This Venture Capital Firm Just Closed on 60 Million Dollars in Funding to Support Technical Risk, Citing Industry Critics Who Often Fail to Do So

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A Track Record of Success and a Focus on Technical Insights

Ashmeet Sidana, a seasoned venture capitalist who left Foundation Capital in 2015 to found Engineering Capital, has successfully closed his third fund with a whopping $60 million in capital commitments from a university endowment, a fund of funds, and three foundations. This achievement is a testament to Sidana’s expertise and ability to identify high-growth potential startups.

A History of Success

Sidana spent nearly nine years at Foundation Capital, where he received his first limited partner agreement after being handpicked by the legendary founder Kathryn Gould. During his tenure, he made several strategic investments that yielded impressive returns. For instance, SignalFx, a cloud monitoring startup backed by Engineering Capital, was acquired by Splunk for $1 billion after raising $179 million from venture capitalists. Similarly, Netsil, another cloud application monitoring startup, was sold to Nutanix for $74 million in stock, despite having only raised $5.7 million.

Technical Insights: The Key to Success

Sidana attributes his success to a unique approach that focuses on technical insights rather than chasing big markets or solving broad problems. He believes that by identifying and addressing narrow, yet high-impact issues, startups can achieve significant traction and growth. This philosophy is reflected in the way he invests, favoring small teams of 5-8 people who can be "fed with two pizzas," as exemplified by the development of Linux, VMware, and Google’s early success.

A Mistake to Avoid: Gluttony

Sidana emphasizes that one common mistake new teams make is trying to tackle too big a problem or aiming for excessive market share. He quotes Steve Jobs’ famous phrase, "It’s difficult to throw away features, not to add them." Sidana stresses the importance of focusing on an incredibly narrow problem with broad applications.

Key Takeaways

Engineering Capital has raised $60 million for its third fund.
Ashmeet Sidana attributes his success to a focus on technical insights and investing in small teams.
He emphasizes the importance of identifying and addressing narrow, yet high-impact issues.
Sidana stresses that gluttony is a common mistake new teams make, trying to tackle too big a problem or aiming for excessive market share.

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