Decoding Bains India Venture Capital Report Subtext By Zerodha

TITLE: Decoding Bain’s India Venture Capital report | Subtext by Zerodha CHANNEL: Markets by Zerodha DATE: 2026-06-04 ---TRANSCRIPT--- When should a founder approach a VC versus a family office?

You should be very clear about the kind of VC. When I say the kind of VC, the specific people that you’re going to be working with. If I was to answer your question, what can go off, right? One is just that your individual styles don’t match. No, who you are marrying? Which is why the title of the report is also warm currents and cold seasons. It may not be a very glamorous industry which also I think is changing because now a few VCs are going and backing some of these players. Now the most cheerful question of all, Jennai, when is it all over? Like how many more months [laughter] over a long four or five year period or a 10 year period. I see little reason to believe that Hello everybody, my name is D. I work for Rain Matter. As part of all of our daily tasks, I think you know we are all very curious about venture capital. Uh Bane team releases a very nice venture capital report every year. So for the past 3 years, me and my co-host Buhan, who you’ll meet shortly, uh have been discussing doing a podcast with the Bane team whenever they put out this report. Um so third time’s the charm. I think you know it’s been quite some time, but we’ve figured out uh some time to meet with the Bane team and do a nice conversation. Um spoiler, we haven’t spoken anything explicitly about what’s in the report, but everything that’s around it and the nuances that goes into making the report and why it’s so important to understand it. So hopefully you know it’s of use to all the founders out there, all the operators, um all the venture capital folks and all the other investors. And if you’re trying to learn a little bit more about some of the sectors, what you know LPs are thinking about India and what you know most other investors should know about family offices and allocation to various sectors. Please do watch this conversation. Thank you so much. Uh hi everybody, my name is DH and I’m here with Adityas and also my co-host Ban. I’ll let him introduce himself also. But we are here to talk about a report that been put out on the VC ecosystem 2026. But Buen, do you want to introduce yourself? Yeah, my name is Buen. I work for Dish. Um, no, he does not. [laughter] So, I mean, I generally don’t know this thing. The reason why I wanted to do this is because I think the BNBC report. It’s one of the best resources to get a sense of what’s happening um in the Indian VO ecosystem. And this is not me just saying that because you guys are here. It’s been a report that’s been informative to me since the very first year. I still remember there’s one particular tweet Nathan did and we were looking for private markets data. So I went through all the reports manually typed all the data points from your report and we did a nice infographic. This was in 21 or thereabouts. Pre-cloud error. Yeah. Yeah. Pre uh prehumanity. [laughter] So I’ve been a big fan both the Indian report and the US report because we are also a broken company with a VC arm attached. [laughter] uh we figured why not do it with the best that’s the context the way we’ll do it is DH and I will both ask a lot of these basic questions because I don’t think people get these definitions and uh people also don’t get the context in which VC is a thing in India of course like uh at least in the metro folks the metro areas and people who are generally a little clued in VC might seem like a big thing but if you step outside the bubble I don’t think many people even know that VC is a thing uh in India so I’ll ask a lot of questions that will evoke a eye roll So bear with us and then we’ll get to the report. Do you guys want to share 20 seconds each about what you guys do at B and and why you guys are so interested in the report as well? Sure. And why are you both named Adit? Yes. [laughter] I think when you were named Adity it was a more unique name but over the years thing. Yeah. Yeah. Um so Adita Shukla partner at Bane. Um I lead a financial investors private equity practice being at Bane for 20 years now and uh along with my fellow Adate who will introduce himself shortly have been authoring this VC report for the last five or six years now. Um we also do a private equity version of the report which actually is a which has a you know longer earlier history for India for India we do it for glo globally as well. So there’s a global report, there’s the report uh and then there’s the India report. The India P report we probably started around I think 2012 or

13. The VC report we started just about pre during the pandemic uh which is when the market really took off. So very very happy to talk to both of you.

Ada I am an associate partner in again the financial investors and private equity practice. Do a lot of my work actually at the intersection of private equity AI tech software. So that was a natural extension of my interest into everything VC everything growth equity. We’ve been writing the report together for probably I know three four editions now. Out of curiosity what’s the backstory behind doing the report? Yeah so I think to what they mentioned around the time of the pandemic when we started seeing this absolute um inflection in growth equity investing and VC investing. I think there’s a lot of interest in the market to color out what the insights were for this class of investments apart from the broader private equity report we put out there. The second thing um is I think there are certain sectors such as consumer tech, software, fintech which naturally saw more minority deal activity, more growth oriented investments which I think needed a bit of a different treatment also because of the states that the companies are in also how the investors themselves are looking at it which essentially gave us the reason for creating a very separate called out report. I think we meant it initially both for u founders as well as the fund ecosystem and we sort can there be one so you can’t have perfect data but to the extent that you can I’ll get to that [laughter] yeah I can see you have a list but to the extent that you can can you really create like one consolidated source of everything that is happening both quantitatively but also as Arita mentioned qualitatively right and then Can it also be helpful for founders? So one of the early additions we had done we focused a lot on on SAS companies right or software companies around that time 202122 then a lot of health tech companies fintech that we spoke about right so the idea was do a broader picture but then depending on that year or the last two years if there are specific subsectors that have uh either seen more interest from funders or just seen more traction in terms of activity of of companies being formed in that space in general it’s becoming very granular by the year yes you would have seen Yeah. Yeah. Yeah. Yeah. Yeah. Now the bar charts have a lot more. [laughter] We we are working harder also over it. So yeah, which we were discussing this like even as somebody who’s who tracks uh the public markets closely, good quality data is a perennial problem in the wrong body part. I’m assuming that’s even worse in this thing private markets and especially in a country like India where private markets is not really a thing even today. What how do you where do you guys get the data? How do you go about it? How painful is it physically and mentally? Yeah, it’s genuinely like piecing together a jigsaw puzzle. Uh we start with the broad aggregators. Um uh if I can drop names, it’ll be traction um capital not a stock. Yeah. [laughter] um ABCJ which gives a slightly broader picture to understand the deal activity, exits, fundraising to some extent but we augment that quite heavily with just very granular secondary research going sector by sector, subsector by se subsector to make sure we’re not missing any key deals. Then we speak with investors, we speak with lawyers to make sure you know broadly covered it and that’s further validated again to make sure that we’re looking at the right number. Um some of them can be a mix of equity and depth. So we have a team that obviously supports us um a team of at least three four people that spent about a couple of months just cleaning the data up. Um I think the database that we have accumulated over the last I would say decade or so is probably the best source of truth out there when it comes to Indian investing activity. By the way that team remain after cla I’m happy to say that I do believe they will exist. what what percentage of the report is like I mean in terms of the effort that went in last year versus this year how much of the report this year was it easier with all the AI tools that you have I think I think it’s not uh because then you go when you start going very deep in specific sub segments whatever productivity benefit you getting like I think it was as difficult right I think some things have become easier and I think that’s a broader question on management consulting and everything else also right but I think you kind of bake in that productivity when you’re planning see some of this stuff for example what Adita mentioned because we have we work with a lot with most of the funds uh in India and outside you have that access where you can actually go and talk and check you know numbers data does this make sense does it make sense a lot of that uh will still remain if there are new sectors for example you know we spoke about the verticalized quick commerce you’re talking about welltech platforms now some of them are so nent that it is anybody’s guess right where they go so you were still spending a lot of time trying to piece things together where I things have gotten faster is of course like just the number crunching and you know putting the stuff in one consolidated base that’s gotten a little faster. I think what Bono was asking also with data you guys must be speaking to a lot more you know say LPs out there family offices institutional folks also I’m guessing all of that was manual last year like for example you know the transcripts of some of these calls somebody had to go through it manually but is there at least say um you know first question there is what are they thinking about India obviously everybody will want to know about that specific question saying what are people outside India thinking about India and what is their insight about what’s happening in the country with VC with PE because all of these companies that have raised money from 2021 for example some of the VCs are obviously sitting on inflated valuations at least that is very clear so what are they thinking today and the second bit is you know with all the insights that you have was this something that came out that you probably felt last year would have been difficult to probably come up with with all the AI tools at your disposal maybe I’ll take the LP question and yeah you know so see a lot of these LPS are funds we work with directly and many of those are LPS into other funds Right. Both Indian funds as well as regional global funds investing in India. I think in general most LPs that we speak to are excited about India about the India opportunity. They actually don’t see it as a India versus US or an India versus global market kind of a trade-off. Um I’ll tell you who does right and there are a few pockets of funds that might look at it that way and I think they are excited one because there are some sectors that are very specifically unique to India. So when we speak even we spoke of e-commerce right and then we speak of quick commerce now we speak of u EMS or electronics manufacturing we speak of a lot of innovations in healthtech everything that is happening on the broking side which you know you guys know better than us uh and ontech some of them are also very uniquely India either because the problem is uniquely India or we are at a point in time where these solutions are likely to find some product market fit as in they’re not like way ahead of their time maturing uh or they’re maturing right so in that context I I think they want to play these themes. The second thing that’s happened is that they have seen some exits in the last 3 four years. So if you look maybe a decade back or even just 2017 18 no IPOs there were no IPOs there were no exits right u even strategic sales right few and far in between and I think the LPs that we talked to say that look we are getting more confidence that these exits show that there is a robust thriving ecosystem secondary market here and that gives us the confidence to actually go and deploy more because if you see fundraising in India for India right I think around almost 55 billion of VC fundraising for India last year And of course there will be portion of the global capital allocated that will not be marked fully for India but which will get deployed in India. So I had a follow-up question. So I mean when I started initially tracking the VC space I was always wonder where’s the money coming from because India is poor. So today all the money that comes into VC across you know all the deals that happen in India. How much of it is domestic pools of capital versus how much of it is global? How about LPS? LPS LPS I think see global LPS are still very dominant very dominant right? So many of the sovereigns from whether it’s the parts of Southeast Asia, whether it’s uh so think of GIC, Tamasc, CPP and many others right they continue to be pretty active but now you are seeing a lot of Indian LPS also right. So you are seeing us, you are seeing family offices, you are seeing offices of conglomerates that are putting them by. So I think that mix is still skewed towards a lot of it being global. I mean if I can push you ask you to put a number on it, how much of it is global and how much of it is domestic some directionally? I think more than uh half of it will be global. Actually that number used to be much much higher right much higher. Six years that you guys have done the report like has it changed materially? I think it was a lot more domestic participation at least and the thing that you will you might call out as hey it’s starting on a low base effect etc but I think to the point Aya made the momentum from family offices the institutional investors too that’s been significant over the last I would say four five years which also gives a an increasing amount of robustness to the market that there’s domestic capital looking to be deployed back in India so when you say family offices these are all let’s say second generation money people who had exit people are doing it they’re trying to create a new engine of growth I think a lot of these people also trying to diversify away from they’re seeing this as a different asset class altogether. In fact, they will see VC as a very separate asset class from private equity. Well, a lot of these guys would have probably invested in um uh the biggest family offices or the biggest LPS in VC funds would have first gone into P funds, right, as as LPs and probably some of them are still there. So, they see this as a different asset class and we’ll talk about how they’ve how it’s performed and all as we talk about it. But that’s why I think they get excited about and then many of them will also do direct investments right as they’ve like you know if it’s a big family office right and they have uh they can get allocation on the cap table then they will also come directly uh along with the fund why why are they really investing in venture capital because you know I think does a very nice report on you know just the returns and benchmarking etc the data isn’t like really clear about you know is there any benefit of diversifying away uh public markets seem better because liquidity is there and I think you have even more visibility So why are they why are these family offices really investing one is diversifying away from the core business but you know some of these sectors they’re getting into they probably don’t have any expertise like if a manufacturing company is investing into deep tech in a space that they understand I think there’s some nuance there but they’re investing into quick commerce for example through a fund and you know they’re getting essentially some co-investing rights whatever uh how how do how are they even making peace with this yeah I don’t think you need to know the sector right a lot of times even public markets people are going and investing or taking large positions right in companies where they would not you know they would not know right we say this tech is it much more [laughter] undiplomatic I’m learning so uh so you know they can you don’t have to we’ll come to actually why I think for some kind of companies or some founders family offices of the right sector and the right kind can actually be a big leverage if I’m a consumer company today if I’m a D2C brand or a you know offline consumer brand or I’m a quickcommerce first brand and I have a large consumer conglomerate backing me a strategic investor the amount of access and information that they can give me about distribution and many things is very uh so that’s a kind of information asymmetry about the market right so in general I don’t think that you need to know if you’re doing a private investment returns right see public market returns in India I think are are an aberration in the sense that they’ve been very high I think it’s only in the last one one and a half years there’s been moderation there’s been some moderation right and everyone thought whenever there’s a dip you need to buy more and oh that’s still a thing that’s still a thing even now I think last couple of weeks but I think some individual VCs have actually done well. I think the issue has been more on on distribution and not on um on MOIC’s on on on So you mean distribution of returns? Distribution of returns, right? And some VCs have done better than the others. One challenge that I think that’s happened is that in the 2020 to 22 vintage valuations were very high right and there was a rightment [laughter] right see I’m going to learn so I’m going to become better at being less diplomatic. Uh and a lot of investments actually happened in that vintage right. So of course you see when you when we say DPI we look at the exit value but you have to look at the entry timing and the entry value right and I think some of it has been that. So yes people need to be more disciplined about the investing approach but I think comparing VC as an asset class to Indian public markets over a four five year data is probably wrong. Even gold has done very well right. So by that logic you know we should all uh probably should invest or should have invested in gold. probably the one just tying two of the threads together. The one trend that we have seen is earlier family offices largely look to go solo and make the direct investments. I think their evolution into LPS is makes a ton of sense because getting access to the best quality assets out there. I don’t think family offices necessarily felt their ability to get their foot in the door as strongly. I think right now what it also enables them is it’s a broader top of the funnel lesser work actually when it comes to you know doing diligences etc because you as long as you have the right partner they’ll do that work and they’ll hold that bar for you I think that mode actually makes sense it’s a I would say it’s a more efficient way of diversifying into a more fragmented asset class if that makes mutual fund for an uh family office basically yeah we really building big teams now many of these family officers right are trying to build teams that are only focused on investments did you find that happening even now I guess And is it happening in 2026 as well as you as we speak just the volumes of amount of money coming in with all the things that has moderated over the past couple of years also in terms of at least say people talking about how some of these investments have done over the past 5 years is the volume and is the interest still high in family offices it’s a gradual increase um I think last year if you combine micro VCs family offices corporate venture capital arms those three broadly I would put in a similar bucket I think it’s gone up maybe about 15% um in value over the last I think what we are seeing which is probably a little bit of a forward indicator is the the infrastructure they’re building up internally and we’re seeing how their thinking has evolved because I don’t think the x amount of capital deployed today and the x amount of capital deployed 3 years ago has the same flavor to it if you really dissect it in terms of the partnerships they’re taking to the market the way they’re thinking about deploying and also I think there’s a certain cautiousness that’s come about on which sectors do we really double down on so it’s I I don’t think just the topline numbers does justice to the dynamic underneath but I think it will I’m telling you many founders that we speak to who have found the right family office usually these family offices they should be more patient because they should be more patient and some of them may not be because some of them may not be used to this asset class we were speaking like I was telling like how because until now public markets were the only game when I say until now let’s say which is a very liquid market right you can so I get to see my pricing every day I get to see my marks every second and I get to see the 12% guaranteed number it’s there in the Indian constitution I get to see that I get to see that every year on year joking [laughter] how is that conditioned let’s say the LPS the newer investors and the second like the follow-up question to that is after 2020 there are a lot of tourist into the public markets and the tourists are now leaving u they figured out okay it’s not there in the constitution I can actually see a negative year it was surprising for a lot of people was it a VC phenomenon also two parts like however the public market returns conditioned the behavior of some of those let’s say funds investors newer investors great question I think there are some there were some family officers that were actually very savvy like these might be people who were individually LPS in you know other funds either outside India or in India so they understand see the biggest thing you need to understand in this asset class is that it is more unpredictable and it will have a longer gestation period and especially now I feel if you are going and investing say in in deep tech or in climate, right? Or even in something that has a very long gestation period. Your holding period and your expectation also needs to be much longer, right? There were people who had this understanding from their prior either investments or their work experience and they were fine. But definitely I think there were some who have to get used to this model, right? That you cannot can’t see a you won’t see the price move up and down every day. You cannot ask for an exit, you know, every year or every second year. And look it’s a which is why if it works your your returns are going to be disproportionately higher right so you have to kind of live a little bit with that uncertaintity but I think what we are seeing is that a lot of these the corporate arms and the family officers are building teams and they’re investing behind getting people who have some experience of investing or managing portfolio companies to get better governance right and to get better discipline about underwriting deals and how do you do diligence. Yeah, I think you spoke about there being too many lines now. I think in terms of sectors I think we see in India was essentially like a commerce play SAS play and IT maybe to a certain extent but with all of the things happening with different sectors all of the family offices for example are they chasing trends which are reaching their peaks like do they get to know when everybody else is exiting and they’re probably you know somebody’s selling them something that they’re probably not oh I think many of them very savvy in fact I agree right many I agree actually and all these people that you’re saying they’re hiring Are they all specialists in particular sectors? Are are they all like generalists? No, mostly generalist. Mostly generalists. I think maybe just talk a little bit of how let’s say from 2021 to from the first year of you guys doing the report to today to the question how has the like have they matured? How is the behavior changed? How has the composition of the asset class itself has changed in terms of people who are investing? Like this is like a very subjective opinion. I get it. But yeah, I think it matured as a we as an ecosystem, right? Right? Because see I think if you if you go back even 10 years right I think there was a period 2013 to 15 16 right when there were a bunch of these consumer tech kind of companies the only game in town right it was the only game in town right some of them still survive I think around you know some of the cap companies for example started then a few others and then there was a moderation that happened right and then again you saw just pre- pandemic doubling down on the consumer tech winners whether they were the horizontal players or in each vertical uh segment you were looking at who has actually scaled who has done better those guys got funded and those guys come out they went and IPOed etc later then if you see the pandemic period around that time I think that is when you saw a lot of India SAS for the world right and that was a huge driver for a lot of the VC investments uh the simple reason that we said look we have great talent this talent has actually worked in some of the top tech companies in the US you had had examples of a freshworks of a Zoho of a few others actually scaling and um and many of these companies actually went and sold to Fortune 500 customers in in the US. Uh in fact most of it wasn’t SMB SAS at that point in time. It was enterprise SAS building in India for global was not really a thing. Yeah. And uh so you saw a big kind of you know boom that happened there and I think then again 22 23 around that post that time right you started seeing a more of a I would say a slowdown in in funding it was more of a consolidation phase and now again you’re seeing some gradual uptick. Long story short, my sense is that the ecosystem is maturing a little bit in terms of the expectations that funds have, LPs have of the kind of return profile and also of the process that they need to follow to go and invest. I think the diligence questions right what they look for in the same sector right a lot more of them look for it now. I think that was definitely you know look the cynical point of view will be that that they won’t right but but the timelines also have also increased right I mean they are also being very patient with deliberate it’s being more deliberate in a couple of areas right like one is if you look at a series B investment today versus maybe 3 years ago there’s definitely a ask for more of the metrics these let’s say consumer tech alluded to it cohorts burn multiples like I think runway as a concept obviously people are really hammering down on to understand like where do we really cut this and it starts rolling by itself. The second area where I would say timelines have increased but I think that’s a very good sign is the ask on what governance needs to look like has quite dramatically shifted I think the e-commerce learned on what are the basics that need to be in place I mean we hearing what we used to hear for series D raises about 3 years ago [laughter] audited financial statements let’s begin with that right um I think there’s a lot more focus on that and I think the question that you had on um family offices I think that’s where the thread was also continuing and early we spoke about them partnering with other investors I think a lot of that maturity is funneling very fast. So earlier to the point Aya made the big family offices people that really were in the know they continue to hold a rigorous process but really some of these younger family offices through their partnerships in the market I think are very fast beginning to understand what do I really need to look out for and I think that’s been also a a very good shift in the market since you said what shifted for these family offices a lot of the founders are watching this probably will want to know what approach works for family offices versus a VC because when when you go to a VC I think you’re actually talking about just numbers, right? You’re saying I’m 100% year-on-year growth. There’s my unit economics and uh essentially saying, you know, consumption is increasing. There’s my target segment XYZ. But the family offices, like you said, are more savvy, much more nuanced. I’m guessing a lot of them are more long-term. So, they want to see some of these companies build for the long run. Also, is the approach different in terms of evaluation like because all of the entrepreneurs need to know what should they really prepare for because the approach is different. So, it is right. I think especially if you’re talking to a family office where the parent conglomerate or that company says a consumer company right and you have a consumer startup and you’re going and talking to them I think the discussion happens at a very different level when I say different level I think it becomes a lot more first principles fundamental what are you solving right how will you really build distribution user behavior right user behavior so it’s it’s a little less about Because see a lot of these guys are also as an investor they’ll also be more cautious as they probably would be in their own businesses. So they want to make sure that this is not just hype and I think the kind of questions that they will ask to gauge the merit of the founders their expertise but more fundamentally why are you doing this like I know founders who go and spend a lot of time with these family officers and they spend the questions they get asked is why are you doing this and they spend a lot of time talking about it they don’t talk about oh I’m in 5 years I’m going to be at this number or you know that milestone. So a lot more 101 and then it gets into a lot of specifics. Now of course if there’s a family office which is not part of that sector right and you are coming from a very different sector then it can become a little different but still they’re going to ask you more fundamental 101 questions but out of curiosity for this newer age nonVC VCs your family officers or UHNIS or you know some of these companies how much of this is them like for example Indian companies are notorious for not spending like we all know the numbers the capex numbers have you know they not really gone anywhere where one might cynically argue also they’re really bad at investing their incremental cash flows. Is this are they investing in this newer age companies because they don’t have the imagination to build the newer age models themselves and this becomes like an opportunity search for them to acquire in the future or is it just because they have too much money and they have nothing to do with it. Good question. I think you framed it uh in an interesting way. I think the view of these companies as a way to get to the next level of capabilities and the fact that it’s a capabilitydriven acquisition is I would describe that as a majority. It’s less to do with you know we have quiet capital sitting and I don’t know what to do with it. It’s a pretty smart move. You see this trend mirroring actually a lot of what we see in Europe in the US. One could have seen it coming as well but you are right. Um there are two forces to this. these are investors that are a lot more value conscious especially these if you look at large cap um trying to go for these strategics and and I mean they’re under the radar they’ll have to be thoughtful about it but I think what ends up happening is in a market where you know there’s a lot of focus on valuation the synergies that these companies can offer to the companies I’m talking about companies very specifically I mean are non-trivial as well so I think that balances out which is why these companies also end up becoming fairly competitive in some of these deals that just standalone investors unless they have a broader platform can’t really compete at the same um valuation to follow on onto his question. Say somebody’s raising capital today because you must have spoken to founders and venture capitalists in this for this report. Would you have a mental framework of when should a founder approach a VC versus a family office? Because you know the technical mindset today or the entrepreneur is also confusing saying you know the money is of the same color but what comes along with it setting aside the fact that I’m desperate for money. So [laughter] no I think you’re probably saying I’m at square one or square zero somewhere around that time right I have no idea who should I go to maybe I’ll you know you may have a different view so we can we can all debate and discuss this. I think firstly you need to be very clear do you want external money or not. I think not all models need external money and it’s totally okay. In fact if you see so many of the public market listings who’ve gone on from small to become midcaps and even larger are companies that generating cash flows that really didn’t need external capital right there and many bootstrapped examples that you can think of. So I think that is the first question that you need to ask yourself and there is there are lots of factors that will drive that decision. One is of course personally the pace of growth that you want. Uh also some sectors will need more cash and either you fund it or somebody else has to come and and and fund it. So that should be very clear. The second thing then is okay now I need cash. Who do I go to? Look, my sense is if you’re doing anything that requires a long gestation period and high amounts of capital for iteration and you don’t know if the product market fit exists or not, you should try to go for institutional capital because they will probably write larger checks. If not now, then in the future and they could also then help you if they come on board, raise subsequent rounds, connect you to other investors, connect you to their companies, portfolio companies, build that build that ecosystem. Um so for example if I’m building something if I’m building a palenteer type equivalent in India today I should go to uh you know some of the VCs because they will need that capital. If I’m building a men’s face wash company for tier 2, tier three, which is actually a company that was made and bootstrapped and got acquired by one of the largest consumer conglomerates, not minimalist, um this is a company called Mootstack, which uh Godidge acquired, then you don’t need to, right? Either raise capital or you can then go to a family office or a corporate venture arm uh which has expertise in that field and that is willing to wait it out for a longer period of time. But even there if you say look I want to get to 100 crores in in 3 years or 4 years or that’s my ambition then you will need capital. If you’re building an online brand I think capital might help you do more performance. I’m not saying it’s sustainable but if that is the ambition you will need to go family office usually will not go in and write as big a check as some of the VCs will do right because their capital pool is limited and I think they’re also more stringent about where to deploy. So that is one one kind of framework on how to think about but but isn’t that isn’t that better like before you answer like as in just like the family offices for example or the institutional capital the difference is obviously this the buffer available you can write followons you can get more in the network to actually participate but say if I’m building something in consumer and if say this family office knows really good consumer tech for example I’ll go to them they might be stingy with how much capital they give me isn’t that better because I’m diluting lesser today. Um, and because this is such a well-known, for example, I had an inkling that this might be the only reason why somebody would go to a VC that capital available is more. But say a larger company with enough in the coffers. Can’t they promise some of these best founders because these are not every day you don’t meet a great founders come up with a great idea. So, can’t they really promise them saying, you know, if you do well, we’ll back you why don’t you take small amount of money today, go experiment, come back to us a year later. Isn’t are are those conversations happening? Yeah. Um, two thoughts there. Um, I think when you think about VCs, especially ones that either have tremendous like total depth or actually are present across multiple geographies, I think the one thing you can’t really underplay is the access to knowledge that you get that some of the family offices probably don’t have the same perview to like you will get the best of the playbooks for the country, but you also have those playbooks augmented by the best of everything that happens elsewhere. M um these VCs also will have much deeper connections in the ecosystem and at least from what you have seen it’s a pretty friendly ecosystem. They’re happy to introduce founders to others to the point that Arthy had mentioned. Uh the second thing over here is not directly answering question but I think the way to think about this is at the end of the day these are multiple investors involved in every deal. So more often than not we actually see VCs, family offices and a couple of others of Ether architects all coming together to sort of get the best of all worlds and you don’t haven’t looked at the data really but if I were to look I would be willing to bet 90% plus are not single investor deals like you have these syndicates coming in etc. Um and finally to the question of can a family office technically say hey here’s some capital try it out come back yes but I think some of the global VCs might be a little bit more understanding of the fact that something is experimental it might not take one year it might take two years but these are the signs we’ll be looking out for it’s very case to case so I don’t want to broad brush this but that’s probably why the ecosystem does at times especially in more experimental bets more nent spaces tend a little bit towards VCs I don’t know if you think differently fully agree this to both of you. This is just the inversion of Disha’s question and because we were speaking to some of them earlier without taking names like like what has gone wrong whenever companies have gone ahead and chosen a VC or a particular type of investor what have been the horror cases in terms of generalizable let’s say uh ideas that let’s say somebody who’s a founder who’s listening can say dude this is the thing that I I don’t have to do see one is you must speak to other founders who have taken money from that individual fund and that is more to understand effectively if I really strip this down what are you doing if you’re taking VC money or any external capital you are saying I have a certain idea which I am going to make into physical reality and it is going to achieve a certain size and scale and I need help uh financial as well as you know otherwise and if you come on the journey then at some point in the future you will not only get the joy and the purpose of actually you know helping us out as entrepreneurs but you’ll also make returns right that is really if I really strip it down to the 101 that is what you know that is what you are doing you you should be very clear about the kind of VC when I say the kind of VC the specific people that you’re going to be working with the two of us for example all four of us will have different styles absolutely that is at one level right we may not gel with somebody who may really like to bond with somebody else right so that is one filter now look it becomes harder if people are like look I have to raise money and I don’t have choice and uh so I can’t really have have the luxury of picking and choosing but if I was to answer your question what can go off right one is just that that your individual styles don’t match uh the second is say I want to run a D2C brand you’ve invested in me you want me to become a platform and that will create fiction at some point right so just misalignment the extent to which you can pick it up early which is why I’m saying you know talk to other other founders fellow founders that’s the second thing that can go wrong third thing that can generally go wrong that we’ve seen is just lack of transparency see both ways uh that’s evergreen one right so that’s that and that happens both ways I wouldn’t blame like you know it’s only the funds right um it happens with with founders u and it happens with the funds so those are the kind of like things that happen and the fourth thing I think that sometimes happens is that there are there are moments in a company’s life cycle when they need when they might need more active help and there are moments when you know others should be hands off and sometimes there’s misalignment there that’s a fine balance very fine balance and when things sometimes it go south with companies that’s when you see a lot of these fault lines actually come to the four so it’s very I know it’s very generalized because hard to give no I think without without names but will you add anything no actually covers it I mean the only other thing that people usually watch out for is how much capital are they accepting what valuation I think we’ve seen that discipline come in over time but yeah I think you captured it pretty well I mean just one more I mean partly cynical question uh cynical guy he’s not the guy he’s royally [laughter] I’m a very optimist guy. Yeah. Yeah. Generally like I would I mean I’ve never gone and raised money but I would presume that if I’m a founder and I might be put in positions where I might not want to do something. We were discussing a few cases where let’s say you are expected to do certain things with your numbers. You’re expect to do it could be doing a entirely new line of business that you have absolutely no business doing. Apart from these obvious let’s say pressure points where you might be forced to take a detour which typically doesn’t end well both for the investor and for the founder. How would you advise a founder to navigate this pressure points where he kind of is in a tricky position but doesn’t know how to navigate it? I would take this. Yeah, I’m thinking I I mean I would presume it happens more often than not. I think the pressures are very real like for sure. Um I think it all goes back to in the some of the horror story situations that I’ve seen. I think what he says actually he said holds a lot of water which is I think you’ll have to be in some alignment or a good amount of alignment with the person that you’re getting into the deal with know who you’re marrying basically I think in some sense and we have seen this in more I would say forward-looking founders a lot of the initial questions are also about the paths that they can take to be very very clear as a company today there are a few you know threshold triggers we’ll see on where the market is going look if it’s going that way this is probably where we’re headed But these are pretty early conversations. So it could either be even before the deal but it’s usually preliminary then because you know you don’t get to a lot of details but right after the deal just really sitting down talking through when we are at a crossroad this is kind of the direction that we are going towards and at the end of the day it’s all going to come down to your equation with that specific investor. I don’t think there’s really anything else over there. I think there are signs look there are there will be less obvious issues that can come up. So not issues but decision points. So you can get a good sense uh I mean simple stuff like should I I don’t know I’m a series A series B company should I hire somebody as a chief in you know invest investor relations officer chief yoga officer right [laughter] and the investors are very keen for whatever reason right they may feel that those guys will come and help you raise or whatever right but you may have a different point of view on it right I want to expand internationally right somebody said no don’t do that right so there’ll be lots of these question velocity of growth is usually a big sense of misalignment, right? Where I want to grow at a certain pace and then I’m told to grow at a certain pace. Sometimes it works, many times it does not work because the original business model may not have been attuned or at least my capability may not have been attuned to growing at that pace. That most of it you should try to to the extent possible try to solve before you actually get into a partnership. Right? I think that is but I understand that many times you will not be able to right might not have a choice. You might not have a choice or you may not realize, right? It’s only sometimes when hits the roof do you actually more of that. Yeah. [laughter] Uh I said it and I looked at you. So those times is when you realize uh what the friction points can be. Um I don’t think there is one kind of magic bullet to uh to really help solve it. I know I know I’m supposed to be listening but I think one of the thing that most founders tell at least us at new LinkedIn poster. [laughter] What has helped is I think generally transparency. I think you know one of you said it. I think it’s best to tell investors what you’re thinking very often because most of these misalignment is also because you’ve been having some ideas in your mind and you keep thinking about it for 6 months and you assume that you know everybody around you knows it and generally it’s not the case. I think because say if you want to grow only 50% next year because of whatever constraints you should just say it out loud and you know because that conversation shouldn’t happen 6 7 months down the line it should happen right then and there at least those are small things basic things that people can do essentially but one follow-up question to you know what Bowen was asking most of the you know people watching this might also be wondering you’ve spoken to so many of these founders LPs family officers lawyers lawyers there are sectors that people are keen on there are sectors which seem too hot at this moment. There are sectors that people are not keen on. If there’s somebody who’s building like a company ground up today and he’s got access to capital, which sector should he ideally be looking at from a 10-year perspective, not not from a 1 2 year, 3 year perspective because those trends are very clear from the report. You know, Welleltech is doing great. Quickcommerce is doing great. Commerce, you know, in fashion, you don’t want anyone else to do well tech now. Yeah. No, I think you know, you know, we we we we probably want more people in WTE. But if if you are a 20 22 year old person coming out of engineering or any college and you’re trying to build in something what could it be because some of these guys must be telling you hey you know I’m keen on this sector because more most people are indexing on PLI schemes government incentives and these are businesses that might be built over the next four five years but who knows what’s going to happen in 10 years. So are people talking about these? Yeah. You want to start? Actually I think you should start. I’ll add on. Great. So uh because you may have different sectors right but I’ll uh so look I think ideally you should we are at a stage where as funds have become bigger India focus funds have become deployment dry powder for India has become larger and they’ve seen cash they’ve seen exits they’ve seen IPOs in principle you should be okay with longer gestation periods and longerterm bets so when we speak of um clean energy right renewables focused startups or you’re going really deep tech right which is still very nent in India right as compared to what it is in the US or even when we’re talking about generative AI native solutions we’re doing a lot of AI but a lot of the initial work was still more around you know the the layers and the rappers right versus something being very fundamental right which now you have a few but there’s so you can build for that right so I think that’s one kind of theme right long gestation period you can go for these but is it fair to say these things tend to be very capex intensive very capital heavy some of them will be right some of them absolutely will be I mean the other one I was going to talk about is uh just manufacturing right and uh I think EMS as a space and the entire value chain uh in in manufacturing is a huge opportunity for us uh to to partake and not just because of China plus one I think in general I think there is there is capability and you can actually do a lot of good work there it may not be a very glamorous uh industry which also I think is changing because now a few VCs are going and backing some of these players. But that’s the other one. And then the third one I’ll pick is uh which might be a little contrarian because people think there’s a glut of companies and consumer but I think that there is you will still have a certain trend towards premiumization right uh in the country. Um now whether it happens now whether it happens 5 years out or consumption slowed down. Yeah, everyone knows consumption slowed down, right? I’ll tell you Nestle had great results, right? And all of that, right? But over a long 4 5 year period or a 10-ear period, I see little reason to believe that consumption in India will not go up in a country that has largely been savings focused, right? Both consumption as well as obviously investing and you know that’s why tech and all have taken off and within that I think there will be two tiers of opportunity, right? uh one is if you build something that is say value retail right that is that is really focused on mahas distribution and there’s some excellent examples of this may not be VC funded where there’s some public companies for example that have done value retail very well or you go and you go up the ladder and play the premiumization tailwind the niche sector the niche sectors I think they will not be niche yeah they they will expand if you think of like for example think of beauty and skincare uh I think there’s a lot companies that got founded were in the mass mass teach segment. Yeah. Everybody wants to be beautiful, right? Uh but including the people who are actually going up you know the per capita ladder, right? So there’s no reason to believe that you will not be closer to where some of the more developed say Asian countries are when it comes to that particular subsegment. So that’s one where I think you can build. Um I’ll maybe just add follow the consumer thing but I’ll let him finish. Yeah, just adding two thoughts to that not specifically sectors but I think looking at fast growing spaces and thinking what are enable opportun enablement opportunities is pretty interesting. For example, we saw a group of quick commerce enablement companies. I think it’s also looking for opportunities and something that’s stretching so fast that’s going to have institutional voids could be an interesting play for sure. Um something that most people don’t really look for that actively. What can be an example for something like that? I would actually say clickcommerce enablement and people talk about software SAS etc. I think a lot of the horizontal SAS now the play really is AI enablement etc. But I think as new industries come out or subsectors come up thinking about verticalized solutions for that place is not only solving a need gap but I think you’re positioning yourself very well for potential acquisition down the line. So that’s one thought. The second thought is I think we shouldn’t play down um researchbacked ideas. I think the less research and knowledge that actually goes into your idea, the less you would end up having. I think a good example actually is I would say beauty and personal care where because of how well equipped the ecosystem is for manufacturing, I think someone can come in day after tomorrow with a new trend and possibly disrupt you. So I think there is an angle of is there a knowledge motor I can have as I go into this. And the third is how do you think about your addressable market? Um I think software again is a good example of this. I think building for India is a great stepping stone but you need to have your eyes on either the India US corridor or at least at the very least a regional corridor. We have seen a lot of our I would say older Indian software companies testing these playbooks and seeing what really works. Um I would just park those three ideas as people as thoughts that people should have as they’re thinking about starting up today. Just one follow up on that research thing like I mean we know that we don’t really have a great ecosystem like to the extent that things are happening to the extent that you guys have seen it is that changing because like for example in the US pretty much at least the initial wave of startups came out of universities uh they came out of government funded um programs today like take any major um you know legendary companies they all have some government threads or university threads but that’s not really a thing in India to the extent that it is in the US huge opportunity if you ask huge opportunity. Uh in fact, see if you want to I was talking to someone last week about what are the four four or five elements okay that are needed to really create a startup ecosystem. Yeah. Anywhere in the world right it’s a nice fancy word though ecosystem but [laughter] so uh because you are cynical so let me break it down. Uh what does that word mean? No no I meant it in a sense that we keep saying ecosystem. We don’t have an ecosystem. Yeah, that’s what we don’t because see we’ve had I think we’ve had some exceptional founders and some exceptional entrepreneurial hustle which has always existed in this country and um and some very sharp and foresighted investors who got together and have created you know these results and ecosystem means that you’re creating something that’s very repeatable and you know very sustainable playbook playbook right so you need one is you need capital you need top talent you will need some relatable hero right of people you can look up to and be like this person went and did this you know uh and and started something sold something IPOed etc right and then you want to look for fourth thing I think you should look for is some wave or some tailwind a lot of the US stuff that you’re talking about the right place right there the right and there were specific waves for example what is happening in AI today right which many of these US comp you know founders actually rode on and the last thing which very important is an environment and that environment has to I would say almost physical and everything that you know like why could you not have I accommodator like setups in India. See in a way a lot of the funds are trying to also do that by having accelerator programs by trying to go preede pre idea I think some of the top institutes of the country at least the alumni are getting together and trying to do this but it needs to spread beyond the IITs right it can’t just be you might say oh Bangaluru is an ecosystem uh right but I have met some exceptional entrepreneurs in uh in Jaipur and in kimur right so they may not have all those elements especially the environment there. I think in this city you can say the coffee shops are probably an environment right so um so that is a huge opportunity uh and can we do that can we do that through the government can we do that through private institutions I mean you’ll you’ll obviously have places like every like for example there’s a t-hub in Telangana right there’ll be others right in different states but I think if you play that right you can actually create or help entrepreneurs who can build for this longer term so huge absolutely agree with you I think we’re not doing it but it’s a big opportunity I’m not as cynical as him. But I have a follow on my like are people like me overtly cynical considering the fact that this is we innings not even innings warm up of this entire stage. For sure. I can I can I can answer. I’ve also answered it. Yeah. Yeah. But but we’re very early, right? We’re very early. VC landed up in India in 2006. We’re talking about 20 years. I think it’s taken it will take a few cycles for people to understand. Yeah. investors, founders, everyone how it works, right? Yeah. I’ll qualify the the word cynicism. I think no doubt the opportunity is massive. I feel like sometimes a question that I have as a cautiously optimistic person is are we aligning ourselves toward the direction that will take us there the fastest. I think that’s where my cynicism comes from. I was speaking with a friend that works at a policy think tank um and it was exactly the same question which was what does India need for an ecosystem? Yeah. And as you were talking about it, it felt like a bit of a chicken and egg where funding needs to come from somewhere. Funding that’s patient, funding that understands the nature of this game. It needs to go into the right catchments. Is it postgrad schools? Is it undergrad schools? Is it specialized institutions? Say an AI school. It needs to have the right talent. We need to have the right infrastructure to attract that talent. So it’s a few things going on over here. So I think I probably fall in between this group over here. Um yeah on the consumer again I’ll tell you all the cynical numbers. So if I’m a public market investor I’ll rattle off all the macro numbers. You look at consumption growth has gone nowhere. Remove the premiumization trend pretty much everything across the board. You take any listed proxies the sales have been flat. Real wage growth is since co has been uh not flat negative. Then there’s this overhang of what AI will do. Then there is the fact that for three straight years we had the worst rural uh economic phase possible. seems to be turning around. If you take away that premiumization trend, if you take away the fact that whatever that X number of millions Indian X number of not millions, lakh Indians who have the disposable income to spend, which probably explains the premiumization trend, do you think that that opportunity set you in terms of the consumer space can it spread beyond those things? I think it can. Look, I think if I was building only for here and now, so let me answer your question. Is there a structural consumption issue? Yeah. In India, right? I don’t think so. Okay. Right. Uh I think that again that’s a different separate podcast we can get into on what what happened. Uh but it’s true a lot of the large listed consumer companies saw kind of flat growth. I think now this quarter a few of them have uh H1 has been doing 2% for 20 years I think. Yeah. But I can give you examples of many um if you want to name companies right we can I can name a trend I can name a zoo zoo and I have many others like uh V2 retail and a few others right Vijay sales uh Vijay sales has is growing because of uh biswa’s standup act [laughter] on on it vij sales but I didn’t know they were at such a scale until like 5 days ago but see this is a this is a great example right so all of these companies have actually seen pretty high growth right zodio has seen high growth right 2 has seen high growth I think a couple of these companies in Kolkata which have uh none of this is stock tips please yeah none of this [laughter] u so it’s not true right and now why are they seeing growth because clearly now there is a unbranded to branded play that is happening for a certain section of the society and there’s a large chunk that where penetration was already very high wage increase has not happened there was price increase also a lot of these companies consumer companies there’s a lot of reasons so one I think that’s not true so there are pockets even nonp premium that have seen growth this middle large middle chunk you’re talking about my sense is it’ll come back here we are not structurally where we are no I get it I get that the the blind spot in my argument is I’m making a point in time judgment rather than a trend so for example this spacew watch company I’m telling you about right I mean they built to a very decent scale very profitable company and have had a fantastic exit right there various others that you can kind of think of I think that if you are playing a 7 to 10 year window which you should as a founder there is enough opportunity You need to be very clear on what your mode again it’s very abused word but is it is it in this case is it the product you know if I’m running a skincare brand for example and I don’t own my formulation which is what I think is true for a lot of companies then my only mode really is my marketing distribution not even distribution right I think it is marketing right and it’s performance marketing which basically means if I’ve raised money and I’m going to spend that to me at least is not a very sustain you might still have some successes but I don’t think it’s a very sustainable more and the premium segment I think will become much larger because our premium is not global premium still right I think if I look at global standard we’ll still be we are the benchmark for ourselves so I think that there you can absolutely build I don’t think AI by the way will once see look at QSR as a segment some of the QSR platforms have seen very high growth uh right and of course you’ll find exceptions to to you know all segments I don’t think the so that is also a little more protected by AI I think AI is going to impact uh you still need to go out. People will binge it because of the you still have your waffles, you still have this, right? You still eat. [snorts] So yeah, so I’m I’m a lot more optimistic on uh on consumer long term. I think suitcases paints that trend very well. If you look at Safari and Mubara and National Miles and Yeah, absolutely. It’s a gradient even the India premium. Yeah, we haven’t spoken much about the report by the way. Yeah. No, no, but I think all of these are from the [laughter] report because the because the numbers are out there. I think you know I had two more questions like one one final question on the ecosystem. I think you I spoke about the ecosystem. I think bhwan’s very cynical. I’m not I’m optimistic. I think uh some optimism I hope flows. Um but I believe that you know I think institutions are trying at least education institutions even in rural say you know at least there’s some support from the government etc. What are one or two things that you picked up on while drafting this report that we can all do better? Like not not for the VCs, not for the government, just all of us collectively. Are there one or two things that we’re not doing that we can do better? Capital providers, companies, founders, entrepreneurs, are they can they speak more about what they’re doing? Can they ask more? Anything else? I think we need more. I think we need more capital. It may not necessarily be the kind of VC capital that we are seeing, but for example, you know, startup India doing a you know, second seed fund, etc., Right. You need that kind of capital which flows into companies and capacity building and capacity building. Right. I’ll maybe add one point and an you should add. I think you need more inspirational stories. You need more absolutely right. Relatable stories. We are at a place today where I think more people are willing to you know start something and go on a founder journey. It’s a thing right? It’s a thing right? Which also has its downside right? Because ideally you should not do it because it is a thing right? You should do it because you may have a great exit in 3 years or 2 years but base case you should assume that for the next decade right you are working very hard and many times by yourself on problems which will not have obvious solutions. So you need to be ready for that long haul. Um so to the extent to which I think we can also create those heroes and support people. You know when I was in in college in undergrad it was still not people were still like why do you want to be a founder right and I think that has changed but it’s not near full potential I think there’s a lot more we can do as people to support them all that’s why all the incubators and accelerators environment goes I need to help you do that ecosystem again ecosystem and if you have those stories because see tomorrow if one company fails you will have 10 writeups written on it right [laughter] uh and sometimes successes are celebrated failures are cautionary takes and then people talk about it right your family your parents will talk about it oh you know that’s this of the family right um well no of everyone know if you want to start something and some other companies failed and some publication writes about it every week right then they’ll say look what happened right so I think that is one that as a general society I think we need to get away from sorry like because uh we recently met this uh team yeah they’re trying to bring out inspirational stories from basically they were trying to bring out Canadian entrepreneurs who’ve done well but aren’t really wellnown and their point was let’s say in Mangalore nobody’s going to relate to Elon Musk and Larry Page because they don’t really care they’re alien but if there’s a local entrepreneur who’s built a small business they might relate to more to that but to the extent that you guys have paid attention to these trends u while doing research for this report is this phenomenon of entrepreneurship becoming is it spreading beyond obvious cities like the top 25 cities that we have spoken about like would you guys have an opinion on that beyond beyond the top 25. Frankly, I don’t think I’ve seen a meaningful trend. I could be wrong. I haven’t seen the data dug into it, but I would say it’s definitely beyond the top four five. I think it’s a good Yeah, absolutely. Yeah, it was like few years back. Jaipur. Yeah, 100%. Few years back it was Koreangla, [laughter] right? Um I mean look at so obviously you have the big cities, the metros, right? NCR and all that, right? But Jaipur, Kimur that I given an example of, right? Lucknau right. So I think a lot is coming out of these places. Pune has done well. Pun has done very well right but again I don’t want to repeat the environment point right but I think the reason it’s important is you have to give that environment to to students and to no 100% like the capital markets business is a prime example of what an ecosystem can do like from listing from raising capital from having participation of people who want to buy your overpriced IPO shares [laughter] so you need that ecosystem so like adding to your point what more we can do um so where this comes from is I do a lot of our recruiting with you know top tier colleges and I constantly speak to students and professors there and the biggest ask is well the industry doesn’t talk to us much it’s a very transactional usually oneway traffic which is they come on take the recruits for hiring and walk away I think the biggest issue is we have so many educational institutions we can debate on the efficacies of those but really what’s missing is a touch of reality on what’s needed on the ground I know we’ve spoken about this for probably two decades now but I don’t think that’s the rubber has not hit the road over where we need more I just don’t mean only startups etc. I think it’s very important because they at the cutting edge of innovation but just steady state industries just be more involved in the local institutions it it needs to translate those you know classroom lessons to hey this is what’s actually going on out there you know Pune reminds me I think they have such a beautiful startup community I think it’s a very small city with like one or two incubators which are where most of the startups spend time I think what’s helped them is essentially every startup tries to help everybody else I think they keep referring to every other fund out there saying that this guy’s building something really cool and you know most VCs in India today I think are functioning on referrals right because I think there’s so much deal flow unless somebody really tells you this company is really good you got to take a look at it nobody’s really going to bother as well which is a problem I think another problem um but you know my last question I’ll let Buan also ask I have a few more if you guys will indulge me so I have one last question is you know in 2025 while you were drafting this report did you notice anything that was out of the ordinary because I think we all peak of general trends. I think was there anything that was exact antithesis to what the mainstream media is writing about about the startup ecosystem and in 2026 do you see that continuing? actually not with regards to what people are writing but I think the one part that we found um a bit of a contrast which is why the title of the report is also warm currents and cold seas is like mentioned we see the ecosystem the investor ecosystem day in day out and we knew that there were headwinds to just broader deal activity in India I think what caught us by a little bit of surprise is the this little sliver that we call VC and growth was actually still doing quite Well, can you just define growth and VC? Oh, absolutely. Um, it’s great. We just started. [laughter] Let me let me recap that. Yeah. So, the way we call VC and growth investments is anything that’s deployed by the typical VCs, family offices, corporate venture capital funds, micro VCs, they all fall in the bucket. It also includes the growth arms of the typical PE funds. It also includes all the activities that occur in consumer tech, health tech, wealth tech, fintech, SAS, everything because typically the nature of those investments still ends up being more growth um oriented. Any buyouts are of course removed. That’s what I mean by the section section of the deal activity that’s called BC and you guys have like like I was mentioning earlier you guys have a unique definition of compared to the textbook definition. You’re done. [snorts] Yeah. I have a few more questions. I mean I should have asked this uh earlier in this thing. I so because everything happens in a macro context and we know the absolutely same totally not crazy totally calm macro environment that has been going for the last years how much of that does have an impact on the VC/growth ecosystem and the second thing is like in terms of because now VC is becoming a thing in India compared to the public markets like is that relative tradeoff calculation changing in terms of people saying that okay dude public markets is not really the only game in town people really feeling a little hot for VC in India like start with the micro question like how much of whatever is happening outside is that having a bearing on RD as big a bearing on VC as it does on private equity right or more buyout funds I think one reason is that the nature of industry is that if I look at the P industry anywhere right they would in invest in larger companies very stable cash flows would end up being manufacturing consumer pharma CDMO CMO within within healthare mature businesses that have very acute linkages with uh with global markets right in the VC ecosystem if you see for example in India if you see who’s getting the funding and who’s actually growing scale in no particular order a lot of the welltech platforms right or the broking platforms right that will have no I mean it will have some implied relevance if you think equity markets will go down and retail participation will come down and you know the net addition of uh DMAT accounts will be lower than what it was all that is fine But a direct correlation with what is happening outside will probably be more limited right same for quickcommerce right and or e-commerce earlier right it’s again very insulated it’s not like we have a huge um ecosystem of VC funded companies that are having direct linkages uh you know outside the one area I can think of is more software SAS AI but that impact is less to do with the macro right I think that impact has to do with the fact that there is a huge NI disruption that has happened And SAS companies that could not or have not reinvented themselves, okay, either organically or through acquisitions of AI offerings will face headwinds, right? They may have a certain cash position on their books. Uh but growth will slow down, right? So I think in that context it’s it’s kind of not that correlated which is also to Adita’s point which you know if you see the data P market in India is still very robust. uh but last year you saw a dip in uh in in in in total value right versus the VC market which has grown and even if I strip out the top deals from last year it’s still grown versus 2024 right right so that that I think is more insulated public market I so second question yes I think trade-off yeah yeah I think people are see if everyone had assumed that you said 12% I think everyone was assuming that 18 to 20% compounded is that’s very conservative by the way [laughter] I should come talk to you right to send you [laughter] and now I think they’re realizing that that’s not the case also see what happened when the public markets really boomed in India last 3 4 years is private valuation also really increased and uh now I think there’s a situation where you can see some tempering of valuation and you have seen what has happened in public markets that has happened on the public but has it on the private side it’s happening I think it’s happening in some places it’s a little less obvious which segments specifically like if you have any visibility on that like where are the valuations deflated like where has that craziness in the post pandemic period I think older tech definitely uh I think new age or genai new solutions uh probably not yeah [laughter] right I think it’s still uh you know it’s still pretty punchy by old tech you mean SAS commerce by SAS yeah more more SAS more software there it’s not like everyone’s doing down rounds right I think there are a few that have actually raised uh but again they have gone and integrated AI offerings etc sometimes they will be structured around and you will it will be hard from the outside to figure you know what’s happened but that is one obvious place where I can think of right I mean SAS companies are raising at not crazy valuations yeah so so that’s I think one one segment but it’s tempting back to the replic uh the one interesting thing which you mentioned when we were speaking uh before the recording started was like you you’re explaining how the behavior of a lot of these companies or rather the fates and fortunes of these companies has changed because quickcommerce is now really a thing and you mentioned several old school businesses that have suddenly found new life because this thing has become a thing. So that’s like if you could recap that’s one trend and in other segments like what are this shift like I could I can think of premiumization another obvious uh shift which has kind of changed consumer behavior revenue patterns whatever it is like to the extent that you guys cover all these broader industries and sublices what are the unique patterns that uh are interesting and founders should also keep an eye out for because if I can build a business on back of quick commerce which was not really a thing until 3 years ago I think that’s a massive shift. Yeah. Like what are such very unique patterns that you guys are noticing? This is for both of you. You want to start with the quickcommerce one? I think that’s one. I think look I think quickcommerce has given Okay. So two parts to this right. One is I think last 3 4 years quickcommerce has given many consumer brands an opportunity to actually go into market very quickly and if you have a good product a certain niche and the segment itself has seen tailwinds like take snacking as an example right take savory snacks as an example or take Indian sweets as an example or take ice creams as an example pet food as another example right these are categories which where quick commerce has helped you distribute to you know hundreds of thousands of people expanded the pipe which you would have had to do offline GT distribution right or you would have started with MT you would have done some of them would have done GT also so that velocity of distribution has come because of quickcommerce but I think that will also get a little bit more challenging going forward because a lot of the quickcommerce platforms also constrained by space in the dark stores quickcommerce is not all is still not a full discovery platform right a lot of people know what they want either they know the brand or they have a very sense good sense of two three brands I need to choose from. So in that context if I start the 10th ice cream brand only because I think commerce will give me an acceleration that might be a little tougher than what it was earlier. But that said there are many brands when it comes to especially when it comes to snacking or ice creams or pet foods which have seen explosive growth explosive to the sense that they some of them have crossed you know 300 400 crores of topline uh which is almost entirely built on on quick commerce. Those brands also at some point will need to go do GT I think right they will need to build offline if they want to scale to thousand,000 plus quickcommerce by itself is a is still a 2025 city top 20 25 city phenomena. So what was your question? Other interesting trends like this which is I’ll probably add one more and you can figure if it is aligned to your question. I think often times when people think about VC investments it’s all about well I mentioned it to consumer tech wealth tech fintech edtech. I think the one um trend that we’ve seen the last three four years is VCs are also looking for you know the lack of a better phrase an earier businesses with physical presence. There’s just a lot more on the ground. Two really prominent examples in my mind. We saw a lot of VCs investing in affordable housing finance, MSME loan companies, very uncharacteristic for VCs. But if you look at the thesis, right, actually makes a ton of sense. These aren’t, you know, winner takes all markets, big TAM. Um, it’s really about being on ground, very sharp execution. And with exactly the same huristics, the other area would be and mentioned this tier 2, tier three retail chains that are doing really well expanding in a thoughtful manner. But and the reason I want to bring that out is that is definitely a sector and a theme that’s grabbing the eyes of otherwise what you would qualify as tech first investment. But but why though like as in I mean the the entire bet I mean is the fact that there will be more and more people in these smaller towns and cities who will buy from some of these outlets but you’re also then betting on the fact that all of these guys are aspirational will move to the cities. So why would they be looking at these local retail stores because they’re competing with local trust local shops which have built trust with people. One of the things I think you know obviously the bunch of these smaller retail folks right who are doing these kirana stores for you know say the next tier of towns etc. I kept asking them is your bet that all of these existing kirana stores are all getting older people and the next generation don’t want to go set up a kirana store is that the bet or is the bet that consume consumption will grow in some of these cities and smaller towns etc. I think consumption will grow. Look, I think there will be okay in the full universe if you see you are going to take share away, right? I think that you know we can’t we can’t deny that might also happen with quick commerce right so that will happen but in general there is such a you will be surprised to see the amount of unbranded consumption that happens in uh in India right outside of the big cities uh and if you go to that population who are educated aware aspirational and give them a branded experience a retail good branded experience which also becomes like a community family outing almost right I think it’s a huge premium to their lives so I think consumption will will kind of grow will it disrupt or will it will it kind of facilitate the shutting down of you know some local stores I think that’s inevitable I think it will happen many of them will continue to exist many of them will continue to it’s happened by the way even pharmacies and all that you see right you still have so many you know CAT B caties right some of them have rebranded done better um I saw it happening with multiplexes and single screens right you can think of so many examples where it’s where it’s happened so if any such anecdotes stories come to mind that’s like the final question that’s it like any interesting observations that from all your interactions with funds VCs not lawyers [laughter] about what’s changing yeah like for example the consumer behavior which you point mentioned which commerce is one yeah that’s I think is so that You know, you’re saying beyond quickcommerce, what else is changing? Because I think you just like is there anything more to Quickcommerce that you want to speak about? No, I mean look, the only thing that really surprised me about Quickcommerce was that a lot of people thought it would be a impulse purchase. Me included. Yeah. But I think it moved to not just being an impulse purchase, but people are stocking up on quickcommerce. No, no, like half of my grocery shopping is now. So, uh that is just expanding the use case and the time for quick commerce, right? So um other industries like any such thing I I’ll ask the gen question obviously. Yeah, but is it all when is apocalypse due? But apart from that [laughter] hardware manufacturing anything at all, banking, fintech, I think uh so I think well tech right as a broadest of course look there are lots of companies which will start uh and not all of them will succeed and many of them will sell to the larger ones that can be said of all industries all industries right but I think well tech is definitely one because if you still think of the behavior for most Indians it wasn’t oriented towards going and investing 100% right forget the numbers and the records of DMAT’s account accounts wrong right uh you have to look at is there a general directional change in the behavior or at least in the psyche of people I think that answer is yes right of course like broking platforms you know have captured that there are some non-broking well tech platforms that will you know kind of come and and and play that’s a change I think that we are seeing and last year you would have seen a lot of them getting seedstage funding we’ll have to see where they land up in the next 3 four years but I think as a behavior that is something that is changing. Uh the third one that I’ll pick up is u hardware manufacturing, electronics manufacturing. There are some fantastic founders who are doing everything from design to procurement to manufacturing. Uh working with some of the biggest electronics names globally now uh and they built in India uh right and very capital efficient. Many of them are very frugal with how they’ve built it. Uh so that’s again going to be a huge and they they also seen companies that have listed in this kind of ancillary space and have done well um so you know that’s again the relatable heroes point that we made earlier uh there’s more you can do there in terms of sorry one last thing I think was speaking about sectors but I think the entire ecosystem has over the past 10 years speaking about UPI mobile penetration data what’s going to be the story for the next 10 years. I think it’s what you do on top of the public infl like I think it’s uh the first one is the network effects you would get from I would say behavioral data is really who gets to that scale first and importantly who uses it. I don’t want to use the word weaponized it but in the sense personalization um using the data for underwriting because that just helps you make a lot more of what people call addressable market actually serviceable for you. I think the second point over here is I think experience in this space specifically matters especially for people that have seen the regulatory cycles understand how to navigate them. So I think we’ll see the more savvy the more analytically driven founders and teams really make the most of the infrastructure. It’s not mo I want to again broadly abused word. I think the more really comes from what you make of the data and really what’s that tacet knowledge that you bring in. I mean I’ll ask about that the sentence that stuck in my head RBI compliant model. Oh yeah [laughter] of course I started laughing when I read it. Please go read the report to see or to hear [laughter] or to know what B’s talking about but but yeah final couple of questions. Uh like the the the thing that stood out for me is you know like you mentioned that PCOS was not really a thing. It was more like you know I order cigarettes or whatever it is then no no no longer it’s [laughter] it’s no longer no that’s what I’m saying like it there’s that loop you know like there’s a platform there’s behavior behavior changes platform it’s it’s created like a virtuous cycle of sort are there any other area like any other such behaviors uh that are changing non-obvious way that come to mind if they don’t come to mind that’s perfectly fine that founders can and should watch out for because that’s where most of the business models will be built because if I go back to let’s say 2021 and I’m thinking you know starting another quick commerce company I said nobody cares like who will order you know cabbages on you know mobile app that’s that wasn’t really obvious but no they’re ordering more than cabbages any last things that you guys might have seen in your interactions might not have come across uh see on the consumer side we’ve spoken about this right so uh but I think the same point around people who have who are now seeing more affluence right you know kind of um relatively better off than what they before the idea of spending on themselves and right and this will be many categories right this can be you know I know beauties obviously but all of it right like for example you have founders who have set are setting up you know hair transplant chains and right and going to do PRP and everything else right there uh big opportunity right if you ask me right uh again brick and mortar kind of opportunity unless you go do products but so you know that would be one right Skin is definitely one right there are lots of these cosmetology chains and clinics again right it’s a different segment whatever you can spend on yourself right which is truly discretionary I think that that is one where you are seeing behavioral change not with everyone because not everyone is at the same starting point obviously but wherever you have the right target market right for those you are kind of um you’re kind of seeing that and the third thing I think is just like you You know there’s still I I think media in itself is still a huge opportunity now that different it’s been a graveyard for business models but so what you do there right I think becomes very very important or relevant right but as a consumer habit are people going and just consuming more content whether it’s video or audio I think that answer is yes right I think that’s only increasing for many of us how you play that I you know again you’re right like a lot of models have come and uh because they they also box themselves into two or three archetypes on how you play this you know kind of media flywheel. Um but that’s the other thing that I’m seeing right I think the other just taking the same thread forward is if you take experience as something people are spending more on I been speaking about that for a bit now but you see grassroots of these curated experienced companies you’re not seeing anything at scale yet but going pretty well like it especially exploring tourism in India for example is a big theme that is coming out I mean I think the IPL is an experience oh yeah completely if you I mean not maybe not relevant to VCs uh or who knows maybe could Right. They build a platform for they build a platform. Right. So, uh but definitely right like it’s a it’s also the reason why movies continue to know few years back a lot of people said yeah that you know theaters will shut down occupancy is very low postco and that’s not happened right like it depends on the content quality it depends on many factors. That’s a big one, right? It’s a big one, right? And also the the perception and the uh the taste profile of the audience has changed massively or at least what they demand in terms of quality, but they still go and you know, we’ve done so much work in this space working with uh with private equity funds that have been looking to invest in theater chains and spoken to a bunch of people, done a lot of research. For a majority of them, it is still a it’s a community outing, right? It’s a social experience. It’s a social experience, right? And therefore if you have the right content that matches that social experience you can really create you know tailwinds for the industry. So that’s not going away which is also the reason why if you see the event space forget the monetization of it right because I know it’s a hard space it’s capex heavy or you do the ticketing route of it which is what a few of these platforms are trying to do the footfalls that these events are having is quite massive and uh they could be niche events they could be niche music events they could be larger events in some of the smaller cities. Why are people going for them? because they want to point they want an experience. So I think that is a very interesting kind of opportunity and I think it will need a longer gestation period because the business model might need to be more capex heavy than light but definitely a trend. Got it. Now the most cheerful question of all like ji what’s your okay when is it all over like how many more months? [laughter] I think the route that we’re seeing India take is the one that actually makes the most sense from where we are. You don’t see too much of the money going into infra. You see pockets but not the salient part. I think what 3/4s is still largely with applications of sorts. A lot of it I think the interesting part is we’re seeing vertical application investments. Now like any good examples come to not company specific but industry specific PFSI healthcare. These are workflows that typically need deep knowledge, have some you know regulatory flank on either side that no other meto can come in and more often than not the use cases if you really push through end up being mission critical in either level two or level three way. The reason why that’s important is you are protecting yourself from you know the fly by night operators but secondly it’s also where the dollars will get spent. We do a lot of work in the India US corridor and we see in the US BFSI um and healthcare companies actually spend quite a bit on AIdriven use cases. So there’s definitely something attractive for the Indian companies to pursue. I think where my eyes are at are some of these thin API wrapped companies that came up in a burst last year frankly which your chuckle says it all. Yeah. [laughter] Which I think remains to be seen. I I wouldn’t say they’re all you know ripe for the bursting right now because what we are seeing is these folks saying okay we got some of this understanding through very quickly but which part of it has really stuck and I think what remains to be seen is which of those teams that actually go after the stickier parts of the workflow because right now especially with everything that we’re seeing these horizontal generic workflows are I think fast becoming commoditized um especially with the the co-work launch from from cloud they’re becoming native capabilities in the model itself. Exactly. And we have a lot of these conversations including with enterprise buyers. So I guess there are two opposing forces. One is to create a solution has become relatively easier. But if you think about enterprise buyers, I mean like relatively larger companies the way they think about it, they don’t want to create an in-house solution for every bit and piece. That’s point number one. Shocking. You don’t mean I can white code my own your [laughter] core backing solution. Yeah. Exactly. The second thing is I think these are institutions that have been set up to be riskoververs. So when I say institution, I’m talking about their risk team, compliance team, procurement team. Nobody wants to be out of a job because you know they trusted the AI hype and you know jumped onto the shiny new thing. So the way we also think about this is where is the company operating? Are we talking about a place where it’s very commoditized and you know nobody really has those guardrails or is it in a regulated industry, complex enterprises? So unfortunately the answer is it depends but the vertical use cases the ones I mentioned earlier definitely seem like one that will have legs if they continue to push through anything else that you know you have seen that but in terms of its disruptive potential I get that a lot of it is doom and gloom rich coming from you but like what’s your sense considering the fact that you see companies actually put this to work u in the workflows in their companies etc. How are you guys feeling personally also? How are you guys thinking about its disruptive impact? The way we typically think about this is across two dimensions. Every software you look at whether it is it can help people do things better or completely replace people. So that’s one way of thinking about it. The second is in your software category is AI completely reimagining the way things are done or it’s you know adding some helpful bits here and there and it really comes down to how the landscape spreads out. I think the good news is if you truly plot it across these dimensions a lot of companies fall in the category where AI is not entirely reimagining the workflows. When I say reimagining I’m thinking now the way you think about creating an image is very different. you don’t need to go step by step especially if you want it done quick and dirty that’s that’s what I mean by rematching but there’s a lot of scope for AI either to assist or to even replace so what happens over there is the question becomes who is really best poised to capture that value that’s coming out of it the thinking as it stands is if you’re a company that is a system of record as we call it which is you hold the data you hold that enterprise knowledge you do have the first right of refusal in a lot of large enterprises because they don’t want to you go willy-nilly somewhere else. The second really big question for people to think about is once you have created that AI feature, can you monetize it? Are you in a segment where someone is going to look at the feature and say, you know what, I see the value in it and I’m willing to pay for it. Given it’s a bit more of a gradient, at least in our view, we at least my personal views, it’s not doom and gloom. In fact, I’m actually looking at a lot of the stocks in the US to see which of them seem unfairly sold off as well. there is going to be a bit of a correction um as we come out of this to see who’s really that person and we will see a divergence in certain stocks that continue to be where they are and good bunches that will come back out but I think of it personally more as an opportunity it’s just that it’s not an answer I can give at a category level so for example if I say ERP is a system of record that is well positioned true but is that company going to be the one to capture it is really where I would think the gap is tlddr we still have some time before we all become Markdown files. Absolutely. Does Bane have Bane Capital? How how big is the Do you guys have a VC investing? No, that Bane Capital is a very is a different firm, separate company merchant banking or is it No, it’s a private equity firm private equity. So, but it’s nothing to do with like originally the folks who set up Bane Capital were part of Bane Consulting but now it’s a it’s a separate entity, separate legal. Does it do early stage investments at all? They have a venture up. Venture up. They do have a venture up. And are they investing in AI consulting companies? [laughter] Now I’m very curious you know it just hit me now that maybe they must be looking at some of these. No I don’t know I think AI consulting in general you are seeing but you know management consulting has two three different layers to it right the expertise you can’t not just the expertise the execution also you can’t I mean I can’t prom say hey the age but you can’t you won’t go to this will be another go to Uttar Pradesh and walk talk to the distributor to convince a distributor to sell something right so uh so I think that will not go I think it will make it will increase productivity It may change the the the the pricing models uh right people may want more value based pricing etc all of that there will be enablers within consulting where AI will come in for example the you know the call transcripts that you were talking about right u there are solutions who can actually do this pretty quickly now right they’re still not accurate fully right not that’s always a risk right but they’ll get there right over a period of time so it’ll make you more productive and more and and faster but hopefully Hopefully we hopefully we still have a job. Hopefully. [laughter] Hope is the word with which we end this podcast. So, thank you again. Thank you. This is absolutely insightful. Like I had I had a blast uh learning all those new things. Yeah, we’re done. We’re good.