1 billion is a commitment. I guess the easiest place to start is how did that go and how did
you go about deploying the capital? Yes, absolutely. First of all, great to be here, Ed
Sapphire Ventures were focused on investing in B to B companies at the mid to late stage. So
we're really looking for companies with product market fit are generating revenue and
that are proven businesses with A I. There's been so much innovation and there's been waves
of adoption. So what we saw really was in 2023 it was a year of experimentation. This year
2024 was a year of roi validation and people actually starting to play with these tools and
getting use out of it. And we believe that next year 2025 will be the year of widespread
enterprise adoption. Now, that being said we've been very active in 2024 to have made
several A I investments already. I sent some sort of out there may be between the venture
capitalist and large tech companies that are making very similar investments or they're
developing technology themselves. And one of your historic portfolio companies is Mulesoft
bear with me. But I picked that Casely because ultimately salesforce went on to acquire
Mulesoft. It was an interesting exit. How do you find that next kind of Mulesoft type
company? But in the A I context, I think this conversation is so interesting when we're
talking about gen A I companies, right, in many ways, the incumbents, whether its sales
force Microsoft Amazon, you name it, they are all actively investing in young A I start
ups because they're trying to ensure that their future will have A I in it. Um As an
investor, what we look for closely are companies stand alone that we think are amazing
businesses and can go all the way to IP O. But we also consider other exit paths including
to M and A. So we pay a lot of attention to companies that we believe hold strategic real
estate for many of the large tech players Cathy. What are the valuations like in the
space that you're trying to put money to work? You say you've done a couple of deals in 2024
already? They high. That's a great question, Caroline. Um The short answer is
yes, the reality is that A I is so consensus right now, which arguably means it's a really
difficult time to invest because the valuations are so high. So if a perfect deal,
that means a perfect valuation, I think our approach and my approach at Sapphire is you
have to take a differentiated approach to investing. And because A I it's still in the
early stages of manifestation into different types of companies, you have to take a leap of
faith on some dimension. So for me, for example, the leap of faith that I'm taking,
which is based again on data and research is that industries that have historically been
technology laggards in terms of adoption are now going to adopt technology en masse. So two
examples are a lot of different verticals, right? So manufacturing, construction, health
care, legal, these are companies and industries that are still operating on pen and
paper and on mainframe computers. And the second one is really small businesses. The
backbone of the US, over 80% of us businesses are companies under 10 people that have
historically not been able to research the latest and greatest when it comes to technology.
I love what you said before about the validation. We're currently at the point where
you have to validate the return on investment. I don't feel like we've had that yet and I'm
wondering whether you're seeing it in the start ups you've backed and how you're
measuring it Cathy. That's, that's such an on point question, Caroline. I think we've already
started that phase. I'll give you an example. Um Sapphire recently backed Elise A I I know
Minnow was on the show a couple of weeks ago. That was a series D company. What Elise A I
does is owns the entire conversation end to end between a prospective tenant or tenant and
a residential building. A lot of their customers are sophisticated residential real
estate companies. They do a lot of internal benchmarking. They don't just trust the lease
to show their own benchmarks. They actually do it in house. And the data shows significant
improvements in accuracy, significant improvements in actual results including
customer satisfaction. Some of the news of late has been open A I's big primary at a
very high valuation. Then reports about anthropic getting itself organized
and one report I spotted was that the minimum check for the open A I round as an example is
$250 million. What's the trickle down effect of that for you? Can you explain that question
a little bit? So everyone's clamoring to get into very small concentration of names
including through pvs. Does that kind of open up the field for you to sort of have access to
more start ups where people aren't paying attention or is it just that you kind of have
to say? Oh, do I need to be involved in this round even if it's a stretch for me at growth
stage? Great question. Look at the end of the day as investors, it's our job to allocate
capital in our fund construction. And that means thematically what we invest in. There's
always going to be great deals out there, but we have to find the best use of our capital
based on our strategy. So I think it's a great thing for companies like sapphire, right? Other
investors are busy chasing these mega deals and these ultra late stage companies or they're
going super super early high pa I companies that may not have a lot of revenue that leaves
more Greenfield for companies like sapphire that again are focused on that mid to late
stage company proven. And by the way, it's not just A I, there's plenty of amazing companies
out there that aren't a gen A I native companies and more investors are looking only
at A I I say that's great for us. OK. Name one that isn't to do with gen of A I that that it
has been exciting to be able to get into at least analyze, you know, I think one
interesting way to play the broader gen A I uh strategy is to think about companies that are
leveraging gen A I for themselves. So I'll give you an example. Um meta B which is a
sapphire portfolio company is a software platform that allows the clinical trials
to be performed in a decentralized manner. It's not a gen A I native company, but they're
actually actively using GEN A I technology to vastly improve
implementation time. So me is working with the largest life sciences companies in the world
and implementations can take a long time because of the complexity. But now converting
1000 page trial document in a way that is automated and someone without technical
expertise can set it up. Is a game changer.