Mail.ru co-founder Dmitry Grishin has a new $100 million fund; he offers a look here

Grishin Robotics is an eight-year-old, Sand Hill Road venture firm that until now, has focused exclusively on the smart hardware industry. Yet a newly closed $100 million fund from family offices in the U.S. and Europe will see it widen its aperture a bit to include online gaming and interactive entertainment, productivity tools and education.

It only makes sense, says firm founder Dmitry Grishin, who is also co-founder and chairman of the Russian internet and gaming company Mail.ru Group. Grishin, like the rest of the world, has seen what people can accomplish from their homes during this pandemic -- and how they've managed to remain entertained. He doesn't think these lessons will vanish.

He certainly seems to has a knack for identifying interesting trends, with exits that include the smart-doorbell startup Ring, sold to Amazon in 2018 for $1 billion; the mesh Wi-Fi router company eero, sold to Amazon for $97 million in 2019; and scooter-sharing firm Spin, acquired by Ford Motor Co. for $100 million, also in 2018.

We talked with him earlier this week about what has his nine-person firm excited right now. Our conversation has been edited lightly for length.

TC: You've historically focused on the U.S., with some focus on Europe via an office in London. Where did you wind up investing your last fund -- the $100 million vehicle that you closed in 2016?

DG: We're mostly focused on the U.S. and Bay Area, though we have a few deals on the East Coast. We want to continue what we’re doing, but the idea is while we started in robotics hardware and IT, we want to extend [our scope to include] online gaming and some physical-to-digital gaming because we're seeing people staying home more and wanting to engage with their devices there. The co-founder of "Guitar Hero" [Kai Huang, who technically co-founded its video game publisher, RedOctane ] is now a senior advisor to our fund, too.

I’m very excited about gaming. I was a gamer all my life, and I have two small kids, and there's a lot to be done -- not just on the iPad but in a way that incorporates the physical [world], too.

TC: As with the Nintendo Wii?

DG: Well, with the Wii, you mostly stayed in front of a TV. With this next generation of games, you can teach someone in a connected way. For example, you're now seeing huge growth in board games, with people [rediscovering them during lockdown]. If you can combine these games with digital . . .

TC: You were a Series A investor in the scooter company Spin, now sold to Ford. In the meantime, the pandemic has decimated the businesses of the standalone scooter startups. Do you think they will fully rebound?

DG: There's a lot of debate in terms of what happens for a lot of sharing-economy companies. Maybe it will take time for people to come back to scooters, but I do think we need personal mobility and some solutions [toward that end.] I do think that, like mobile operators, you maybe can't have five companies but more like two or three. The same is true of food delivery [because of the margins].

TC: Mate Rimac, who founded the car company Rimac Automobili, has been called the Elon Musk of Croatia. You know the hardware space as well as anyone. Who are other founders -- far-flung or nearby -- who you know to be superstars but who are perhaps undiscovered or underestimated?

DG: Jamie [Siminoff] of Ring is amazing.

TC: Is he still at Amazon or has he started something new?

DG: I think he's still at Amazon but I hope he's working on cool stuff. I also think the founders of [our portfolio company] Starship Robotics are really interesting guys.

TC: These are the last-mile delivery robots that look like small refrigerators on wheels.

DG: The whole idea that food delivery should be done by robots, I'm a big believer in that happening. There has been huge interest in them over the last few months; you'll see them more at hospitals and university and corporate campuses.

TC: How many startups did you invest in through your last fund and which startup received the most money?

DG: We had 17 or 18, and Spin was one of them that received the most money.

TC: Your new fund is the same size as your last. Will check sizes also remain unchanged?

DG: We want to keep pretty much the same, meaning seed and Series A-stage companies in which we invest $3 million to $6 million -- somewhere in this range.

TC: You mentioned combining the digital with the physical in terms of games. How interested are you in augmented reality? Obviously, Magic Leap burned up a lot of cash, trying to create a holographic display that people would love.

DG: We looked at the space for some time and longer term, I think it will happen. One of the most important takeaways as an investor is to be careful not just about the big trends but timing. If you think about the dot-com era, all of those businesses [that went belly up] exist now: pet products delivery, food delivery. So I think long term, we'll see a lot of interesting options, but only once you have 10 or 20 million active devices. That will be the tipping point for [AR and VR], but it has to make sense. There has to be good, high-quality games [to attract customers].

TC: What's one new investment that has you excited?

DG: Ziva Dynamics based in Canada. Its software was used to animate the dragons in “Game of Thrones." It's really cool software for building the next generation of animation. You can now animate almost all dogs, dragons. These are tools that were available only for studios previously. It also has amazing founders.

TC: Have you funded any founders you haven't met in person over the last few months?

DG: Not yet, but as a company, as a team, we are spending more time on Zoom. [Regarding investments], we try to do many more reference calls. I think we'll maybe [always] spend more time on Zoom now and maybe in the final stages, we'll meet with a team.

TC: Have you noticed any other trends in recent months while we've all been working from home?

DG: I have noticed more founders actively trying to reach out to VCs. We're seeing more inbound interest before from founders who want to proactively build relationships and maybe secure extra runway because their fundraising process was delayed or something else happened. A lot of founders, too, say, 'I have maybe six months of runway, but maybe I need to fundraise earlier.' That behavior is happening.

And I see a lot of startups pivoting to hot areas, including online education. Definitely, some teams are open to pursuing new areas that they weren't before.

TC: You mentioned that online education is a greater area of interest now. How has your experience been with your kids in recent months, with schools and most activities closed?

DG: Remote education for young kids is a disaster, in my experience. I've been trying to manage myself and my kids and [it hasn't gone well]. I do think there are a lot of opportunities in online education if you're based in India or Europe and want to watch lectures at Harvard and Stanford. But young people need physical opportunities [that online schooling doesn't provide].

TC: What about remote work?

We have discussions with a lot of founders about remote work, and sometimes it’s not about business, it's more about personality. Some people really like to be on a computer all day; others are extroverts who want to be with people all day. For them, this has been really tough.