Decoding Bain's India Venture Capital report

Hello everybody, my name is Dinesh. I work for Dean Matter as part of all of our daily tasks. I think we are all very curious about venture capital. Bain team releases a very nice venture capital report every year. So for the past three years, me and my co-host Bhuvan, who you'll meet shortly, have been discussing doing a podcast with the Bain team whenever they put out this report. So third time's the charm. I think it's been quite some time. But we figured out some time to meet with the Bain team and do a nice conversation. 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 it's of use to all the founders out there, all the operators, 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 LPs are thinking about India, and what most other investors should know about family offices and allocation to various sectors? Please do watch this conversation. Thank you so much. Hi, everybody. My name is Dinesh. And I'm here with Adityas and also my co-host, Bhuvan. I'd like to introduce himself also. But we are here to talk about a report that Bain put out on the VC ecosystem, 2026. But Bhuvan, do you want to introduce yourself? My name is Bhuvan. I work for Dinesh. I'm not a big part. So I mean, I generally don't know this thing. The reason I wanted to do this is because I think the Bain VC report is one of the best resources to get a sense of what's happening in the Indian Bikoi 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 was one particular tweet, "Nithened" 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 there about to pre-clod error. Yeah. Pre-humanity. 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 homotest. We figured, why not do it with the best? That's the context. The way we'll do it is Dinesh and I will both ask a lot of these basic questions because I don't think people get these definitions. And people also don't get the context in which we see is a thing in India. Of course, at least in the metro areas and people who are generally a little clued in, VC might seem like a big thing. But if you step out so the bubble, I don't think many people even know that VC is a thing in India. So I'll ask a lot of questions that will evoke Iroh. 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 BIM and why you guys are so interested in the report as well? And why are you both named Aditya? Yeah. [LAUGHTER] You were named Aditya to the board unique name, but over the years, you know, I'm not the Indian. So Aditya Shukla, partner at BIM, I lead off financial investors private equity practice being at BIM for 20 years now. And along with my fellow Aditya who will introduce himself shortly, have been authoring this VC report for the last five or six years now. We also do a private equity version of the report, which actually is a longer earlier history for India. We do it globally as well. So there's a global report. Why? Because there's an India report. And then there's an India report. The India peer report we probably started around, I think, 2012 or '13. In the VC report, we started just about pre-during the pandemic, which is when the market really took off. So very, very happy to talk to both of you. Aditya, Aditya, I'm 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 there was a natural extension of my interest into everything VC, everything growth equity. We've been writing the report together for probably three four editions now. Out of curiosity, what's the backstory we are doing to the report? Yeah, so I think to what I've mentioned, around the time of the pandemic, when we started seeing this absolute inflection and growth equity investing and VC investing. I think there's a lot of interest in the market to color out what the inside show for this class of investments apart from the broader private equity report we put out there. The second thing is, I think there are certain sectors, such as consumer tech, software, Fintech, which naturally saw more minority, de-lactivity, 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 auto-port. I think we meant it initially both for founders, as well as the fund ecosystem. And we thought, can there be one? So you can't have perfect data, but to the extent that you can-- I'll get to that. [LAUGHTER] 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 Aritha 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 SaaS companies, right? Those software companies around that time, 2021-22. Then a lot of health tech companies, we didn't tech that we spoke about, right? So the idea was do a broader picture, but then depending on that here or the last two years, if there are specific sub-sectors that have either seen more interest from funders or just seen more traction in terms of activity of companies being formed in that space. In general, it is becoming very granular by the years. Yes. I have seen that. Yeah. Now the bar charts have a lot more. [LAUGHTER] We are working harder also, right? So yeah. Which we were discussing this. Like, even as somebody who tracks the public market 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 like, until like India, where private markets is not really a thing, even today, 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 Dick's Op-Azel. We start with the broad aggregators, if I can drop names and retraction. Capture like you. At least somebody not a stoppick. Yeah. [LAUGHTER] A, V, C, J, which gives us slightly broader picture. To understand the de-lactivity exits, fundraising to some extent. But we augment that quite heavily with just any granular secondary research going sector by sector to make sure we're not missing any key deals. Then we speak with investors. We speak with lawyers to make sure, again, broadly covered it. And that's further violated again, to make sure that we're looking at the right number. Some of them can be a mix of equity and depth. So we have a team that obviously supports us, a team of at least three, four people that spend about a couple of months just cleaning the data up. I think the database that we have accumulated over the last or say decade or so is probably the best source of truth out there when it comes to Indian investing activity. But the team remain after clothes. I'm happy to say that I do believe they will exist. What percentage of the report is-- 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 it's not because then you go when you start going very deep in specific sub-segments, whatever productivity benefit you're getting. I think it was as difficult. I think some things have become easier. And I think that's a broader question on management and consulting and everything else also, right? But I think you've kind of bacon that productivity when you're planning. See, some of this stuff, for example, what Aditya mentioned, because we work with most of the funds in India and outside, you have that access where you can actually go and talk and check numbers, data, does this make sense? Does it make sense? A lot of that will still remain. If there are new sectors, for example, we spoke about verticalized quick commerce. You're talking about well tech platforms. Now, some of them are so nascent that it is anybody's guess, where they go. So you were still spending a lot of time trying to piece things together. Where I think things have gotten faster, is of course like just the number crunching and putting the stuff in one consolidated base that's gotten really faster. I think what Bruno's asking also with data, you guys must be speaking to a lot more, say, LPs out there, family offices, institutional folks also. I'm guessing all of that was manual last year. Like, for example, the transcripts of some of these calls, somebody had to go through it manually. But is there at least say, 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 there inside about what's happening in the country with VC with P? Because all of these companies that have raised money from 2021, for example, some of the VC's are obviously sitting on inflated motivations. At least that is very clear. So what are they thinking today? And the second bit is with all the insights that you have, was there something that came out that probably felt last year would have been difficult to probably come up with with all the AI tools that are disposed of? - We'll take the LP question. - Yeah. - 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 in West India. I think in general, most LPs that we speak to are excited about India, about the Indian opportunity. They actually don't see it as the India versus US or in India versus global market kind of a trade off. I 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 even when we spoke of e-commerce, right? And then we speak of quick commerce now. We speak of EMS or electronics manufacturing. We speak of a lot of innovations and health tech. Everything that is happening on the broken side, which you guys, you know, no better than us and on well tech. 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. - Absolutely. - Or they're matured, right? So in that context, I think they want to play these themes. The second thing that's happened is that they have seen some exits in the last three, four years. So if you look, maybe a decade back or even just 2017, 18, no IPOs. They have no exits, right? Even strategic sales, right? So you're in front of 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, four India, right? I think around almost five, five and a half billion dollars 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 when I started initially tracking the VC space, I was always wondering where's the money coming from because India is poor. So today, all the money that comes into VC across all the deals that happen in India. How much of it is domestic pulls of capital versus how much of it is global? - How much of it is global? - LPs. - LPs, I think, see, global LPs are still very dominant, right? So many other sovereigns from whether this part of Southeast Asia, whether it's, so think of GIC, TAMASEC, CPP and many others, right? They continue to be pretty active, but now you're seeing a lot of Indian LPs also, right? So you were seeing UHNI, you were seeing family offices, you were seeing offices of conglomerates that are putting them behind me. So I think that makes it still skewed towards a lot of it being global. I mean, if I can push you and 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 half of it will be global. - Actually, that number used to be much, much higher, right? - Yeah, much, much higher. - Six years that you guys have done the report, like has it changed materially? - I think it will be a lot more domestic participation. - Yeah, the thing that you might call out as hate, starting on a low base effect, etc. but I think to the point of the day, I 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 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, say, second generation money, people who are out of existence. - Some people are doing it, they're trying to create a new engine or 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, we see as a very separate asset class from private equity. A lot of these guys would have probably invested in the biggest family offices or the biggest LPs in VC funds would have first gone into P funds, right? 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 that 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, they can get allocation of the capital, then they will also come directly along with the fund. - Why are they really investing in venture capital? Because, you know, I think Crystal does a very nice report on, you know, just the returns and benchmarking, et cetera. The data isn't like really clear about, you know, is there any benefit of diversifying away? Public market seem better because liquidity is there and I think you have even more visibility. So 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. How do they even making peace with this? - 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? I'll say this tech or there. - Is it much more? - Yeah. - I'm learning. - 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 stove, you know, offline consumer brand, or I'm a quick commerce first brand. And I have a large consumer conglomerate backing me to strategic investor. The amount of access and information that they can give me about distribution and many things is very, uh. - So, there'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 other aberration in the sense that they've been very high. I think it's only in the last one and a half years there's been some moderation, right? And everyone thought, "Whenever there's a dip, you need to buy more." Oh, that's still a thing. That's still a thing, even now, I think, in the last, last couple of weeks. But I think some individual VCs have actually done well. I think the issue has been more on distribution and not on, on MOICs on. - Same in 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 2022 vintage valuations were very high, right? And there was a. - Understatement, right? See, I'm going to learn. So, I'm going to become better at being less diplomatic. And a lot of investments actually happened in that vintage, right? So, of course, you see, when you 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, we should all probably invest, or should have invested in gold. - By the one just tying two of the threads together, the one trend that we have seen as earlier family offices largely looked 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. Less of work actually when it comes to doing delusions is a threat because you, as almost the right partner, they'll do that work and they'll hold that bar for you. I think that more actually makes sense. It's a more efficient way of diversifying into a more fragmented asset class. - That makes a mutual phone for a family office. - Basically, yeah. - Yeah, really building big teams now. Many of these family offices, right? A trying to build a team that are only focused on investments. - Did you find that happening even now? I guess, is it happening in 2026 as well as we speak? Just the volumes of amount of money coming L, with all the things that is 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 five years. Is the volume and is the interest still high in family offices? - It's a gradual increase. I think last year, if you combine micro VCs, family offices, corporate venture capital arms, those three broadly output in a similar bucket, I think it's gone up maybe about 15% in value over the last year. I think what we are seeing, which is probably a little bit of a forward indicator, is the infrastructure they're building up internally. And we're seeing how they're thinking as a world, because I don't think the X amount of capital deployed today, and the X amount of capital deployed three 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 certain cautiousness that's come about on which sectors do we really double down on? So I don't think just the top line numbers does justice to the dynamics underneath it. But I think it will, I tell 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 the tax class. We were speaking, like I was telling, like, how? Because until now, public markets were the only game. Many 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 that 12% guaranteed number. It's there in the Indian constitution. I get to see that every year on you. I'm joking. How is that condition, let's say, the LPs, the newer investors? And the second, like the fall-up question to that is, after 2020, there are two recent to the public markets. And the two reasons are now leaving. 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 that a VC phenomenon also? Two parts. Like, however, the public market returns condition, the behavior of some of those, let's say, funds, investors, newer investors. - Great question. I think there were some, there were some family offices that were actually very savvy. And these might be people who were individually LPs, and you know, other funds is 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're going to have an investing, say in deep tech or in climate, right? Or even in something that has a very long gestation period, you're holding period in your expectation also needs to be much longer, right? There were people who had this understanding from their prior 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, you cannot see the price move up and down every day. You cannot ask for an exit, you know, every year, every second year. And look, it's a, which is why if it works, your returns are going to be disproportionately higher, right? So you have to kind of live a little bit with their uncertainty. But what we are seeing is that a lot of these corporate arms and family offices are building teams, and the investing behind getting people who have some experience of investing on managing portfolio companies to get better governance, right? And to get better discipline about underwriting deals how do you do it? - I think you spoke about there being too many lines now. I think in terms of sectors. I think we seen India was essentially a commerce play, SaaS play, and IT may be 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? Do they get to know when everybody else is exiting and they're probably, you know, somebody selling them something that they probably not. - Oh, I think many of them are very savvy. - Yeah, yeah, in fact, I agree. - I agree. - I agree. - And all these people that you're seeing, they're hiring, are they all specialists in particular sectors? - Are they all like generalists? - No, mostly generalists. - Mostly generalists. - Maybe just talk a little bit of how, let's say, from 2021 to the first year of you guys doing the report today, to the Nishas question. How has the, like, have them matured, how has the behavior changed? How is 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. - Yeah, I think in much more, as a VCs, the ecosystem, right? Because I think 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. - That was only a minute out. - It was only a game and down, right? Some of them still survive, I think, you know, some of the cap companies, for example, started then, two 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 segment, you were looking at who has actually scaled, who has done better, those guys got funded, those guys come over and went an IPO'd, etc. later. Then, if you see the pandemic period around that time, I think that is when you saw a lot of India SaaS for the world, right? And that was a huge driver for a lot of the VC investments. The simple reason that we see, 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 fresh works of a Zoho, a few others, actually scaling. And many of these companies actually went and sold to Fortune 500 customers in the US. In fact, most of it wasn't SMB SaaS at that point in time. It was enterprise SaaS. - Building in India for global was not really a thing. - Yeah. And so you saw a bit kind of boom that happened there. And I think that again, 22-23, around that post that time, right? You started seeing more of a, I would say, a slow down in funding, it was more of a consolidation phase. And now, again, you're seeing some gradual uptake. 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 we 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 they won't, right? - But the timelines also have also increased, right? I mean, they are also being very patient with diligence. - It's being more deliberate. - In a couple of areas, right? Like, one is, if you look at a series, the investment, today versus maybe three years ago, because definitely, I ask for more of the metrics, these, let's say consumer taxancy allotted to it, cohorts, burn multiples. I think, runway as a concept, obviously, people are really happening down on to understand, like, where do we really cut the Senate, 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 ecosystem is learned. - On what are the basics that need to be in place? I mean, I'm being hearing what we used to hear for a series of meetings, auditors, financial statements, and thinking of that, right? I think there's a lot more focus on that, and I think the question that you had on family offices, I think that's where the third was also continuing. And early we spoke about them partnering with the other investors. I think a lot of that maturity is funneling very fast. So, earlier to the point of the day, I made the big family offices, people that really were in the know, they continue to hold a request process. I think 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 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 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 essentially saying, you know, consumption's 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 longer than also. It's the approach different in terms of evaluation, because all of the entrepreneurs need to know what should they really prepare for, because 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 it's a different level, I think it becomes a lot more first principles, fundamental, what are you solving? Right? How will you really build distribution? Use a behavior, right? Use a behavior. So, it's a little less about, because 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 offices, 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 five 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, new-erage non-VCVCs, your family offices, your UHNIs, or, you know, some of these companies, how much of this is them? Like, for example, Indian companies are notorious for not spending. We all know the numbers, the KPX numbers have, you know, not really gone anywhere. One-many-synically argue also, they're really bad at investing their incremental cash flows. Are they investing in this new-erage companies because they don't know the imagination to build the new-erage models themselves, and this becomes like an opportunity set for them to acquire in the future? Or is it just because I have too much money and they have nothing to do with it? Good question. I think you framed it in a 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 capability-driven acquisition, is I would describe that as a majority. It's less to do with, you know, we have quite capital-sitting, 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 and the US. One could have seen it coming as well. But you are right. There are two forces to this. These are investors that are a lot more value-conscious, especially these, if you look at large-cap, trying to go for these statistics, and these, 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 folks on valuation. This synergies that these companies can offer to the companies, and don't want companies to be very specific. I mean, are non-trivial as well. So I think that balance is out, which is why these companies also end up becoming fairly competitive in some of these deals that just stand-alone investors unless they have a broader platform can't really compete at the same valuation. To follow on to his question, say somebody is raising capital today because you must have spoken to founders and venture capitalists 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 over the entrepreneur is also confusing, saying, you know, the money is the same color, but what comes along with it? Setting aside the fact that there's an desperate for money. So, I think you're probably saying I'm a 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, our company is that generating cash flows that really didn't need external capital, right? There are many bootstrapped examples that you can think of. So, adding 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. Also, some sectors will need more cash. And either you fund it or somebody else has to come 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 than in the future. And they could also then help you if they come on board, raise subsequent rounds, connect to other investors, connect to their companies, but for your companies build that ecosystem. So, for example, if I'm building something, if I'm building a palenter type equivalent in India today, I should go to some of the VCs because they are building that capital. If I'm building a mens face wash company for tier 2, tier 3, which is actually a company that was made and would strap and got acquired by one of the largest consumer governance, not minimalist. This is a company called Mootstack which go to the acquired. Then you don't need to. right either raise capital or you can then go to FF. family office or a corporate venture arm which has expertise in that field and that is willing to wait it out for the 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 are 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 a 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 are also most stringent about where to deploy. So that is one kind of framework on how to think about it. But isn't that better like before you answer like isn't just like the family offices for example or the institutional capital the difference is obviously this the buffer available you can follow on 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 diluting lesser today and because this is such a well known for example I had a inkling that this might be the only reason why somebody go to a VC that capital available is more but say a larger company with enough in the coffers can 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 those conversations happening? Yeah two thoughts there I think when you think about VCs especially ones that either have tremendous sectoral debt or actually are present across multiple geographies I think the one thing you can't really underplay is the access knowledge that you get that some of the family offices probably don't have the same per view too. 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. 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 they had mentioned. 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 they're not we actually see VCs family offices and a couple of others of each other's are 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 you were to look out people like about 90% plus are not single investor deals like you have these syndicates coming in and so on. 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 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 but more nascent spaces tend a little bit towards VCs I don't know if you think differently. This to both of you is just the inversion of the NICES 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 ideas that let's say somebody who's a founder who's listening can say dude this is the thing that 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 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 will also make returns right that is really if I really step it down to the 101 that is what you are doing. You should be very clear about the kind of VC when I say that kind of VC the specific people that you are going to be working with but 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 you may like to bond with somebody else right 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 so I can't really have the luxury of picking and choosing but if I was to answer a question what can go off right one is just that that your individual styles don't match. The second is say I want to run a D2C brand you have invested in me you want me to become a platform and that will create fiction at some point yeah yeah yeah yeah yeah. So just miss alignment the extent to which you can pick it up early which is why I am saying to you know talk to other other founders fellow founders that is the second thing that can go wrong. Third thing that can generally go wrong that we have seen is just lack of transparency both ways. That is your green one. So that and that happens both ways I wouldn't blame like you know it is only the funds right what happens with with founders and 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 to work. Very fine balance and when things sometimes it goes out with companies that's when you see a lot of these fault lines and actually come to the fore. So it's very I know it's very generalized because hard to give. No, I think generally it's better than this. But will you land 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 they've seen that discipline come in over time but I think you captured it pretty well. I mean just one more partly cynical question. No, it's cynical guy. He's not a central rule. He's a such a non-rosan. I suppose we have a very optimistic guy. 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're expected to do certain things with your numbers, you're expected to do. It could be doing a entirely new line of business that you absolutely know business doing. Apart from this 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 do you advise a founder to navigate this pressure points where it kind of is in a tricky position but doesn't know how to navigate it. You know what I mean? Yeah, I'm thinking. I mean I would presume it happens more often than not. I think the pressure is a very real like for sure. I think it all goes back to in the some of the hottest 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. No, 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. There's a company today that 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 and 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 sides. Look there are there will be less obvious issues that can come up so not issues but decision points. So you can't get a good sense. I mean simple stuff like should I and I'm a CD is a CD is becoming should I hire somebody as a chief in you know invest investor relations officer. Chief yoga officer. 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's in we don't do that right so there'll be lots of these questions. 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. 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. The 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 shit shits the roof do you actually more of that. I said it and I don't say it. Those times is when you realize what the friction points can be. I don't think there is one kind of magic bullet to really help solve it. I know I'm supposed to be listening but I think the one other thing that most founders tell at least I was at New LinkedIn per star. 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 six 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 six or seven months down the line 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 Boone 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 offices. Lawyers. Lawyers, the sectors that people are keen on, there are sectors which seem to 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 ten-year perspective? Not from a one, two, or three-year perspective because those trends are very clear from the report. You know, well-tech is doing great, quick commerce is doing great, commerce, you know, in fashion. You don't want anyone else to do well-tech now. Yeah, I know, I think, you know, you know, we we we we we probably want more people in Belltech. But 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, I'm keen on this sector, because 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 ten years. So are people talking about these? Yeah, you want to start? I think you should start. Alar on. So, because you may have different sectors, right? Exactly. So, look, I think ideally, you should we are at a stage where as funds have become bigger, India focus funds have become a deployment to drive out of 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 longer term bets. So, when we speak of clean energy, right, renewables, focus start-ups, or you're going really deep tech, right, which is still very nice and in India, right, as compared to what it is in the US. Or even when you're talking about generative AI and native solutions, we're doing a lot of AI, but a lot of the initial work was still more around, you know, 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 this thing is 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 just manufacturing, right? And I think EMS has a space and the entire value chain in manufacturing is a huge opportunity for us to partake. And not just because of China plus one, I think in general, I think there is capability and you can actually do a lot of good work there. 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, but that's the other one. And then the third one I'll pick is which might be a little contrarian because people think there's a glut of companies and consumers. But I think that there is, you will still have a certain trend towards primilization in the country. Now whether it happens now, whether it happens five years out or consumption slowed down, everyone knows consumption slowed down, right? I'll tell you, Nestle had great results, right? And all of that, right? But over a long four, five year period or a 10 year 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 that's why wealth I can all have taken off. And within that, I think there will be two tiers of opportunity, right? One is if you build something that is say value retail, right? That is that is really focused on Mahastu's distribution and there's some excellent examples of this may not be VC funded, whether some public companies for example that have done value retail very well or you go and you go up the ladder and play the primilization talent. The niche sectors, I think it will not be niche, they will expand if you think of like for example think of beauty and skincare. I think there's a lot of companies that got founded were in the mass teach segment. Yeah, everyone should be beautiful. 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 them were developed for Asian countries or when it comes to that particular sub-segment. So that's one where I think you can build. I'll maybe just add two thoughts on that. I'll be moving but I'll let him finish. Yeah, it's just adding two thoughts to that, not specifically sectors, but I think looking at fast growing spaces and thinking water, enable opportunities is pretty interesting. For example, we saw a group of quick commerce and development 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. Something that most people don't really look for that actively. What can be an example for something like that? How do I actually say quick commerce and development? And people talk about software, SaaS, etc. I think a lot of the horizontal SaaS, now the play really is AI and development, etc. But I think as new industries come out of sub-sectors come up, think about vertical solutions for that place is not only solving a need gap but I think you're positioning yourself very well for potential acquisition. So that's one thought. The second thought is I think we shouldn't play down research back ideas. I think the less research and knowledge that actually goes into your idea, the less mode you would end up having. I think a good example actually is, I'll say beauty in personal care, because of how well equipped the ecosystem is for manufacturing. I think someone can come in the after tomorrow with a new trend and possibly disrupt you. So I think there is an angle of is there a knowledge more that can have as I go into that. And the third is how do you think about your addressable market? 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. I would just park those three ideas as people as thoughts that people should have as their thing about starting up today. Just one fall upon the research thing. We know that we don't really have a great ecosystem. To the extent that things are happening to the extent that you guys have seen it, is that changing? Because for example in the US, at least the initial wave of startups came out of universities. They came out of government funded programs. Today take any major legendary companies. They all have some government threads or university threads. But that's not really the thing in India to the extent that it is in the US. If you ask me whose opportunity, in fact see if you want to, I was talking to someone last week about what are the four or five elements that are needed to really create a startup ecosystem anywhere in the world right. So nice fancy word though ecosystem. Because you are cynical so let me break it down. What does that word mean? No, I meant it in the sense that we keep saying ecosystem. Because we have had, I think we have had some exceptional founders and some exceptional entrepreneurial hustle which is always existed in this country. And some very sharp and foresighted investors who got together and have created these results. An ecosystem means that you are creating something that's very repeatable and very sustainable. We are playbook. One is you need capital. You need top talent. You will need some relatable heroes. Of people you can look up to and be like, this person went and did this and started something, sold something IPO etc. 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 are talking about. Right place right. And there were specific waves. For example, what is happening in AI today? Which many of these US founders actually wrote on. And the last thing was very important is an environment. And that environment has to be, I would say almost physical. And everything that you know, like why could you not have I combinator like setup in India? See in a way, a lot of the funds are trying to do that by having accelerator programs, by trying to go pre-seed, 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 IT's. It can't just be, you might say Bangalore is an ecosystem. But I have met some exceptional entrepreneurs in JAPO, RAN and Coimbatore. So they may not have all those elements, especially the environment there. I think in this city you can say the coffeeshops are a problem in environment. So that is the huge opportunity. And can we do that? Can we do that for the government? Can we do that for private institutions? I mean you'll obviously have places like every, for example, the T-Hub in Telangana. There will be other 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-up on my next, like are people like me who are totally cynical, considering the fact that this is a very, innings for not even innings, warm up of this entire stage. For sure. I can answer. I've also answered. But we're very early, right? We're very early. We see landed up in India in 2006. We're talking about 20 years. It's taken, it will take a few cycles for people to understand. Investors found us everyone. How it works. I'll qualify the words in the system. 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 towards the direction that will take us there the fastest? I think that's where my cynicism comes from. Speaking with a friend that works at a policy think tank, and it is exactly the same question, which was, what does India need for an ecosystem? And as you're talking about, it felt like a bit of a chicken and egg where funding needs to come from somewhere. Funding that's patient, funding the distance and nature of this game. It needs to go into the right catchments. Is it post-grad schools? Is it undergrad schools? Is it Specializing 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've probably fall in between those group over here. - On the consumer word, again, I'll tell you all the clinical numbers. So if I'm a public market in Australia, I'll write all the macro numbers. You look at consumption growth, it's gone nowhere. Remove the premiumization trend, pretty much everything across the board. You take any listed proxies, the sales have been flat. Real-wise growth has since COVID has been not flat, negative. Then there's this overhang of what AI would do. Then there is the fact that for three straight years, we had the worst rural economic face, what 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, X number of millions, lack Indians who have the disposable income to spend, which probably explains the premiumization trend. Do you think that the opportunity said you said 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 in India? Right? I don't think so. - Okay. - Right? I think that's a different separate podcast. We can get into on what happened. But it's true. A lot of the large listed consumer companies saw kind of flat growth. I think now this quarter few of them have, H.O.L has been doing 2% for 20 years, I think. But I can give you examples of many, if you want to name companies, we can name a trend, I can name a Zoodoo. Zoodoo and many others like V2 retail, and a few others, right? - Vijay sales. - Vijay sales is growing because of, this was a stand-up. I don't know. - I like Vijay sales. - But I didn't know they were in such a scale until like five days ago. - No, but see, this is a great example, right? So all of these companies have actually seen pretty high growth, Zoodoo has seen high growth, right? V2 has seen high growth. I think a couple of these companies and Galkata, which have. - None of this is stock tips, please. - Yeah. - Yeah. - So it's not true, right? And now why are they seeing growth? Because clearly now that is unbranded to brand-aid play that is happening for a certain section of the society. And there's a large chunk that where penetration is already very high, which 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 the pockets, even non-premium that have seen growth. This middle, large middle chunk we're talking about, I sense there to come back here. We are not structurally where we are. - No, I get that. I get that the blind spot in my argument is I'm making a point in time judgment rather than a trend. - So for example, let's face what's coming I'm telling you about, right? I mean, they built to a very decent scale, very profitable company and had a fantastic exit, right? There were various others that you can kind of think of. I think that if you're playing a seven to 10 year window, which you should, as a founder, there is enough opportunity. You need to be very clear on what your moat 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 only my own, my own only moat release my marketing. - Distribution. - Not even distribution, right? I think it is marketing, right? And it's performance marketing, which basically means FF raised money and I'm going to spend. That to me at least is not a very sustained, you might still have some successes, but I don't think it's a very sustainable moat. 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 best mayor for ourselves. So I think that day you can absolutely build. I don't know, AI, by the way, will, the ones, see, look at QSR as a segment, some of the QSR platforms have seen very high growth, right? And of course, they'll find exceptions to all segments. I don't think the, so that is also a little more protected by AI. I think AI is going to impact, you still need to go up. We'll binge it because of this. You'll still have your waffles, you'll still have this, right? You'll still eat. So yeah, so I'm a lot more optimistic on Unconsumer, RobTom. I think suitcase is, paints that 10 very well, if you look at Safari and Mukobar. Mukobar at National Miles and-- Yeah, absolutely. It's a gradient. Even me, the India premium. Yeah. We haven't spoken much of the report by the way. Yeah, no, no, I think all of these are extra-monic reports. Because the numbers are out there, I think, I had two more questions, like one final question on the ecosystem. I think you can speak about the ecosystem. I think Bhuvan is very cynical. I'm not. I know I'm optimistic. I think some optimism I hope flows. But I believe that, I think institutions are trying, at least education institutions, even in rural, say, at least there's some support from the government, et cetera. What are one or two things that you picked up on while drafting this report that we can all do better? Like 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, start up in your doing us, second-seat fund, et cetera. Do you need that kind of capital which flows into companies? And capacity building. And capacity building, right? I'll maybe add one point and other three should add. I think you need more inspirational stories. You need more-- Absolutely. --relatable stories. We are at a place today where I think more people are willing to start something and go on a founder journey. It's a thing, right? It's a thing, right? Which also, as it's 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 three years or two years. But in base case, you should assume that-- That's what we're saying. --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. So to the extent to which I think we can also create those heroes and support people. I was in college, in undergrad. It was still not-- people were still like, you want what 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. 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 tomorrow, if one company fails, you will have 10 write-ups written on it, right? And sometimes-- Successors celebrated failures or cautionary days. And then people talk about it, right? Your family or parents will talk about it. Oh, you know, that's the one-- The sheep of the family, right? Well, no, everyone knows. If you want to start something and some other company is failed, then some publication writes about it every week, right? Then they'll say, look what happened, right? So I think that is one that has-- as a general society, I think we need to get away from. Sorry. Like, because we recently met this team. Monday, but I-- Yeah, they were trying to bring out inspirational stories from basically, they were trying to bring out Canadian entrepreneurs who've done well, but aren't really well-known. And their point was, let's say, in Mungalore, 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 a bit of a small business, they might relate to more to that. But to the extent that you guys have paid attention to these trends 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 the top 25, frankly, I don't think I've seen a meaningful trend. It could be wrong. I haven't seen the data or dug into it. But I would say it's definitely beyond the top 45. Still a little bit. Yeah, absolutely. It was like Fuse, back-- Yeah, I poured 100% Fuse, back into the score, Mungalore. It was called Mungalore, right? I mean, look at-- so obviously, the big cities, the Metro's, right? NCR and-- Yeah, yeah, yeah, yeah. But Jepor, Coimbatore, they give an example of, right? Lucknow, right? So I think a lot is coming out of these places. Pune has done well. Pune has done very well, right? But again, I don't want to repeat the environment point. But I think the reason it's important is you have to give that environment to students and to-- You know, 100%. The capital markets business is a prime example of what an ecosystem can do. Absolutely. From listing, from raising capital, from having parts special of people who want to buy your over-priced IPOs. So you need the ecosystem. It's just like adding to your point of what more we can do. So where this comes from is, I do a lot of recruiting with top dear 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 one-way traffic, which is they come on, take the records for hiring and walk away. The biggest issue is we have so many educational institutions that can debate on the efficacies of those. But really, what's missing is the touch of reality on what's needed on the ground. I know we have spoken about this for probably two decades now. But I don't think that's-- the rubber is not hit the road over there. We need more-- I just don't mean only startups, et cetera. I think it's very important because they are at the cutting edge of innovation, but just steady state industries. Just be more involved in the local institutions. It needs to translate those classroom lessons to, hey, those words actually point one off there. Pune reminds me, I think they have such a beautiful startup community. I think it's a very small city with 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, then this guy's building something really cool. And most VCs in India today are functioning on referrals, because I think there's so much deal flow. Unless somebody really tells you this company is really good, you've got to take a look at it. Nobody's really going to bother us, which is a problem, I think, another problem. But my last question, I'll let Boon also ask. I have a few more if it is, will indulge me. So I have one last question is, in 2025, why you were drafting this report? Did you notice anything that was out of the ordinary? Because I think we all speak of general trends. I think was there anything that was exact anti-theases to what the mainstream media is writing 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 a bit of a contrast, which is why the title of the report is also "Warm Currents and Cold Seas" like Arthiard mentioned, we see the ecosystem, the investor ecosystem day and day out. And we knew that there were headwinds to just broader de-lactivity in India. I think what caught us by a little bit of surprises, this little sliver that we call VC and growth was actually still doing quite well. But can you just differ in growth and VC? Absolutely. It's great, we just started with VC. 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, we all found the bucket. It also includes the growth arms of the typical VFUNs. It also includes all the activities that occur in consumer tech, health tech, wealth tech, fintech, SaaS, everything. Because typically the nature of those investments still ends up being more growth oriented, any buyouts are of course more. That's what I mean by the section of the de-lactivity that's called VC. You guys, like I was mentioning earlier, you is a unique definition of compared to the tech-stuked definition. You're done? Yeah. I have more questions. I should have asked this earlier in the last thing. So because everything happens in a macro context and we know the absolutely saying 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/Grot 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 trade-off calculation changing in terms of people saying that okay, do public markets is not really the only game in town, people really feeling a little hot for VC in India. Like start with the macro question, like how much of whatever is happening outside, is that having a bearing on the ID like? As big a bearing on VC as it does on private equity, right, or mobile out funds. That is one reason is that the nature of industries that if I look at the P industry anywhere, right, they would invest in larger companies, very stable cash flows, would end up being manufacturing consumer, farm, mature business, CDMO, CMO within healthcare, mature businesses that have very acute linkages 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 well tech platforms, right, or the broken platform site. That will have no, 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 de-mata 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 quick commerce, right, or e-commerce earlier, right, it's again very insulated. It's not like we have a huge ecosystem of VC funded companies that are having direct linkages, you know outside. The one idea I can think of is more software SaaS 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 genie disruption that has happened and SaaS companies that could not or have not reinvented themselves either organically or through acquisitions of AI offerings will face headwinds, right. They may have a certain cash position on the books, but growth will slow down, right. So I think in that context, it's kind of not that correlated, which is also to other things point which, you know, if you see the data, P market in India is still very robust, but last you saw a dip 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, so that I think is more insulated. Public market, so second question, yes, I think I think people on, see everyone had assumed that you said 12%, I think everyone was assuming that 18 to 20% compound rate is very conservative by the way. I should come talk to you, right. I am agmat to say nobody. And now I think they are realizing that that's not the case. Also see what happened when the public market's really boomed in India last three, four years is private valuations also really increased. 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 in the public, but as it is 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, where are the valuations deflated, whereas that craziness in the post pandemic period. I think older tech definitely, I think new age or genie I, new solutions, probably not. I think it's still pretty punchy. Why old tech means SaaS? Commerce. By SaaS, more SaaS, more software, there is not like everyone's doing down-downs, I think a few that have actually raised, but again they have gone in integrated AI offerings, etc. Sometimes they will be structured around and 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. I mean SaaS companies are raising at not crazy valuations. So that's I think one segment. It's tempting. Back to the replica. The one interesting thing which you mentioned when we were speaking before the recording started was you're explaining how the behavior of a lot of these companies or other the feats and fortunes of these companies has changed because quick commerce 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 a, like if you could recap that's one trend. And in other segments like water this shift, like I could I can think of prememization and other obvious shift which has kind of changed consumer behavior, revenue patterns, whatever it is. Like to the action that you guys cover all these broader industries and subsidizes, what are these unique patterns that are interesting and founders should also keep an eye out for because if I can build a business on back of quick commerce which is not really a thing until three years ago, I think that's a massive shift. Like what are such very unique patterns that you guys are noticing? This was both of you. You must start with quick commerce one. I think that's a great illustration. Look, I think quick commerce has given, okay so two parts for this, right? One is I think last three, four years quick commerce has given many consumer grants 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 taking as an example, right? Take every 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, quick commerce has helped you distribute to you know hundreds of thousands of people, which you would have had to do offline GT distribution, right? Or you would have started with empty, you would have done some of them, would have done GT also. So that velocity of distribution has come because of quick commerce. But I think that will also get a little bit more challenging going forward because a lot of the quick commerce platforms also constrained by space in the dark source. Quick commerce is not all still not 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 quick 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 some of them have crossed you know 300, 400 crores of top line, which is almost entirely built on on quick commerce. Those brands also at some point will need to go to GT. I think they will need to build offline if they want to scale 2000,000 plus. Quick commerce by itself is still a 20, 25 city top 20, 25 city phenomena. So what is your question? Are there interesting trends like this which is I'll probably add one more and you can figure if it is a linear question. I think oftentimes when people think about BC investments, it's all about well I mentioned it to consumer tech, wealth tech, fintech, edtech. The thing the one trend that we've seen in the last three four years is BC is also looking for you know the lack of a better phrase in earlier 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 BCs investing in affordable housing finance, MSME loan, very uncharacter. Very uncharacteristic for BCs but if you look at the thesis right, actually in certain sense these aren't you know winner takes all markets, big time, it's really about being on ground, very sharp execution and with exactly the same heuristics, the other area would be and I've mentioned this tier two, tier three retail chains 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'd qualify as tech first investment. But why though? I mean the entire bet I mean it's the fact that there'll be more and more people in these smaller towns and cities who'll 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 trusted people. One of the things I think you know obviously bunch of these smaller retail folks who are doing these Kiranastos for next tier of towns etc. I kept asking them is your bet that all of these existing Kiranastos are all getting older? People and the next condition don't want to go set up a Kiranastos. Is that the bet or is the bet that 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 we can't deny that it might also happen as a quick comment, right? So that will happen. But in general there is such a huge surprise to see the amount of unbranded consumption that happens in India, outside of the big cities. 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 kind of grow, will it disrupt or will it kind of facilitate the shutting down of 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 even pharmacies and all that you see, right? You still have so many, you know, cat B, cat C pharmacies, right? Some of them have rebranded, done better. I saw it happening with multiplexes and single screens, right? You can think of so many examples 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, we see not lawyers. About what's changing? Yeah, like for example, consumer behavior, which you point, which is. The compass is one, yeah. I think it's, you know, you seem to want quick compass. Because I think you just, like is there anything more to quick compass that you want to speak about? No, I mean, look, the only thing that really surprised me about quick compass was that a lot of people thought it would be a impulse purchase. Me included. But I think it moved to not just being an impulse purchase, but people are stocking up on quick compass. No, like half of my grocery shopping is known. So that is just expanding the use case and the time for quick compass, right? So other industries like any such thing, I'll ask the general question, obviously. Yeah. But is it all when he's a apocalypse do, but apart from that, hardware manufacturing, anything at all? Banking, fintech. So I think well tech, right? As a broadest of course, look, there are lots of companies which will start and not all of them will succeed and many of them will sell to the larger ones. I think we said of all industries, but 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%. Forget the numbers and the records of DeMatte's account accounts. They're all guests, right? 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, the broken platforms have captured that. There are some non-broken well tech platforms that will kind of come and play. That's the change, I think that we are seeing. And last year, you would have seen a lot of them getting seed stage funding. We'll have to see where they land up in the next three, four years, but I think as a behavior, that is something that is changing. The third one that I'll pick up is hardware manufacturing, electronics manufacturing. There are some fantastic founders who are doing everything from design to procurement to manufacturing, working with some of the biggest electronics names globally now. And they built in India, and very capital efficient, many of them, very frugal with how they're built it. So that's again going to be a huge. And they've also seen companies that have listed in this kind of fancily space and have done well. So that's again, relatable heroes point that we made earlier. There's more you can do there. In terms of, sorry, one last thing, I think he more and more speaking about sectors, but I think the entire ecosystem has both the past 10 years, I'm 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 and I think it's the first one is the network effects you would get from, I would say behavioral data as early who gets to that scale first and importantly who uses it and on use would recognize it, but in the sense, personalization using the data for underwriting because it 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 more, I want to again, the broadly abused word. I think the more it really comes from what you make of the data and really what's that, tacit knowledge that you bring in. I mean, I ask about the sentence that stuck in my head, RBI compliance mode. I swear to love it. Please go read the report to see or to hear or to know what Bhuvan is talking about, but yeah. Final couple of questions. The thing that stood out for me is, you mentioned that pickamas was not really a thing, it was more like, I'd order cigarettes or whatever it is. No longer. It's no longer a thing. That's what I'm saying. There's that loop. There's a platform, there's behavior changes, platform, it's created like a virtual cycle of sort. Are there any other behaviors 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 over because that's where most of the business models will be built. Because if I go back to let's say, 20 or 21 and I'm thinking of starting another pickamas company, I say nobody cares, like who ordered cabbages on mobile app? That wasn't really obvious. But now they are ordering more than cabbages. Any last things that you guys might have seen in your interactions might not have come across? See on the consumer side, we've spoken about this. But I think the same point around people who are now seeing more of loans, right? No kind of relatively better than what they were before. The idea of spending on themselves and this will be many categories. This can be, and beauty is obviously. But all of it, like for example, you have founders who are setting up hair transplant chains and who are going to do PRP and everything else. There are big opportunities. If you ask me, again, break and mortar kind of opportunity unless you go to products. But so you know that would be one. Skin is definitely one. There are lots of these cosmology chains and clinics again, it's a different segment. Whatever you can spend on yourself, which is truly discretionary. I think 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 seeing that. And the third thing I think is just like, you know, they're still, I think media in itself is still a huge opportunity. That's really graveyard for business models. But so what you do there, right? I think it becomes very, very important to relevant right. But as a consumer habit, are people going and just consuming more content whether it's video or audio? I think that's only increasing for many of us. How you play that, you know, again, you're right, like a lot of models have come and because they also box themselves into two or three archetypes on how you play this, you know, kind of media flywheel. 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've been speaking about that for a bit now. But you see, grassroots of these curated experience companies, you're not seeing anything at scale yet. But going pretty well, like especially exploring tourism in India, for example, is a big thing that is coming on. I mean, I think the IPL is an experience. Oh, yeah, completely. If you, maybe not relevant to VCs, all of us maybe could be. So, but definitely, right? 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, post-COVID. And that's not happened, right? Like, it depends on the content quality. It depends on many factors. It's a big one, right? And also the perception and the 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 the private equity funds that have been looking to invest in theaters, and then spoken to a bunch of people, done a lot of research. For a majority of them, it is still 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 their 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 then what's the 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 there could be niche events, there could be niche music events, there could be larger events in some of the smaller cities. why are people going for them because they want to, to, what it is, point of one in the next fields. So I think that is a very interesting kind of opportunity. Well, I think it will lead a longer gestation period because the business model might need to be more capex heavy than light, but definitely your trend. - You got it. Now the most cheerful question of all, like, Janai, what's your, okay, when is it all over? Like how many more ones? (laughs) - I think the route that we're seeing in the 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, in for, you see pockets, but not the salient part. I think what three-fourths is still large 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 my not company specific industry specific. - The FSI healthcare. These are workflows that typically need deep knowledge, have some, you know, regulatory flank on either side that know the meat who can come in. And more often than not, the use cases, if you really push through, end up being mission-tritical in either level to or level three way. The reason why that's important is you are protecting yourself from, you know, the fly by nine 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, and healthcare companies actually spend quite a bit on AI-driven use cases. So this is definitely something attractive for the Indian companies to pursue. - I think where my eyes are at are some of these thin API-rapped companies that came up in a burst last year frankly, which your checker says it all. - Yeah. - Which I think remains to be seen, 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 are 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, especially with the co-work launch 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 in these. That's point number one. - Shocking, you don't mean I can wipe cold my own. - Yeah, cold back in the year. - Exactly. - The second thing is, I think these are institutions that have been set up to be risk covers. So when I say institution and 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 on to 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 guard nails, 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 can't need 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, that is coming from me, but, like, what's your sense considering the fact that you see companies actually put this to work in the workflows in their companies, et cetera? 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 what I mean by reimagining. 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's 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 records, 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 go bilionally 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 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 the good ones 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 easily where I would think the gap is. - TLDR, we still have some time before we all become our own five. - Absolutely. Does Ben have Ben Capital? How big is the, do you guys have a VC investment? That Ben Capital is a different firm. - He's a separate company. - Is there a promotion banking or is it a pre-private equity firm? - Private equity. - But it's nothing to do with, like originally the folks who set up Ben Capital were part of Ben Consulting. But now it's a separate entity, separately. - Does it do early stage investments at all? - They have a venture up. - Yeah. - They do have a venture. - And are they investing in AI consulting companies? (laughing) - I'm a bit curious. - Just hit me now. That maybe they must be looking at some of these, no? - And no, I think AI consulting in general, you are seeing, but 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 promise it. - But the age you can talk to. - But you won't go to. - This will be a new, other part. - You can't answer Pradesh and walk talk to the distributor. You can convince the distributor to sell something. - Right. - So I think that will not go. I think it will make, it will increase productivity. It may change the pricing models. People may want more value based pricing, et cetera, all of that. There will be enablers within consulting, where AI will come in. For example, the call transcripts that you were talking about, right, there are solutions who can actually do this pretty quickly now, right? They're still not accurate fully, right? They're not real. That's always the risk, right? But they'll get there, right, over a period of time. So it will make you more productive and fast. But hopefully, we still have a job. - Hopefully. (laughs) - Hope is the word with which we end this podcast. So thank you again. - Thank you. This is absolutely inside. I had a blast landing all those new things. - You're good. - Yeah, we are done. We're good.