2 Bain VCs say the firm is on the hunt for early-stage founders. Here's an exclusive look at Bain's plan to support 'outlier' entrepreneurs and nurture unicorn-track startups

Ajay_Agarwal_Bain

Bain Capital Ventures partners Ajay Agarwal and Aeref Hilaly said that the firm is looking to invest in early-stage founders who can "create markets" and "change the world."
Part of the firm's strategy is leveraging the larger Bain Capital network to assist with things like early customer acquisition and preparations for the IPO roadshow.
Here's a look at what the 2 VCs look for in early-stage founders.
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Bain Capital Ventures has built a reputation by backing later-stage growth investments in high-profile startups like SendGrid, which sold to Twilio for $3 billion, and DocuSign, which raised $629 million in an IPO in 2018.

But Ajay Agarwal, a partner with Bain Capital Ventures, told Business Insider that a number of their early-stage investments are currently on the unicorn track, including Moveworks, Redis Labs, Attentive, and JustWorks.

"We love meeting founders at the earliest stages," said Agarwal, who added that, while the firm is doubling down on Seed and Series A investments, it supports startups throughout their entire life cycle.

Agarwal said that his firm's geographic reach is much broader than many Bay area venture firms' territories, which he says don't extend too far beyond the highways that surround Silicon Valley.

When some investors go "east of the 101 or west of the 280 their networks get incredibly thin," Agarwal said.

Bain Capital Ventures, which has over $5 billion in assets under management, is the venture investing division within Bain Capital, a global private investment firm with over $100 billion in assets under management across venture capital, private equity, public equity, credit, life sciences, real estate, and impact investing. Bain Capital has offices scattered across 4 continents.

Bain touches "thousands of companies around the world," Agarwal added.

So if IPOs are on the horizon, Agarwal said, the firm connects its portfolio companies with Bain colleagues who run the company's private equity fund, which is separate from the venture arm, so that the startup can prepare for the roadshow with Bain affiliates who are familiar with the process of taking a startup public. The VC also said that their founders can draw on expertise from Bain Capital colleagues from other sectors, especially life sciences and real estate.

With all the expertise available inside Bain Capital's robust network, the venture capital wing can take risks on early-stage startups that may have great ideas, but need help shaping up to gain business credibility, the two VCs explained.

"It's the great entrepreneur that leads you to the market or creates the market," Aaref Hilaly, Bain's newest partner and a former Sequoia partner, told Business Insider in an interview.

"We're looking for the outliers," Hilaly added. "We're looking for the incredibly bright misfits who have the imagination to dream about how the world could be as opposed to being constrained by how it is today."

Hilaly said that the team looks to partner with startups when they have an idea, but an imperfect plan: "It's rough around the edges and pieces are missing."

Some of the early-stage startups they invest in don't even have a website, Agarwal added.

"Forget 'build a company' and forget 'get to profitability,'" Hilaly said.

Hilaly said that he places a great emphasis on the founding team and asks himself, "Is this a person that can create movement around the core of their company, that can really change the world?"

This search for unicorn-track, early-stage diamonds in the rough is well-illustrated by Bain's investment in open-source database company Redis, which based its core, free product on a programming language — especially hot among data scientists — called SQL, or Structured Query Language.

When Bain first participated in the Series A round for Redis, which now has the most downloaded SQL database in the world, Agarwal said that there was "tremendous download activity" and high "ratings and stars on GitHub."

But there was a catch: No robust money-making business model had been developed by Redis, Agarwal said.

Agarwal said that, back in 2013, he and his team were seeing a major shift from traditional SQL to NoSQL databases, so they invested in Redis and helped "to commercialize the success of the open-source product." They jumped in to assist the team with its product and market strategy, such as adding features to the commercial version of the database that users had to pay for.

In 2018, Redis masterminded a plan to take on Amazon Web Services, as Business Insider's Rosalie Chan previously reported.

"We helped them identify features that Amazon Web Services and other cloud vendors don't provide," Agarwal added, referring to the databases' ability to serve clients on premise in the client's offices, not only in distant third-party cloud servers.

In addition to helping the Redis team create a "capital efficient, together velocity, go-to-market model," the Bain team offered assistance with finding early customers as well as making key early and executive hires, Agarwal VC said.

Redis has received $146.6 million in total funding, and is on track to become a unicorn, Agarwal added, though he wouldn't reveal specifics.

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