Prime Venture Partners Podcast

2024 Startup Rewind: AI, Fintech, and Quick Commerce | Prime Venture Partners Podcast

• Prime Venture Partners: Early Stage VC Fund • Episode 156

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✨ How did Indian startups conquer 2024? What’s next in AI, fintech, and EdTech? Find out in this special year-end podcast with Prime Venture Partners’ top voices: Sanjay Swamy, Amit Somani, Shripati Acharya & Brij Bhushan

🔥 What You’ll Discover:

  •  #1 trend shaping startups in 2024
  • Why AI adoption is revolutionizing business across industries
  • Is quick commerce hype or here to stay?
  • How startups like MyGate, PlanetSpark, and Dozee achieved profitability

Big predictions for 2025: EdTech’s comeback, vertical AI, and fintech’s next wave

Timestamps:

0:00 - Intro: Reflecting on 2024
2:00 - How the Indian startup ecosystem matured this year
10:45 - AI: From consumer trends to enterprise adoption
20:30 - Quick commerce: Hype or here to stay?
30:15 - Stories of resilience: MyGate, PlanetSpark & Dozee
48:00 - 2025 Crystal Ball: What’s next for startups and investors

💬 We want to hear from you!

  • What’s your top startup prediction for 2025?
  • Which insights from this episode inspired you the most? Share your thoughts in the comments!

💡 Why Watch This?
This candid conversation offers entrepreneurs and investors actionable insights, inspiring success stories, and a strategic look at the future of innovation in India.

👉 Don’t miss the next big idea. Subscribe to the Prime Venture Partners podcast today!

#PrimeVP #2024Review #Startups #AI #QuickCommerce #EdTech #Fintech

Brij Bhushan:

I knew this was coming.

Sanjay Swamy:

Profitability, profitability, profitability. India is still massively credit star.

Amit Somani:

I would certainly say for our portfolio, this year was quite a breakthrough. Edtech and healthcare are going to be a need even 500 years from now. Sas is dead. Long live SAS.

Shripati Acharya:

The need for security is just going to skyrocket Voice, vertical SaaS and democratization of AI. There's going to be a bloodbath.

Brij Bhushan:

Okay, so time for some crystal ball gaming, and I think next year we'll see a lot more companies beyond the 10-minute apps. There are a lot more mafias getting created, right.

Amit Somani:

You had more LP interest at Prime kind of this year than perhaps the last. You know 5, 7, 10 years, maybe even combined right.

Sanjay Swamy:

I'm saying the 17th coming off.

Shripati Acharya:

FinTech Namaste.

Brij Bhushan:

Welcome everyone to the Prime Venture Partners year-end podcast. We are here to share moments that gave us a lot of joy, some grief and some moments that actually turned our hair grey, as you can see, for all four of us. So I'm Brij and I'm joined with my partners in crime, Amit, Shripati and Sanjay.

Sanjay Swamy:

They're your partners at Prime, by the way.

Brij Bhushan:

Partners in Prime yes, actually, in Crime and Prime both. So what we will be doing today is covering what happened in the last year, have a fun, candid, no-holds-barred conversation and hopefully, have a lot of insights along the way for our viewers. So we'll get started, and we'll start with what happened last year. So I start with Sanjay. You first right. What is one standout moment from our portfolio that you'd like to share with the audience?

Sanjay Swamy:

Hi Brij, I think I'll step back a little bit before I dive into the portfolio, if you don't mind. Broadly, it was sort of an interesting year where almost nothing happened yet so much happened and in some ways I see it as the maturing of the Indian startup ecosystem and the landscape itself, where you know, when we all started out, you know 12, 14 years ago, in the early days it was sort of a really romanticizing. Startups really had no clue how they could solve problems, how technology was going to shape up. But a lot has happened over the last 10, 12 years and this year it felt really like there's a coming of age of the ecosystem. One of the first things people would ask us whether it was LPs or even we would ask ourselves, where are exits going to show up from? And we broadly were building in an open loop sort of manner, saying good things will happen someday. Let's figure it out. But if you look at what happened in 2023-24, the last 12-24 months, I think there's a clear sense that there is a goalpost and if a company gets to this goalpost, you know it will be able to list itself on the Indian public markets and broadly get, you know, between 20 and 50 times its EBITDA of the forward 12 months as its valuation. So if a company gets to $50 to $70 million of revenue at the low end and has a reasonable unit economics and profitability, it could be a $700 million to $1 billion type of an IPO. So in many ways that has been established several times in the past 18 months now and there is a sense of confidence in the ecosystem that we know where we are headed and what we need to do to get to a solid outcome. So that I think, at a macro level, is one big thing that I felt has been solidified in 24.

Sanjay Swamy:

Coming to the portfolio, I guess there are two levels. One is the companies that are doing very well, that have broken out, that are now looking at these goalposts and saying we need to be there over the next 12 months, 24 months. So we've seen one group of companies and we'll talk about that in more detail as we go along. And then there are younger companies that you know are entering our portfolio as we, since we invest at seed and we have two, three really exciting investments. So that, I think, was, you know, in some ways business as usual, but there are new themes, new products, new technologies coming in, and then the last part I would say is at a firm level itself, at Prime, obviously you're coming on board a couple of really exciting promotions in the team and new people coming up to speed, new LP relationships, as we've been going out looking at our next fund. So I think broadly, if I look at it from three areas here the ecosystem, our existing portfolio, as well as at our firm, a lot of exciting new progress.

Brij Bhushan:

I think definitely this year has been remarkable, as you were just saying that the IPO path is clear for all startups that are creating, and I remember when I was at Nexus 10 years back, one of the big questions used to be how will you generate returns for the investors? What is the exit path? And, as, andrew, you mentioned, we used to talk about that. If we do the process right and if the market matures, eventually it will show up. I think 10-12 years now we are actually at that stage, amit. Is there anything else that you saw in the market broadly that you will want to share with our listeners around the broad themes, around what is changing in the market?

Amit Somani:

Yeah, maybe I think Sanjay covered a few things. The quality of the entrepreneurs and the next generation of entrepreneurs is actually very, very exciting to see how that has evolved, and a lot of it is not necessarily second time founders, although there are some of those ones as well. It's people that have worked at these other companies, right, you might have worked at a Zomato or a Runner or a Make my Trip or wherever, and Flipkart and so on, and you're now starting up because you saw some very exciting journey, right. So I think that is very, very heartening to see, right, because in the ecosystem we are pretty young still, so the quality of the entrepreneurial talent definitely has gone up quite significantly. I would also say, on the VC VC side, a lot more capital in 2024 compared to, say, 23 and certainly 2022, and a lot of mushrooming of sort of micro VCs and stuff like that, right. So I think that very, very early stage almost you know, precede conception, say there's a lot more sources of capital.

Brij Bhushan:

so those are a couple of interesting things beyond what Sanjay covered there are a lot more mafias getting created, right the bullet of PayPal mafia. There are multiple companies where CXOs are exiting and starting companies. Shibari, what do you think? What's your big takeaway from the year gone by?

Shripati Acharya:

It is the mainstreaming of AI. So if you look at it, you know now, in 2023, we used to see articles in newspapers and excitedly talk about that I've gone ahead and put me a four-day travel itinerary for Varanasi and the fact that it could tell me where all to go. Now, just last week, my daughter was stuck in Amsterdam because her connection got messed up and she said, look, I need to figure out, you know how to get. Are we going to pay for something? The airline, what is the compensation, et cetera? So I said, okay, how are you going to figure that out? She said, yeah, I've already gone ahead and got the thing from ChatGPT and what to do and how much I'm entitled for, et cetera.

Shripati Acharya:

So it has become very second nature from a consumer standpoint to now start interacting with AI and use it as an enabler. It's no more a talking point. We don't come to the office and say, hey, I did this. Right, that's one. And then the second one is on the business side. I feel that the enterprises are moving, gingerly but surely, from pilots to production. We're beginning to see the initial stages of that. I think that it's going to be a much slower process than consumer, but we are beginning to see the initial stages of that. Of course we can have a lot more conversation about on the tech side how things are dramatically changed between last year and this year, but I would say broadly mainstream of AI would be the theme that sticks in my head.

Brij Bhushan:

Actually, I want to double click on what you just mentioned about what is actually happening on the tech landscape using AI right? So is there anything that stood out from you in the last one year about Indian startups in the AI space?

Shripati Acharya:

Absolutely. I would say that Indian startups or entrepreneurs are as up to speed and as at the cutting edge of using AI as any other startup out there in the valley or elsewhere. So, beginning to see entrepreneurs who are looking at Indian use cases of AI, where you're solving a problem which is specific to the Indian market it doesn't mean it only is in India, but the nature of it is more specific, the way in which you are going to solve yeah, you are going to solve, and what that means is that the total surface area of things which you can solve with technology is increasing, because these were things where technology was not, it was not possible for us to do these kind of things Right. But now, with AI and the flexibility that it provides, it just opens up new vistas for us to address new problems, and that's what we began seeing.

Brij Bhushan:

I think, srinivas, you talked about AI. I think there were some other hot themes in the last one year and I'll come to you, sanjay, for one of the most hotly debated. Talked about spaces, quick commerce. What's your thought? Is it a bubble, is it hype, or is it actually here to stay?

Sanjay Swamy:

I think you're the expert on quick commerce, Rizal he knew the source I'm going to make you put you on the spot here. Oh, absolutely, I was prepared for it, your thoughts and given your experience.

Brij Bhushan:

No, I think, like with everything in retail specifically, right. Anytime there is a shift in how things are delivered at the speed or the price or selection there is obviously a need. So I remember reading about Jeff Bezos when I was starting Magic Pin, and one of the things he said is build for things that consumer will always want, instead of what is likely to change. And he had this example of speed of delivery. Nobody's going to say I need it slower, right? Similarly, nobody will say that I need it expensive or that I don't want as much options. So I think with commerce has proven it. So if you deliver stuff that used to take three days in 10 minutes, consumers will love it.

Brij Bhushan:

And so, while there is a lot of jury out there in terms of whether they will ever become profitable like economics, are they accounting for inventory costs correctly or not the consumer behavior has definitely shifted, and when that shifts, it forces every incumbent to change the way they operate in the market. So no wonder Flipkart is launching Flipkart Minute, amazon is launching Amazon Days, reliance is thinking about it, tata is thinking about it, and you have Flipkart, you have Zomato, zepto and Swiggy. Anyways, right, aggressively building out, because that's where the future is and if you can imagine five years from now, 10,000 dark stores. We are at about, I think, two or two, two and a half thousand At 10,000 dark stores. The amount of retail that will be happening to quick commerce is mind-blowing and it is a humongous market, so I'm personally very excited about it. I think there are multiple opportunities.

Sanjay Swamy:

Actually one of the most interesting posts I saw from the founder of Zepto said when we started off three years ago, you could buy a kg of apples for 16 rupees, and today you can get an Apple iPhone 16 also delivered to you in 10 minutes. 10 minutes, yes.

Sanjay Swamy:

And that tells you also the range right, because initially it started off, as you know, groceries, daily consumption things but it has quickly moved into also the more expensive. You know product lines and so on. So it's not just serving the speed need, it's just become the way of doing commerce for people.

Amit Somani:

And Brij, if I may ask you to double click on this, since you've talked about it a lot at Prime, that it's the end consumer facing thing is get this to me in five minutes, 10 minutes, whatever. But there is a enormous kind of you know, iceberg below the water in terms of supply chain, in terms of logistics, in terms of so, really, the innovation that is happening is not just the you know, I'll get this to you in 10 minutes and you, of course, want everything faster, so maybe you could talk a little bit about you know what. That is Sure.

Brij Bhushan:

So, as you mentioned, amit, this is just the tip of the iceberg, right. When I get something in 10 minutes, there is a lot of complexity behind actually delivering it in 10 minutes. So this is a complete shift in how supply chain use is working on e-commerce or retail. 10 years back, when we invested in delivery when I was at Nexus right, the thesis was that, because of e-commerce, the traditional 3PL vendors will not be able to change to the new need of customers, and the new need was that customers will want things in 3 days instead of 10 days and they'll want COD instead of prepaid. So suddenly you need a new supply chain to meet to that customer need, and I think a similar thing is happening in QuickCommerce, zepto, blinkit, need, and I think similar thing is happening in quick commerce, zepto, uh, blanket, instamart have all created their own networks and like everything else.

Brij Bhushan:

Right, you start with fully integrated solutions. So I want to serve my customers quickly. It will scale to having common solutions that other platforms can also use. So I clearly foresee a world where there would be a common enabled system of dark stores, of 3PLs right that other platforms, including standalone brands, will want to use so that they can offer also a quick delivery experience for their customers. So I clearly see that happening and I think there will be a lot of opportunities for startups to come in and create businesses that are catering to this common infrastructure.

Shripati Acharya:

I have a point of view and perhaps a question out there. I feel that the number of players in this, this is a horizontal commerce platform, right. So let's look at the number of players here. You have Instamart, you have Blinkit, you have Zepto, tez and Minutes, big Basket and, and Big Basket and Reliance and Reliance coming up, right. So we have seven, almost we have seven, and they're all well-funded, correct? You know, everyone has raised a lot of money. Some of these other guys have tons of balance sheet money with which to play, etc.

Shripati Acharya:

So I would think you know, if I would go out on a limb, that if I would go out on a limb, that it's going to be a bloodbath in the market with respect to margins, because I have already myself personally gone ahead and ordered from at least three of these players actually four, and it is really about and the reason that I shifted was not because I was wedded to one particular thing. It's just because I was looking for selection or something else came up on the notification, and these are all well-known brands. It's just because I was looking for selection or something else came up on the notification, and these are all well-known brands. It's not like you have trust with one versus the other. So how do you see that playing out in 2025?

Brij Bhushan:

I think if you go back 10 years Flipkart, Snapdeal, ShopClues, Amazon and I forgot more players and I mean there is still bloodbath in that market. They are still not making money, but what happens is that you create a new consumer behavior. It allows a lot of supporting infrastructure and services and software companies to exist. So that wave of e-commerce created the delivery, a Shiprocket right and a Unicommerce, and these are three names that are coming top of my mind. I mean this wave of QCommerce can also create another three similar companies. So there will be opportunities.

Brij Bhushan:

That I don't disagree with you. There will be bloodbath and that's why it requires deep pocket and a lot of conviction, a lot of gumption, to actually go out there and fight in this space, but it will be fun to watch it from the sidelines. Right, but back companies that are actually servicing these customers. Yep. So I'll talk about SaaS also. I mean, actually, I wanted specifically your views because that's one space that has seen, at least from outside, a lot of challenges. Do you agree with that sentence or do you think there's still a lot of upside in the SaaS market?

Amit Somani:

Yeah, I think it's one of those you know adages, right? You know SaaS is dead. Long live SaaS, right? So software has been around for forever now and I think it'll be around.

Amit Somani:

I think I wanted to add one point to what Shripati said earlier about AI and the mainstreaming of AI. This is like any computer science revolution you take right From client-server computing to mobile internet, to edge computing. It's one of those. Right, like everybody has to go figure out what is your kind of AI story, right? And I think that is particularly true for the SaaS companies.

Amit Somani:

I think just going and enabling some workflow or automation or some business process is not going to be good enough, right, that's very, very clear. That's also what the public markets are reflecting in terms of valuations, in terms of multiples, et cetera. That said, I think the need for having software to, you know, solve customer problems, whether it's support, whether it's marketing, whether it is customer service, whether it is, you know, whatever it remains like you know there, for you know it's going to remain for a while to come, right? So so I think the thing that we think about at Prime is really you know, how do these SaaS companies get enabled with AI, with automation, with the new buzzword, agentic AI, et cetera, to really help me solve my business processes or solve my consumer problems or solve my customer problems, right. So, yeah, so I do think SaaS kind of circa 2020 or 2022, I think is going to have a tough time right If you're just building software.

Amit Somani:

The second point related to what Shripati said earlier about AI. A lot of our AI companies in particular one comes to mind, neo and others have done a phenomenal job of how they use AI just to up-level themselves, irrespective of, necessarily, what you're offering to the consumer or the customer, right. So, whether it is on marketing or it's on dev or dev tools or automation or customer support, etc. So I think there'll be a lot of opportunities to help companies adopt AI for themselves, even if they don't necessarily bring it out there, right. So I think SaaS plus AI is going to be here to stay.

Brij Bhushan:

Got it, so you remain excited and bullish about the SaaS plus AI combination.

Shripati Acharya:

That's right. Maybe I can make a couple of other points there, which is that the size of the company required to build a SaaS company is going to come down. Yeah, so, because I feel that the productivity of the what is the most when you're starting a SaaS company, the zero to one journey is the hard, is a very hard journey. Everyone says it's a hard, it's a very hard journey. For that you need to assemble a right team from a tech side and you need to actually, after you have got a PM, some semblance of PMF you need to go and sell it. You can go outside and sell it and have a motion for lead gen qualification, sdr marketing qualified, dcs qualified, all those kind of things.

Shripati Acharya:

I feel that AI is going to play a very big role in reducing the headcount required to make those things happen and increase, and does reduce, the time to market, reduce the time to market, reduce the amount of money required and make it faster to actually go to this initial ramp. So we will see a lot more companies, in my opinion, with three, four engineers slash business people who are having, in the first year, one to $2 million ARR. I think that's what we are going to start seeing in 2025 on these SaaS companies. I think that's what we are going to start seeing in 2025 on these SaaS companies. I think that's going to be exciting. I'm not necessarily extrapolating it to the 1 to 10 journey, because I think that when you want to actually become bigger, it's back to the future. All the things which have mattered will continue to matter Will continue to matter. Yeah, you need to understand go-to-market, you need to understand unit economics, you need to understand churn retention, all of those things.

Sanjay Swamy:

I wanted to add one very important note of caution for entrepreneurs itself right, Because a lot of times the initial success is 1 to 2 million that you're going to get, Since every enterprise has got some sort of an AI budget it might be coming out of that, versus saying I have decided that I need to adopt AI in the mainstream and I'm going to do a pilot.

Sanjay Swamy:

So if the pilot is successful, is the customer committed to mainstreaming? This or not is the most important question to ask and, frankly, the $1 to $2 million are not as important as the fact that you have customers who are planning to mainstream the solution after a successful pilot.

Brij Bhushan:

And not just an experimental AI budget because I want to checkmark that we are doing AI. No, absolutely.

Sanjay Swamy:

Because for the customer, even the fact that it doesn't work is also data, useful information, right. So spending a million dollars, a half million dollars, to find out that this is not for us or not yet ready for us is itself valuable, but for that startup, you know it might be, you know it might kill the company.

Brij Bhushan:

So, sanjay, that's a good segue, because I want to talk about a space that is close to your heart and you've been at it for decades in some ways right FinTech.

Brij Bhushan:

Before the space started yes, before the space started FinTech, it was not called FinTech, I believe it would just be usually called financial services or whatever else. Right? But again, that's another space that people are sort of doubting whether it is a space that has still something left, or is it old-fashioned, traditional and that people were building and no longer there are opportunities for VCs to invest in. Do you have a different view or do you agree with this? What are your thoughts?

Sanjay Swamy:

I think in India, over the foreseeable future, fintech is going to be kind of like the probably Lakshay Patra, the gift that keeps on giving. There is still infinite opportunity here, right, if anything, the regulator getting more actively involved. And if you saw the initial speech by the new RBI governor as well, in terms of the role of technology and you know the importance of fintechs, I think what has happened is in the early days it was sort of like the Wild West, right, you could do whatever. Nobody knew you existed, nobody cared about it. You are still a a small piece, I think, with a lot of the focus on bringing it into the regulatory umbrella in a more formal manner. The regulator has basically said you know you are now a first class citizen, right, you, sir you? It comes with certain responsibilities, it comes with certain restrictions, because I also need to make sure that we are protecting the consumer, protecting the small business. But you are actually legit, right, and in order to be legit, you know there are certain things that need to be done. You need to partner with regulated entities, ideally become a regulated entity.

Sanjay Swamy:

I think this whole space of you know India is still massively credit starved at all levels, right, you can think of. We have several companies, whether it's a Finag or a Nabdan or a Metafin or a Frio, operating in this space, and in all of those spaces there is never going to be a winner takes all, and there can be several large companies, right. Not to mention the opportunity for the incumbents. Some of the incumbents will do things themselves and several will partner with the fintechs in order to achieve their goals, also knowing that these are not businesses that can be built overnight. So money is not a weapon, money is a tool in these businesses. And also there is no concept of a gray area in this business. If it's not white, you'd assume it's black and you can't do it right. So if you stay within the lanes it's now that the highways have been built and the lanes are marked you know it doesn't make sense to drive on the shoulder to get a little faster. You have to follow the rules. But if you do, there are huge pots of gold here, right, huge profit pools, and so we remain continually you, we remain absolutely excited about this space.

Sanjay Swamy:

There is a second category that has emerged, and we have a company called Knight Fintech, which is one of the companies. Easytap also kind of started in that space, which is tech enabling the incumbents. So, on the one hand, you have the new financial services slash fintech companies that are the service providers. They are the customer-facing brandintech companies that are the service providers. They are the customer facing brand.

Sanjay Swamy:

They may be working at the back end or in partnership with the larger regulated entities, but there's going to be a huge opportunity because the regulated, the large players, are also going to enter these spaces and they need to retool. And so, whether it's their lending infrastructure, whether it's their you know, maybe not the core banking infrastructure, that might be too much of a change, but all of the you know surrounding systems around there. And if the first wave was getting these into, you know, cloud-based, saas-based solutions, now whatever we are seeing in enterprise with AI is going to play a huge role here as well, because, at the end of the day, financial institutions are large enterprises. Right, there are regulatory constraints that may make the adoption a little more. I mean, there are ethical issues of, you know, decisioning on giving somebody, on credit worthiness and so on, that have to be thought of, but all the scaffolding around customer service and things like that huge opportunities immediately, right. So we remain super interested and excited about this space and we'll continue to back conference.

Brij Bhushan:

It's almost a regulatory capture, increases the cost of starting up companies and there'll be less companies prying out things on the edges, as you just mentioned. Do you think that's likely to happen, or is it more clarifying the new RBI stances that this is what you need to do and this is what you should not do, and does it not affect the pace of innovation and the pace of startup creation? Business?

Sanjay Swamy:

So, look, I think you can look at the glass as half full or half empty, right In all these situations. Right, the fact that there are rules to follow is a non-negotiable thing here, right? So try to stay within the rules and build what you can. There are still large opportunities and large problems to solve. I think that should be the motivation for entrepreneurs.

Shripati Acharya:

One thing which I've actually learned from Sanjay in our internal discussions is that, as entrepreneurs try to understand and really internalize what is the spirit of the regulation rather than the letter of the regulation, and that is an important thing, what we have seen the best fintech entrepreneurs do is they are grasping that and building the business around that. So then what happens is that the incremental regulations would typically come from RBI is when somebody has put an end around it, and so then they have to bring in a new regulation to say hey, no, no, you cannot actually do those kind of things. It's like doing credit in a certain way where it is not meant to be, et cetera.

Brij Bhushan:

On that note, let's switch some gears. So, and now I want to talk about the three of you specifically from your perspective of being vogue members, but I'll start on the positive notes and amit with you what has been the one instance in the last one year where you have seen in one of your companies and that made you think that this is why I do this job, this is why I love doing this job.

Amit Somani:

Yeah, I would say across the portfolio. I mean there are several. Obviously, the biggest one that comes to mind is Dozee, which is one of our portfolio companies, which is really about saving lives and getting to this notion of zero code blues, so wherever they're deployed, you don't get any sort of inadvertent code blues or deaths or whatever, right, I mean, that is beyond anything else that you can imagine as being in sort of venture capital. I would also say there are other examples. For example, a company of ours called Planet Spark, which is in the ed tech space where you get young eight year old, nine year old doing TEDx talks, right, I don't think everybody here is very well represented. I don't think any of us have done a TED or a TEDx talk yet, or maybe somebody has, and this is from somebody who started with relatively very modest kind of communication skills from tier two, tier three, india, right.

Amit Somani:

So Wheels Eye is another example of a company that is the backbone of logistics in the country and people see it everywhere. And if you ever happen to mention that we're investors in Wheels Eye, they're like what you guys are in Wheels Eye. I didn't know that. So I would really say the impact that these companies are making. That would be one that across money I've just picked a few examples, but across many that really makes you feel like this is worth it.

Brij Bhushan:

Well, I had the Veerzai moment last week when I met someone. He said oh, you are an investor in Veerzai. Everyone has sort of experienced that product right, but it's incredible what they have done.

Sanjay Swamy:

And Sanjay coming to you. Actually, I was gonna ask Sripati maybe we can talk a little bit about quizzes as AI and some of the really exciting stuff that you've been seeing closely.

Shripati Acharya:

Yeah, it is One of the things which quizzes does is it enables teachers to do assessments. That's how it started. Now it has, of course, become a much more core tool which teachers use across the journey, and it is really gratifying to see how the use of AI has dramatically expanded the utility by both teachers and students. And one of the use cases which TI AcQs has is called accommodations, and accommodations refers to how a single question paper can be changed for needs of students who might have differing needs. So, for example, there is a student who has attention deficit right, that student probably needs a little bit more time, needs 15 extra minutes or 20 extra minutes to do the problem. Or there might be a student who is at a slightly slower pace of learning but will do equally well if they are provided one extra hint on how to actually do the problem.

Shripati Acharya:

These are all called accommodations, and there are 20, 30 different types of accommodations. How do you do that in real time with an assessment? It's things which are just not possible, and things like this make the lives of students very difficult. It makes learning a very different exercise, from being completely overwhelmed to actually enjoying it, and for teachers it gives a much greater sense of making a difference right. So these are the things which companies do and having just the privilege of being part of these companies, you actually see this.

Sanjay Swamy:

So, in keeping with a similar theme, right, obviously, Dozie, we can talk for an hour on some of the exciting things that they've been doing. Another company which is a new addition to our portfolio is a company called Metafin. It does rooftop solar installation and financing. It's an NBFC for small SMEs in rural.

Sanjay Swamy:

India, and think of a classic example. Here is an Atachakki in Uttar Pradesh for small SMEs in rural India. Right, and think of a classic example. Here is an atta chakki in Uttar Pradesh, where there's like a little flour mill pretty much attached to the house of the family and it runs on diesel. Right, if at all. There is a grid there.

Sanjay Swamy:

That grid brings lighting, probably at night, but there is really no power to run the motor consistently right and today, you know metafin has about 2000 installations where it goes ahead and, you know, helps replace diesel, which is a high pollutant, very expensive costs keep rising with a silent rooftop solar. It's really replacing diesel to solar, right? It's not like you're charging a battery with power which is also generated with fossil fuel. This is truly going green. And not only that. The cost of the EMI is pretty much the cost of the diesel, or even less, as diesel keeps going up. You only pay it for three to four years and then you own this thing. You may pay an AMC after this. So then they give you 25 years of power. Your kids are not inhaling that diesel exhaust. It's turned out that many of them have actually been able to even lower the cost of their product because they're getting much better margins.

Sanjay Swamy:

People are talking about how this has enabled me to send my children to college, how it has enabled me to marry off my daughters, or you know some of the small testimonials we've started to get. It's a very young company, right? So, again, very, you know as, again, very, uh, you know, as you say, you know what makes you feel. This is why I do this. I think financial success in startups and in venture capital are always an outcome.

Sanjay Swamy:

Yes, that is sort of the metric on which we are going to be measured. And now you know, all of us can you know, with above average luck or with you know, with average luck, we'll do well. But it really feels very good when you see, at the end of you know, with above average luck or with you know, with average luck will do well. But it really feels very good when you see, at the end of you know, 10 years of putting in an effort here, that a company that is not just transforming people's lives and livelihoods is the reason why you achieve your financial success. And we have really been privileged in several companies in our portfolio where, yes, yes, it seems like it's a convenience that it's solving or it's a core need that it's solving, but it's really making people's lives better oh, absolutely.

Brij Bhushan:

I think that's true and and that's a great place to also talk about more companies that we had invested in the last one year. Right, I mean, if you want to share some of the other examples that we've invested in some tidbits about what make made us invest in those companies last year sure, uh.

Amit Somani:

So I'll take a couple of examples um, so, some that are closed, some that aren't, so I'll keep it a little, uh, cryptic. Um, so, the intersection of ai with various verticals, right, one that you led or co-led, uh, which is basically ai on the shop floor in a manufacturing setup in fact I was going to make that point earlierled, which is basically AI on the shop floor in a manufacturing setup. In fact, I was going to make that point earlier about AI, which is that customers are not saying show me more AI. Maybe somebody CXO, cpo, somebody in the boardroom has to put a slide, so the CEO and the board is okay, but really they're saying I have these problems, solve these problems, right. So I think that was a very exciting company which is basically saying how do you help me improve my manufacturing process, quality, quotient, you know, leveraging whatever you want to leverage, right, so they're using original AI.

Amit Somani:

Another one is in the legal tech space, which is saying that, as I invest a lot in legal tech, particularly in the IP domain you know contracts, negotiations, ip assessments, et cetera Can I make that process a lot more effective and efficient for the IP attorney, for the inventor, for the interaction with patent offices for reviewing portfolio assessment when I'm doing M&A and so on. That's another one, and then perhaps maybe just one more which is in the cross-border space, which is in the B2B space. Thanks to this big kind of China plus one wave over the next seven years, we think exports are going to double or triple from here on out. Right, thanks to everybody all over the world, and certainly out West, looking for a China plus one strategy, right? So this is a company called LKME in the B2B chemical space, but I think this could be an interesting area for variety of other verticals as well. So these are a few examples of the kinds of companies that we've looked at this year, or rather back this year.

Brij Bhushan:

Shripati, I'll ask you the counter of this or opposite question of this, which is what would you have liked to see more of?

Shripati Acharya:

I would like to see more of in 2024. Yes, I would have liked to see, actually from India, more infrastructure AI companies. I think there's an opportunity here where a lot of spend is going to happen, for obvious reasons, because this is a very fundamental shift in computing. Our data centers are going to be rethought You're seeing the success of NVIDIA, as in every single data center, server is going to actually look different, because compute is basically going to go to AI workloads versus the traditional workloads and so forth. So I hope we see more infrastructure companies, and infrastructure just doesn't mean actually doing LLMs.

Shripati Acharya:

I don't think that's a game that we necessarily need to play, which is a very high-capx kind of game. But one example of an area where infrastructure will be required is, let's say, in security. So let's look at it, because what's going to happen is that the essentially folks who are trying to do the attack here now have something as powerful as AI in their hands. So you can expect several things to happen in that space, which is that the attacks are going to become more frequent. They're going to become more powerful and more sophisticated and once they actually enter a system, the rate at which they can export data is going to be faster. It's not going to be weeks, it's going to be hours in which they can do so.

Shripati Acharya:

All of these things now lead to a situation where the need for security is just going to skyrocket, because every enterprise is going to be very, very concerned and, in fact, they would want to do this before they put any AI inside their enterprise right, they would want to have, and fintech is one such area where it is absolutely paramount. So I feel that there are opportunities here and I'm really hoping that in 2025, we start seeing the innovative stuff there. And the thing to watch out for is that when we are looking at infrastructure, we have to be competing with the best that the Valley has to offer. We have to be competing at that level. I think we do have the talent absolutely to do it and hopefully, I'm excited about what's going on there.

Brij Bhushan:

On the same level of excitement. I'd like to end this section specifically by asking each one of you individually to share one anecdote of our portfolio company that has truly shown in the last year, and they've done a remarkable job. One anecdote each, and please give us some more color on what made that company stand out in the last one. Let's start with you, sanjay.

Sanjay Swamy:

All right. So I'm actually going to use the same example across three companies, which is profitability, profitability, profitability, right At scale, right. So three or four companies sort of broke through to the other side in a stable, configurable, consistent manner, and I think that the first one, of course, has talked about it publicly is MyGate Now actually seeing pretty strong momentum with the combination of advertising revenue, saas revenue that is starting to come back, as well as some new innovative products. They've launched the MyGate locks and more to come in that category. I think there what has happened is it's clearly the segment leader, the category creator and the category leader and slash owner, I would say. And I think real focus on basics, right, what got us here, what made us successful in the beginning, and really being laser focused on the customer, the customer requirements, ensuring all the questions around data privacy and security, in which we're always answered. They're more well communicated to people so they understand uh, you know that their information is safe and so on, um, and just very clear communication, both externally as well as within the organization. And the path ahead as well looks really exciting. So we're super excited about where this company is and in a similar vein, we had Frio in the consumer lending space.

Sanjay Swamy:

Again, you know it's a sizable heft now and really stayed laser focused on profitable unit economics and I think that that is a very large space. There are several players there, but you know the opportunity space is humongous. There are several players there, but you know the opportunity space is humongous. Everybody has their own approach to the market and Frio has really demonstrated extraordinary discipline in everything around, you know, because the biggest thing that can kill you here is CAC and, of course, npas. And you know, having like an engine where you can acquire customers at a, you know, very low cost, get the right customers to come up the ladder and actually start borrowing from you and making sure your NPAs are in control and make that sort of a repeatable engine that can be scaled. I think they've demonstrated that level of maturity now in the business. And the third one Amit talked about is Planet Spark, again in the education space. I know everybody you know still has questions of you know is EdTech a good opportunity or not.

Sanjay Swamy:

I think they're kind of past that now. I think people are starting to realize that. You know, it was probably one very, very large rotten apple that they were drawing some lessons from, unfortunately, but now I think there's a lot more confidence and ClientSpark again. You know the founders have talked about this, shared that video quite openly as well. You know, doing 125 crores of revenue, profitable scaling. We're super excited. I think this is a theme and for us as a VC, when I see a similar situation in another company, while it's not ideal, it doesn't scare us anymore. Right, we are saying, okay, there is a path out of this and it's going to take A, b and C and it's going to be six to nine months, maybe 12 months, but you know we can tell with conviction to the founders now that, hey, you know, let's put the plan together and we are seeing another company that's sort of in that phase, that is coming out of it now. So I think to me that has been the most reassuring.

Brij Bhushan:

What about you, amit, any, any of the companies that have stood out?

Amit Somani:

Yeah, so I'll, I'll.

Amit Somani:

I'll pick a theme rather than a company, although I'll mention a company as well which is, I think, one of the modes modes we have realized of companies that go from good to great or great to awesome is ability to build the software which is not code, which is the team right.

Amit Somani:

So investing in high quality leadership team, grooming the leadership team, being open to executive coaching, taking executive coaching, etc. So I would certainly say for our portfolio this year was quite a breakthrough, at least on the last element, that I think there are at least uh, maybe six or seven have lost track now maybe eight companies where the founders are seeking kind of external counsel, help, right, and say, look, it doesn't matter, you know even a gukesh needs, you know coaching from paddy upton or vishwanathan anand or what have you right? So I would say, um, you know, sir, and different, different, you know strokes for different folks. But, for example, wheelsa has done a lot of investing in the leadership team, right. A bunch of other founders have done a lot around getting more self-aware on you know what are perhaps their limiting or empowering beliefs and how do you kind of supercharge that. So I would say investing in that software was definitely one of the highlights, for me personally.

Brij Bhushan:

That's a great sign of a maturing ecosystem. Now we are thinking 10 years hence. Absolutely so, if you have to, then our team needs to be as equipped as the quality of the code or the quality of the GTN.

Amit Somani:

So I think that's a very important sign and in an AI world, like Sripati said, you're going to have fewer people right. You have lesser engineers, lesser marketeers, lesser whatever. Now it becomes even more important. You know what your right brain is going to do, not just your. You know left brain and how do you kind of marry that and so on and so forth.

Brij Bhushan:

Even Djokovic has Murray as a coach now.

Amit Somani:

Absolutely, absolutely.

Shripati Acharya:

Shilipati. What about you? What do you think? I think that what Sanjeev and Amit said on my side in addition to those two, I was really excited to see a couple of companies actually establish themselves as leaders in spaces where it is sort of difficult to do so.

Shripati Acharya:

One I'll come back to quizzes where edtech was essentially, or is essentially, an area most and number one candidate for disruption by AI, like in 2023, it is the number one candidate and one of the things which the team set out to do is say that, hey, this thing is coming, we are going to understand it, we are going to really focus on it and our goal is to make this as a thought leader in tech over the next year. And what I am glad to say is that now teachers, when they're talking about tech and AI, actually first mention quizzes. So that requires a lot of work, it requires art building, it requires understanding the technology, as well as spending very prudently to make that happen. It's really satisfying to see that and I feel that all companies need to start thinking in that way. Right, when you're at the forefront of being disrupted, you're actually how be a leader in that way, like, in one sense, you know, run to your confrontation and tackle it in a way which is on your terms, versus having confrontation come to you.

Shripati Acharya:

The second one I would say which I'm really delighted about is a company in our portfolio called Hitwaker, which is a gaming company, as the name indicates, a cricket strategy game, and it is an area where we haven't seen any leaders in India. But I firmly believe that we are going to get a clash of clans out of India. There's absolutely no reason. We have the data ubiquitous, lowest price mobile phones, ubiquitous smartphones, ubiquitous young population, like everything points towards creating a leader in gaming and I feel that you know it was a breakout year for HitWicket in terms of their user growth, revenues, unit economics, all of that. So just excited about companies sort of breaking out in new categories.

Brij Bhushan:

Okay, so time for some crystal ball gazing and sneak peek, right. So I'll start with you, Amit, on what's one trend or sector that you're most excited about in 2021?.

Amit Somani:

I'm assuming AI will be common to everyone, so I won't do that. So, the third coming of EdTech, third coming of EdTech, third coming of EdTech, and I feel like you know, edtech and healthcare are going to be in need even 500 years from now. Yeah, we've had two innings, you know some with somewhat you know, checkered past, but obviously a lot of impact that there is 100 million people that have gone through a variety of. I'm just talking about India, right, not talking about global, right. If you go into global, like, you know a lot more. Just in India, which is such a dire need, right, we have such a lack of quality teachers, quality infrastructure, access, inclusion that you talked about in a variety of themes. So I think the need is there, I think the appetite to pay is there, I think we need kind of the both the current and the next gen of entrepreneurs to be able to serve it Leveraging tech, leveraging AI, leveraging product, et cetera. So I think that I'm going to stick my leg out and say the third coming of EdTech.

Brij Bhushan:

Yeah, and I think there is now enough proof points of demonstrably sustainable business models in EdTech right, Absolutely Like a couple of years back.

Amit Somani:

Absolutely and a lot more awareness, right? No different than you know when the mobility revolution, whether it's taxis or whether it's e-commerce revolution. So you know, quick commerce is much easier to pull off once everybody knows that I can do commerce. Right, I can do Flipkart, myntra, amazon. So now I'm like, oh, of course I can do this. So now people are aware like, look, I can take a course online and get better employed or up-leveled by skills or what have you.

Brij Bhushan:

So yeah, what are you most excited about?

Shripati Acharya:

I would say voice, vertical SaaS and democratization of AI to actually reach which makes tech accessible to as many people as possible.

Shripati Acharya:

So, just to pass that a little bit, I feel that the opportunity set in vertical AI, where you are actually solving a problem like earlier Amit mentioned in manufacturing a deal which you co-led problem like earlier amit mentioned in manufacturing a deal which you call it where you are not only just solving the problem for that manufacturing customer, but you are slow integrated with their workflows, their core needs, their business problems and providing a compelling roi right, those will be the themes, uh, which we feel we'll see more of. I'm really excited and what is going to enable that is the ubiquity of voice, because now, with the tech is being that advanced, I feel that voice will become mainstream and our ability to interact with software and technology over voice, which is a natural voice for us, will be a very powerful strength. It's going to ultimately make tech and software accessible to more and more people. You don't need to understand graphical user interfaces, you don't need to understand English to actually do this, and that's really exciting.

Brij Bhushan:

That's truly democratization of computing. Eventually, everyone will have access to it in the natural interface, the most natural interface. One can think of Got it. What about you?

Sanjay Swamy:

Brij. Before you ask me.

Brij Bhushan:

I'm actually going to ask you a different question, not about the future. Can I ask you that first? Then I'll come to what I have sure so I want to ask you to give us a sneak peek of what has country 25 in store from Prime and Zubatna's perspective so, as Amit said, third coming of EdTech, I'm saying the 17th coming of FinTech.

Sanjay Swamy:

That's going to be there for sure. I think one idea that we have alluded to in the context of Dozee perhaps is I think this whole IoT with AI is going to be extraordinarily exciting as well. So I'm looking to certainly see potentially even working with some young entrepreneurs and incubating some new concepts, you know, just to see how far that could take us as well. And yeah, I think those are broadly the areas that we'd be looking to do more stuff in. A lot of the stuff is business as usual, but I think a lot of the stuff is where the excitement is going to be, and you know we have. I couldn't be more excited about the opportunity ahead.

Brij Bhushan:

Absolutely. So I will spend a couple of minutes and talk about what I foresee. So I think, amit and Sripati and you have already talked about it, but I'll just summarize in how I am thinking about 2045. So there are two things that I'm extremely excited about. One of them is AI, especially integrated AI, created to solve the problem Not a platform, but a problem solution that customers can use and see immediately. And second is I've always been bullish on retail, so I just see that with quick commerce enablement and just the fact that now millions of Indian consumers can truly experience what fast, high-quality commerce means. So I remain excited about that space as well, and I think next year we'll see a lot more companies beyond the 10-minute apps come out and create value. So I have finished my cup of coffee, but I would love to I have to say one more thing.

Sanjay Swamy:

I'm going to take a vote here. Last year I was in that seat. This year you're in this seat. I propose that you keep that role for the next several years. You did a bang of job of it. Any objections, amit? And Shiv.

Amit Somani:

Not at all, not at all. I think that.

Brij Bhushan:

Then I will use that veto and ask you one more portion before I close. Okay, so?

Sanjay Swamy:

but I do want to comment on something, right? This is probably the first time we have not talked about payments, right? Upi has just become so taken for granted. It is ridiculous that, you know, we just don't think about it anymore as a even an accomplishment, because it has just become. You know, it's like breathing right now.

Sanjay Swamy:

Right, it's so mainstream, In fact, breathing is probably not as taken for granted unfortunately it is, but it's really amazing to see the infrastructure that we have in India, the DPI, which is the envy of the whole world, but it stays at the foundation of several of the things that we have done and it's really the enabler, so really happy to see how that has just become mainstream across the board actually I was about to ask that only, not payments, but broadly, what has remained the same and what do you think will remain the same next year.

Brij Bhushan:

So on his payments, I guess it's so ubiquitous that it will remain what it is, but tripati amit, anything else that you see, that is not changing and should not change.

Amit Somani:

I'm going to go on a little tangent and come back because I wanted to say this yeah, perhaps closing remarks, right, I think just the maturity and the quality of the entrepreneurs which I mentioned earlier, both the next gen and this, and the level of LP interest for India We've had more LP interest at prime kind of this year than perhaps the last, you know, five, seven, 10 years, maybe even combined, right, so I think we're very high quality investors backing India and a lot and very kind of privileged position, like we said earlier, to be working with high quality entrepreneurs who are really trying to kind of change the world, make a dent in the universe and so on.

Amit Somani:

Right, I think, in terms of what remains unchanged, I think consumer appetite remains unchanged, in fact only increasing right, like in a positive way, right, so and that's a name, I don't know if you call it unchanged or not I think the demographic dividend remains unchanged, right, only growing. So we'll be the country with the highest sort of working population for years, decades to come, right Till 2047 when the country turns 100 in terms of independent India. So, yeah, I think, the betting on the talent and the people and the consumption just domestically which will, I think, keep us more insulated from the vagaries of the sort of geopolitical world.

Brij Bhushan:

Absolutely Anything from you, Shibu. Any closing remarks.

Shripati Acharya:

I'll say that, in one sense, the more things change, the more things remain the same. And the focus on creating a company requires all these nuts and bolts things, which is, you know, building an org, having belief in a problem that you're trying to solve and actually having the resistance, the grit and the persistence to go ahead and build that company. And in the talk of all this AI and everything else, you might forget that because the technology you can fall in love with it, but if you're not solving a real pain point which you're passionate about solving, it's not going to work. So I feel that the opportunity set is dramatically increased. That is really, really exciting, because now technology can reach more people more cost-effectively, in a more compelling fashion, and we have that opportunity to do that in India today.

Brij Bhushan:

Well, so that is it for our year-end podcast. Thank you, sanjay Shibati and Amit, for sharing your thoughts, and thank you, listeners, for being part of the show, and we'll see you in the new year, with our first episode coming up in January, and so the power to you on the other side of the new year thank you for listening to this episode of the podcast.

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