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Sajan Pillai on why a blend of pure-play VC investing and startup foundry is key for Season Two Ventures

Sajan Pillai on why a blend of pure-play VC investing and startup foundry is key for Season Two Ventures
Sajan Pillai
6 Jan, 2020

Early-stage and enterprise-focussed venture capital firm Season Two Ventures has hit the market with a unique blend of typical VC investment playbook and a startup foundry model. Floated by former UST Global chief executive officer Sajan Pillai, the firm looks to invest as a pure-play VC fund in sectors such as banking, retail, logistics, healthcare, energy and utility. It will also  earmark one-third of its corpus to build companies that address global pain points of the enterprise technology sector (business-to-business or B2B).

Staying true to its distribution network, advisory and shared services ecosystem, Season Two Ventures plans to identify and invest in companies that can achieve a projected revenue of $15 million in two to three years.

The firm has a target corpus of $100 million for its first fund and expects to mark the first close in the early part of this year.


Pillai quit UST Global earlier this year after over two decades at the firm. UST Global has business operations through its centres in the US, the UK, Spain, India, Malaysia, the Philippines, Singapore, Mexico, Australia, Poland and Israel.

In an interview with TechCircle, Pillai said the firm looks for brilliant people first, concepts second and solutions third.

Edited excerpts:

As a B2B investment fund, what is the funding thesis for Season Two Ventures?


The primary fund philosophy is that the time of investing in B2B in India is now. Secondly, when you invest, you have to be more than a VC. You have to be someone who guides the distribution and access to global markets. Thirdly, there is more prosperity in early stage than in growth stage.

There is a tremendous amount of capital, but B2C is where most investments go. However, B2C is highly risky while B2B is much more reliable. We think there is a great opportunity to have investment valuation as a VC as well as helping the startups as a global network, which is what we did for almost three decades.

How would you define your investment strategy in terms of stages, sectors and business models?

The fundamental thesis is to invest in early stage, India-based technology companies which are primarily focused on any of these areas – healthcare, retail, logistics, banking, insurance, BSFI, energy and utility. These are massive sectors where India has great potential.


We invest across three stages. The first stage is the early stage where a founder and a team has started, but may not have revenues at all. That’s our most interesting stage.

Second stage is the foundry. It is the scenario before there is a founder. We will source the idea from global companies. We will source a founder and a team that can build it and have some stake in that company. A third of the fund is focused on the startup foundry. We identify global B2B problems and we will create a startup ecosystem based on those problems.

Third stage is where a startup has some clients and early revenues.


We have a strong distribution network, we have the ability to get the startups strategic guidance. If we can get them early enough, that gives us a valuation advantage. We would like to get in ideally under $5 million (of valuation) or even less. We have the ability and game plan to take them to $15 million over a two year period. We look for brilliant people first, concepts seconds and solutions third. We want to open the doors to global markets for them.

A foundry concept is a new approach to B2B investing in India. Can you elaborate on the thesis?

From our own experience and expertise, we understand there are several pain points that global enterprise companies face. Our goal is to identify the most critical ones, create solutions for them and build solid teams that can execute these solutions.

The founders will have a skin in the game. We will have a majority stake (51% or more), we are yet to decide on the complete structure of this model. In some cases, we may actually find founders with very good early stage ideas where we have a problem statement, we will fund them enough to build a solid business where we take 60% of the company and rest belongs to the founders. In some cases where the idea is purely ours while the founding team comes in for an execution play, then we will probably go for a higher stake of 70%-75%.



In the foundry concept in Israel, they found failed entrepreneurs. That is one of the things we want to try. Many of them fail because of weak distribution network and those are absolutely the right founders we are looking for. We are looking at their acumen and technology talent to produce. It is a proven model.  

You are in the market to raise the first fund, when do you expect the first close? Can you share more details about first close, ticket size, and limited partners?

The first fund is $100 million. We are looking at a first close sometime early this year. The LPs are primarily very large family offices. We have looked at certain characteristics in our LPs such as true passion for entrepreneurs in the B2B space, focused on a particular area with the ability to create distribution and access, passion for Indian startups, and also have an understanding of an early stage fund.


Half a million to $2 million would be our ticket size. We would begin with half a million to a million and then double down on this in the future deals.

Foundry will be larger investments because a foundry life will be larger. Here, the investment is towards the growth stage as well. In foundry, we may actually go up to $5-6 million because we will take it to a Series B and C starting from zero. In other deals, we will invest as small as $300,000 to all the way up to $1 million in the first round and then a follow on round of another $1 or $1.5 million.

We don’t want to rush, want to pick the right startups. The deal flow is very large, but the conversion is only 5%. We are only going to invest in companies that can get to about $15 million in two to three years. Unless we are confident that we have a customer that is ready to use him, and we have that ability to scale, we wouldn’t invest. It narrows our playing field quite substantially.

We are trying to build an ecosystem here to create a broader and larger fund down the road. We are building the ecosystem with distribution, with shared services, and with the support for startups. Realistically, we want to prove our hypothesis – start small, get companies to revenues sustainably, and provide them the support they need to get them off the round.

As a VC, we are taking a longer view. The next fund will be much larger. Our idea is to have about 10-12 LPs, enough to make sure we have a core group of LPs that can scale to the next round. We think our fund will be filled up by next year.

How does your deal pipeline for 2020 look?

There are about six deals in the process at various stages, from terms sheet to due diligence and fund deployment. These startups operate in areas such as mobile POS, personal data monetisation, air monitoring, and water management.

Is creating unicorn SaaS companies a target for the fund?

We are not experts in unicorns. We think the search for unicorns is counterproductive. We are very good at taking a company to a $100-150 million valuation, of which some may get to a billion, but that definition of success is very important. Our expertise is to figure out those areas that can create companies of good size valuation.

In our parlance, we almost discourage companies to target unicorn status but rather focus on getting on to a good size company and see what happens. 

Is there a market in India for B2B startups to grow to a $150 million valuation in such a short time span?

They need to go global, almost certainly. Valuation is commanded when your customer is a global company. You need to go where the valuations are, you need to prove it in the global grounds. We will take our portfolio firms to international markets, that is our model. From our own operating partners’ strength, we have strong network connections across the US, Europe and Latin America.

What is your exit strategy?

There are a lot of large funds who invest in growth and scale, who would take this over at Series C and D stages. Clearly many enterprise startups will have exits with major B2B players like Microsoft, Oracle, SAP, and Salesforce. We have relationships with about 10 of such large enterprises. Mergers and acquisitions is a big opportunity. These are the possible exit plans and we are getting ready for all of these.

We are going to make sure that everyone is onboard with an exit expectation of about 7-8 years. However, we believe that we do it right, we can expect exits at four years. Our thinking is that if we are getting a startup into the $150 million valuation space, we should exit. The thesis is to invest in a pre-money value of $5 million and post dilution and post money, if we are getting 6-7 times returns, we feel that’s good returns.