Arati Prabhakar joined U.S. Venture Partners (USVP) in February of this year. Prior to becoming a venture partner at the Menlo Park, Calif.-based venture firm, Prabhakar was a program manager and director of the Microelectronics Technology Office at the Defense Advanced Research Projects Agency (DARPA). During her time at DARPA, she worked with more than 300 companies, universities and other labs to pursue breakthrough technologies.
In 1993, President Clinton appointed Prabhakar as the director of the National Institute of Standards and Technology, where she led a 3,000 person staff. At NIST, she co-invested with companies in R&D in areas ranging from healthcare information infrastructure to composite materials to DNA diagnostics. In 1997, Prabhakar joined Raychem Corp. as the chief technology officer. Shortly thereafter Prabhakar left Raychem and joined Interval Research Corp. as president. There, Prabhakar spent her time focusing on broadband.
Why did you choose to enter the world of venture capital?
I have done a whole bunch of very different things. What turns me on is new technology and business opportunities. During my first career in funding R&D in Washington, I used to push the elephant from behind. Now I feel like I am pulling the elephant.
At the end of the day what I really think is exciting is the transformation of going from a cool technology to a really great business. Venture capital plays a really interesting role in that process and USVP is a great place for what I am excited about.
What industries interest you and which will you be focusing on?
Technology is certainly where I come from. Obviously, it is only one of the main ingredients that it takes to make a great company happen. I know many great companies happen based on other things, but a lot of things are transformational because of technology. It changes the way people work and live. A lot of things are rooted in technology and technology breakthroughs.
This is a great opportunity to look into if you care about building companies. And that is where I will focus, digging around in the new research areas and looking for new business opportunities.
Have you had a chance to dive into the sector yet?
What I have been spending my time on is a combination of learning about, and working with, some of our portfolio companies ? looking at new business plans that come in, and because we work as a team, helping out however I can.
The other part of what I am doing is going to really small interesting workshops. I am engaging with the technology community and the really smart people who are working on hard technology because those are sort of the sources of the business. So I am doing a bunch of things.
Why did you choose to work with U.S. Venture Partners?
It?s a firm for which I developed a lot of respect, as I started to meet and talk to the partners there. Venture capital is going through some wrenching changes right now. USVP is a 20-year-old firm and its partners have both operating experience and a lot of venture investing experience.
For example, Phil Young invested in FedEx in the [1970s]. He is not intimidated by a market downturn. No one wants market downturns, but I wanted to be in a place where people were insightful in how to deal with the business in the current environment, and they do. They also work as a team very effectively. I found a lot of strength to compliment the things that I do. And I found a firm that really embraces working on difficult problems because they see value from doing that, and that turns me on.
You have done a lot of interesting things. Which would you say was the most enjoyable and why?
It?s the usual problem of comparing apples and oranges, but I loved my experience with DARPA, the defense central research organization. It was a place where as a program manager I had a significant budget and was set free to find great ideas and build technical communities in areas that I thought had a lot of long term promise. It was place where you achieve success by working with creative smart people outside your four walls. DARPA was an office building but the work gets done in this technical community that you funded, built and nurtured.
It is different from what I am doing now because there we were trying to create technology and here we are trying to create businesses. But the common element that I love is the ability to tap smart minds outside of your four walls. I get a lot of energy from that. DARPA was an enjoyable experience, and I am finding some element of what I liked about that in what I am doing now.
What do you bring from your previous experiences to USVP?
I bring the one component that I think it takes to be successful in the venture capital world, which is insight about technology and some perspective on long-term trends. I feel like when I was in the technology world I was a generalist and saw the forest rather than working on the trees and bark. I also spent a lot of time nurturing the people who did build the trees, and that is what I bring.
I came to USVP to hook up with the people who know how to fit all the pieces of the equation. They know how to look at opportunities, how do you discern if there is a business opportunity and how do you put all the pieces in place so a company really has a shot at a big win. I just bring one piece of the puzzle. I expect to learn a lot of the other dimensions.
How did this opportunity come about and what made you try your hand at VC?
It is sort of a weird thing with someone from my background. The specific opportunity came up because I worked with David Ladell at Interval Research and I knew him and he knew USVP. Also, you can?t live in Silicon Valley and not think about venture based businesses. If you drink the water, you think about them.
People have often asked, ?Do you want to start a business?? Again, I think I excel at looking at the forest. One partner at the firm likes to talk about us being dot connectors, and that is where I flourish. I love seeing a large landscape and putting the pieces together.
The venture capital side is better for me. And I have known about the VC community since the beginning of time. But I didn?t think it made sense for me until this moment in time. When it was about dotcoms you didn?t need a technology background.
When there was a software focus that just wasn?t where I came from. I think this is a time when physical technology and devices are going to be on the core of creating value, and now I think it makes sense for me.
What do you hope to learn from working in the venture capital field?
I feel really confident about my ability to discern technology opportunities. But that is only one ingredient of discerning great opportunities and helping to build those. I hope to learn how to really make the transformation happen and be an effective partner to a company in doing that.
Do you see any sector or product becoming the next big thing?
What?s the next big thing? Everyone wants to know. There are certainly ideas that my partners and me get excited about that are contrary to popular beliefs. I actually think this is a great time to be starting businesses that have relatively long-term horizons.
While the markets are sorting themselves out, a lot of the business models are getting fixed in the downstream industry.
I think this is a good time to be starting something that will blossom over the next five years. But really, at the end of the day I don?t think it?s our job to predict the next big thing. But we should recognize it when someone comes up with it and be able to connect the dots.
We have been looking in areas that we think are relative to the fundamental demands of bandwidth, which despite all the bumps in the market hasn?t gone away. And we look for things that will fuel the storm in the long-term.