Karthee Madasamy, a seasoned investor in the deep tech space, joins the Startup Project to discuss what he calls the “golden age” of foundational technology. As the founder of MFV Partners and the former Managing Director at Qualcomm Ventures, where he led investments in groundbreaking companies like Waze and MapmyIndia, Karthee brings a unique perspective shaped by decades of experience. In this conversation with host Nataraj, Karthee shares his unconventional journey from engineer to venture capitalist, the critical differences between corporate and financial VC incentives, and the challenges of launching his own fund. He provides a masterclass on evaluating deep tech opportunities, explaining why the sector is moving beyond selling technology to tech companies and is now being embraced by traditional industries, unlocking massive new markets in robotics, AI, and quantum computing.
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Nataraj: How did you come into venture investing as a career?
Karthee Madasamy: It wasn’t planned at all. In fact, people who knew me from a very young age would have been surprised that I’m an investor or even a business person. When I was younger, the plan was to do a PhD and then go develop new technologies. That’s what I pursued for the first 10 years of my career: building new things in semiconductors and wireless communication.
I think it was circumstances where I was getting pulled up, going in front of customers, and leading people. I basically learned that maybe more than my technical capability to build things, I have other skills, which is what led me to do an MBA. I had a very clear thought that I wanted to come back to technology, but maybe more as a business person.
I spent a summer doing venture capital. Until then, I was a startup guy, just doing startup stuff, and then suddenly I’m evaluating startups. That was a lot more interesting because I could look at several different startups. Even then, I just jumped in, thinking maybe I’ll try this for a couple of years. There wasn’t any planned path to get into venture capital. If I had to rewind, would I just go to venture capital? I don’t know. I might have just done product management and been an operator.
Nataraj: What was your first job in venture?
Karthee Madasamy: My first job in venture was at JK&B Capital in Chicago, where I was doing my business school. In venture, unlike other areas, you have to basically go fight for your job. I reached out to them saying, “Look, I’ve done a lot of stuff in semiconductors and wireless communication, and it seems like you guys are starting to look at that. I can add value.” I told them about reconfigurable semiconductors, new architectures, and so on. They liked that because it was an area they were spending time on but didn’t have deep expertise in. So I joined to look at new electronics, microelectronics, and semiconductors. I was basically doing sector analysis and reviewing companies in those areas.
The one key thing in venture capital is that you have to define a job opportunity and a job description, telling them, “You need this, and this is what I can come and help you with”—even as an associate, an entry-level person. In venture, it’s not just about saying, “I’m a smart person who can do software.” You have to create an opportunity and then say, “I can go fill that opportunity.”
Nataraj: Once you joined the firm and started understanding venture capital, what were some of the early deals that you worked on?
Karthee Madasamy: One of the early ones was using wireless communication for tracking things. This was in 2005, 20 years ago now. They were creating a proprietary wireless communication stack for tracking objects or assets across the country. This was in the early days of 3G, so most data communication was pretty low-key. Think of it like an early incarnation of Apple’s AirTags, but for big assets. It was interesting because I had a wireless and microelectronics background. We didn’t end up investing, but it was interesting to understand how to solve business problems using technology.
The key learning there was that you always try to solve a business problem with underlying technology, but you have to be aware of how quickly that technology gets commoditized. One of the early companies I evaluated at Qualcomm was a navigation app. This was 20 years ago, before Google Maps. You paid $10 a month for an app which gave you phone-based turn-by-turn navigation. It was a business need because you were driving and didn’t want to buy a separate navigation device. It was a good business opportunity, and some companies were doing good revenues.
But the underlying technology was getting commoditized. MapQuest was saying, “I can do it for $4 a month.” And then Google said, “It’s free.” Suddenly, these companies’ business models just went away in one day. So it was good to understand both the business problem and the underlying technologies. That’s the thing about deep tech, or new technologies—they get commoditized very quickly as well. Whatever I built 25 years ago as a startup is now a five-cent chip. It’s a commodity. Understanding the technology curve is extremely important to figure out which is going to last longer and which is going to just go up in flames.
Nataraj: Is there any pattern you’ve identified to figure out if a new technology is getting commoditized and whether to invest or not?
Karthee Madasamy: It’s a lot of heuristics. You try to see the path of commoditization and who could still retain value. In the turn-by-turn navigation stack, the navigation part went from $10 to zero when Google came along. But we felt the underlying map data—the actual data of where all the points of interest are—is not easy for anybody to just go build. At that time, NAVTEQ and Tele Atlas were spending $50 to $100 million every year to make sure they had updated data. I never felt that was going to get commoditized down to zero based on technology alone.
That’s what led to two investments: one in the US called Waze, and the other in India called MapmyIndia. You have to figure out what could get commoditized and what could not. For example, would Nvidia’s GPU get commoditized down to nothing? There are a lot more barriers there. First of all, to get to that level of performance, but more importantly, they have built the stack on top—the middleware, the software, the application layer. They have created a moat around everybody using CUDA and their software middleware to build applications. So they’ll be able to preserve quite a bit of that. You look at all possibilities to see if they have any other protection or if they are just at the whim of the technology curve.
Nataraj: What was your lens behind investing in MapmyIndia?
Karthee Madasamy: We looked at the whole stack of location-based services and felt that the biggest value was in the underlying map data and points of interest data, which is not easy to get. Waze was doing it in a crowd-sourced way. MapmyIndia was more traditional, but they were going after a market which is very, very unstructured. In the US and most Western markets, addresses were standardized in the mid-1900s. India is still completely unstructured.
To give context, when a parcel of land is assigned, there’s a plot number. Then there’s a numbering system, maybe a road, and finally an official street name. You have at least three different versions of an address, but most of the time, there are five or six. Different people will use different ones. Mapping this data and routing it is very unstructured. Navigation in India is more about, “You’ll find this particular place, turn left on that.” It’s never about turning left on a specific street; it’s turning left at a point of interest, which itself will have six different names. It’s a much harder data problem, which is why we felt that data would be very valuable. We invested in them in 2009. They went public two or three years ago, and even today, nobody can match the quality of data they have built.
Nataraj: Talk about the differences in incentives. When you work at an early-stage fund, you get carry and salary. In a corporate venture firm, it’s a salary plus some equity component. For people early in their careers who want to get into venture, what should they maximize for?
Karthee Madasamy: Early on, there’s not as much difference. You’re learning to build your network of entrepreneurs, build relationships, and figure out which are good, investable startups. You’re curating deals and developing your own framework for what makes a good investment. When you start in venture capital, those are the first things you’re focusing on. Frankly, there’s not as much difference between a corporate venture and a financial venture because, in the early years, you’re learning the craft.
Some of the bigger financial VC firms have a brand that attracts entrepreneurs. Corporates also have that. For anything related to semiconductors or wireless communication, Qualcomm is a well-known name. To have someone from Qualcomm validate your technology or company is very interesting for a startup. At Qualcomm Ventures, we were given reasonable autonomy to chase investments. If we made an investment, we would be on the board and responsible for it.
On the compensation side, again, early on, it doesn’t matter as much. In a financial VC firm, you get some carried interest plus bonuses and salary. In a corporate firm, some are now instituting carry, but even if you didn’t have it, you probably had bonuses, stocks from the corporate parent, and a salary. It was almost the same.
The difference comes in the later years. Once you’ve made these investments and one has a good outcome, if it had been in a financial VC firm, the compensation would have been different. It starts to matter once you are five or six years in because an investment takes six or seven years to exit. With corporate VC, your downside is protected, but your upside is capped. You live within a band, which is okay in the early part of your career but not later. If you believe you’re a very good VC making very good investments, that’s when you start to feel the difference.
Nataraj: So you made a couple of interesting bets, like Waze and MapmyIndia, and then decided this wasn’t enough and started your own firm. What was that journey like, and how challenging was it to raise your first fund?
Karthee Madasamy: It wasn’t the compensation alone. I became a corporate VP and felt that I was hitting the roof, both in terms of learning and other things. And also, if I’m making good bets, I should be compensated accordingly. The transition to starting a firm was probably one of the hardest experiences of my career.
Raising money from LPs is very different from raising money as a startup. The main reason I did this was that in 2017-2018, software was ruling the roost. Software was eating the world. We had the cleantech bust in 2010-2011, so nobody wanted to touch anything that was remotely hard technology. Most of the big VC firms were retiring their hardware VCs. It was clear that if you talked to entrepreneurs in core technology, they had very few VCs to go to, even in Silicon Valley. We felt there was a missing gap, and that was my DNA in terms of evaluating new technologies. So we felt there was a gap we could fill.
The biggest thing was fundraising. As a corporate VC, I didn’t have to fundraise; we invested off the balance sheet. Investing as an LP is a trust-based thing. People invest based on trust, which means you can really only raise money from people that know you or at least know of you. It’s much harder to go beyond those circles. Coming from a corporate background, I had to learn that from scratch, build those relationships, and build that network. It was much slower and harder, but it’s not a short-term thing. We felt there was a need to do this for the very long term, so we were able to go through all the ups and downs. Now we’re investing out of our fund two. It’s much better than how it was when we started.
Nataraj: Based on your experience raising two funds, what are two quick lessons you can share?
Karthee Madasamy: There’s a statement that everybody has a plan until you get knocked in the face. I don’t think I could have done any more analysis. The only thing I would have said is that there were so many people I felt could have invested in the fund who didn’t. Separating people from their capital, even as an investment, is the hardest thing to do. We started off thinking we were going to raise a bigger fund; maybe we should have started by thinking we would raise a very small fund. Assume that everyone you think could invest is not going to, and then maybe start that way. But I don’t think the end game would have been any different. Maybe we would have had fewer disappointments.
Nataraj: Let’s talk about deep tech. The term has become pretty common now. VCs used to fund hard problems, but then we went a bit haywire. You probably found the right time when everyone was focused on software. Where do you think deep tech is right now, and which areas are you interested in?
Karthee Madasamy: You’re right, VCs used to fund hard problems. Not necessarily R&D science research, but when something was proven out and ready to be built, even though it was still hard. Then the internet started, then mobile, then elastic compute and cloud. All three came together. The concept of deep tech or core infrastructure has been there for the last 50-60 years of our technology evolution. You come up with a microprocessor, which starts the personal computing era, then you get a bunch of applications. You start with internet infrastructure, and you build on top of that. In that cycle, nothing has changed. The next one was robotics, automation, and AI.
What happened was the internet, mobile, and cloud provided this era of cloud, internet, and mobile applications. It coincided with the hard landing of cleantech and the emergence of China as a semiconductor hub. A lot of the slightly easier semiconductor work moved to China. You couldn’t compete. So, people investing in hard technologies found that the opportunity threshold was much, much higher. The institutional knowledge was completely gone. The new VCs hired into firms were all doing software.
But I’m very bullish because technology used to be bought by technology companies; now other verticals are buying technology and getting disrupted. We are in a golden age of this core deep tech. We’re seeing things around robotics and automation, synthetic biology, a new generation of computing like quantum computing, and core AI solving classification and generation problems. We are in the golden age of new technology solving problems. I’m sure once this infrastructure gets built, you’re going to see a variety of application layer companies.
Nataraj: I want to talk about one of your portfolio companies, PsiQuantum. You invested before Quantum was really in the narrative. What was your bet on PsiQuantum, and what is the company really doing?
Karthee Madasamy: We are hitting the limits of computing. We’ve gone to one-nanometer, two-nanometer semiconductor chips. There’s no more room to pack things in, but our computing needs are not going away. We need a different form of computing architecture, and quantum provides the best alternative. Today, if you want to push the edge of computing beyond what we can do with our current technologies, the best option is quantum.
The basics of quantum draw from quantum mechanics, where anything can be in multiple states at one time. Current digital computing is either a zero or a one. With quantum, a bit can take multiple states. That has exponential qualities. If you have eight bits, it can stay in 2^8 states at one time. If you can use that to do arithmetic, you can solve complex exponential problems much harder to solve with conventional computing.
The first applications are all things that require this. Think about drug discovery. We can’t simulate the full interactions in your body on a computer because it becomes an exponential problem. In a quantum computer, we could get most of that simulation done. This means we could get a drug to market much faster. The pharma and computational biology applications are big. Same for computational chemistry. Those are all going to be the first applications, and they have huge impacts on business, industries, and humanity. It may take a while before you have a quantum computer in your laptop, but solving these big problems for industries is going to happen much sooner than people realize. We are a few years away from significant breakthroughs using quantum computers.
Nataraj: What do you know about investing that you wish you knew when you started your career?
Karthee Madasamy: It is not a monolith. Investing in the stock market is very different from investing in a Series Seed company versus a seed company versus a pre-seed company spinning out from a lab. They are all different, and they require different levels of gut instinct versus being data-driven. I’ve come to the conclusion in the last 10 years that I’m more comfortable in the early stage because it involves intuition and gut as well. When you’re starting your career, you want to figure out what you are more comfortable with. Are you comfortable with data, with processes, or with technology and instinct? Depending on that, you probably belong in different parts of the spectrum.
Nataraj: That’s a good note to end the conversation. Thanks for coming on the show and sharing all the insights about what you’re investing in deep tech.
Karthee Madasamy: I enjoyed the conversation. You asked a lot of interesting questions that I typically don’t get. It was fun.
Karthee Madasamy’s insights reveal a pivotal moment for deep tech, where foundational technologies are not just advancing but creating entirely new industries. His journey underscores the long-term vision and conviction required to invest in companies that are solving the world’s hardest problems.
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