange Unocoin at the height of the digital currency boom. The ongoing rout in the sector has not fazed Draper Associates. Its principal investor, Siri Srinivas, tells Outlook Business that the company adheres to its founder Tim Draper's ethos of going big or going home. 

Edited excerpts: 

What is Draper Associates' current investment portfolio in India, and which sectors are you looking at investing in the future? 

We invest in early-stage companies around the world. Some of Draper Associates' investments in India include Up, Blowhorn, Unocoin, etc. 

We are generalist investors who favour emerging technology companies in areas such as fintech, govtech, enterprise software and transportation. We tend to like companies that reimagine legacy industries and those which take bold bets. 

When is the ongoing funding winter set in India likely to reverse? Will the current scenario lead to a rationalisation in valuation, which was over-inflated? 

VC funding has certainly slowed down in the US in the last two quarters owing to the larger macroeconomic environment. The valuations, too, have come down a few notches thanks to the correction in the public markets. 

This trend will likely spread to other technology investment hubs if it has not already. In times like this, we expect certain technology verticals to consolidate, and investors will return to quality over quantity. 

This may be a return to a more sustainable investing pace and is a healthy correction. However, it is hard to predict when this will reverse. 

Draper Associates has backed cryptocurrencies globally and led a $5 million round in the crypto exchange Unocoin. However, that sector has been in free fall. Was this an ill-placed bet? 

We are long-term technology investors. By virtue of this, we have seen several bull and bear cycles, particularly in the crypto market, just like all bitcoin and crypto investors over the last 13 to 14 years. We remain bullish on Unocoin and the larger digital currency market over the long term. 

Why did your company choose to invest in Up? What kind of support will it extend to the founders to achieve profitability? 

We have looked at several start-ups building new and modern technology in the food space, both on the retail and industrial sides. We are excited about Up's differentiated bet on modernising consumer appliances and bringing some automation and a top-notch consumer experience to products that haven't evolved in decades.

We found the founding team's depth of experience extremely compelling. Mahek Mody, Mohit Sharma and their team, have built world-class hardware products at Ather and Chaayos and bring that experience to the table. We love battle-tested teams, and Up's team is excellent at executing its vision.