Not the Third Wheel, but the Third Man Factor—How?

In the VC space, it’s easy to give money. It’s also easy to become a boss rather than a compass. What’s tough is betting on what matters and, then, actually giving it wings – without being a weight. Let’s see if that’s possible.

By Pratima H

The Big Tech is not only working on the ‘next big thing’ through internal innovation engines but is also giving fuel to other ideas with start-ups on their own steering wheels. Like Google and Microsoft, Salesforce is in this space too. Salesforce Ventures has joined hands with many enterprise software companies from Seed to IPO. It has, under its trunk, over 30 IPOs and 100 acquisitions already – while there are many dedicated funds for up-and-coming ideas under its hood. Its basket covers companies like Airbyte, Airtable, Aiven, BetterUp, Contentful, Databricks, Drata, Gong, Miro, monday.com, Modern Treasury, OwnBackup, Razorpay, Snowflake, Snyk, Vercel, Vivun, Wheel, Wiz and Zoom. With $5 billion invested since inception and with new frontiers like AI, Quantum and enterprise software disruptions on its radar, a lot of exciting traction can be seen on this VC Runway. Including a focus on diversity- like in 2020, Salesforce Ventures announced $100M in intentional capital for empowering enterprise software companies led by underrepresented minority founders. It also has an Impact Fund—emphasizing on education and reskilling, climate action, diversity, equity and inclusion, healthcare, and providing tech for nonprofits and foundations.

We caught up with Paul Drews, Managing Partner, Salesforce Ventures at Trailblazers this year in San Francisco. He walked us through the intent-path and action-graph of these funds that are being invested with a distinct eye on the future. Let’s see what big and what lies ahead next—and why is he exciting about it.

What’s the philosophy and strategic posture of this venture arm? What do you lean towards—stealth start-ups, early-stage, seed, or late-stage investments?

It’s our venture arm that focuses on enterprise tech across software apps, infrastructure software and emerging trends. We cover everything – from early-stage work to IPOs. We have been investing in many interesting companies. Our investment advisory board has CFOs that help us for prioritizing portfolio strategies.

The last two years have seen some dip in VC action and there is some dry powder lying around. Has that affected your approach too?

We have been active investors. There has been a bit of slow pace in 2020-21 in the industry but there has been some correction in the last few quarters. We are excited about the next year.

There has also been a movement towards multi-partner deals – is that a definite trend?

We try to be a collaborative partner as early, and as much, as we can. There have been no conflicts yet. Getting more expertise is always a good move. We identify good companies as per their vision and potential. We are excited about emerging trends.

Like the recent AI fund—And the Impact fund and Slack fund?

Yes they are part of different functions in our venture. In AI we have invested in four exciting companies, each with a distinct space of its own. Like Anthropic – pioneers in responsible AI, Cohere – that embeds AI in products, Hearth.AI – with a new category advantage, and You.com – for business user productivity. Each year, we identify categories right for disruption which can create large outcomes. There is a real shift in the tech landscape towards real value creation. The pace of innovation now is a paradigm shift.

Do you bet on people or on companies?

The first few meetings are always with people trying to understand if they can really grasp the pain-points they want to create solutions for. We see the company’s vision and the path they have. We are excited about emerging trends.

Like Q Ctrl – are you keen on Quantum computing too?

Yes, we are and Quantum is a big area we are excited about.

Do you also consider ROFs – how do you handle product overlaps and do acquisitions play on your mind while choosing investment candidates?

We have made about 400 investments and only less than 20 have been acquired so far. That’s not what’s on our mind as a top thing. We go after value and future and not for acquisition mind-set. Our focus is on expanding the innovation ecosystem and building partners. Strong financial outcomes and strengthening Salesforce ecosystem are our key goals.

What’s different here than what Alphabet GV or Microsoft M12 is doing?

We look for best-in-class enterprise software innovation across all stages. We are looking for disruptive categories. How we identify and add value is unique to us. The pace of innovation is going to accelerate ahead.

Is India on your radar?

Innovation is happening everywhere. We invest across the world. India is our core focus, we have picked five companies in the last few years. We expect more work ahead.