Prime Venture Partners Podcast
A podcast for entrepreneurs who are looking to build & grow their startups. Avoid common traps & learn uncommon strategies & tactics from makers & doers of startup ecosystem. Prime Ventures is a early-stage venture fund which focuses on startups that not only need capital but also require mentoring to transform them into disruptive companies. We share a passion for working closely with entrepreneurs and enjoy sharing their journey in a high-frequency, interactive and fun environment.Read more about us at http://primevp.in
Prime Venture Partners Podcast
2025 Predictions for Indian Startups, Funding, AI & IPOs | Prime Venture Partners Podcast
🔮 What does 2025 hold for Indian startups, venture capital, and innovation?
In this special episode, Partners at Prime dive deep into the predictions and trends that will shape the world of Indian startups, venture capital, and sectors in 2025.
Timestamps:
00:00 - Introduction: 2025 Startup & VC Predictions
01:15 - Prime’s New Fund Launch & Global LP Interest
03:00 - Focus on Early-Stage Investments: Fewer Bets, Deeper Support
05:30 - The Role of AI in the 2025 Startup Landscape
08:00 - IPOs in 2025: When Should Founders Start Thinking About Going Public?
10:45 - Growth vs. Profitability in 2025: What’s the Right Balance?
13:00 - Unit Economics: Key Metrics for 2025
15:30 - Emerging Sectors in 2025
18:00 - Why Founders Must Master Storytelling
21:00 - The Need for Better Dashboards & Actionable Metrics
23:30 - Overcoming the Growth-Stage Capital Challenge
26:00 - The Importance of Communication Between Founders & Investors
28:00 - The Role of Founders in Managing Burn and Growth
30:00 - Wrapping Up: The India Story in 2025 and the Future of Startups
🔥 What You’ll Discover:
- The Growth vs. Profitability Dilemma: How startups should balance both for long-term success in 2025.
- The India Story in 2025: Why global investors are bullish on India, and how new sectors like manufacturing are opening up investment opportunities.
As India’s startup ecosystem matures, this episode gives entrepreneurs the tools to navigate and thrive, from fundraising to scaling with discipline and focus.
🎧 Takeaways:
- The how of Prime Venture Partners’ strategy of concentrated investments and hands-on support.
- The role of storytelling in entrepreneurship and why it matters for attracting talent, partners, and investors.
- The evolving VC landscape, particularly for Series A and beyond, and how it impacts your startup’s future.
🔔 Subscribe for more in-depth insights on the future of Indian startups, venture capital, and expert predictions
LinkedIn: https://www.linkedin.com/company/primevp/
Twitter: https://twitter.com/Primevp_in
👇 Join the conversation – What are your thoughts on the startup trends for 2025? Share your predictions and experiences in the comments below!
#2025Predictions #IndianStartups #VentureCapital #AI #FinTech #PrimeVenturePartners #Innovation #Entrepreneurship #InvestmentTrends #TechEcosystem #GrowthVsProfitability #UnitEconomics #IPO #IndiaInvestment
We actually can deploy anywhere up to $10-12 million per company right.
Speaker 2:I think this is going to be the year of more IPOs from Prime and Prime Family Launching our new fund.
Speaker 1:Now we've got LPs from the Middle East. We've got new LPs from Europe.
Speaker 3:Taking fewer bets but going deep in those bets.
Speaker 2:What should the VC stop doing in 2025?
Speaker 1:Everybody, unfortunately, has watched Shark Tank and thinks that that's how they need to narrate their story.
Speaker 2:Most founders do not pay attention to dashboards, so what is the right time to think about an IPO. Fundraising requires an enormous amount of storytelling.
Speaker 1:I'm going to disagree a little bit here why I can say that as a South Indian.
Speaker 2:Hi everyone, happy New Year. Welcome to Prime Venture Partners' first podcast for 2025. I'm Brij and I'm joined with my partners in crime and in prime, sanjay, tripathi and Amit. So today we are going to talk about what's in store for 2025, especially for Prime, for the ecosystem and generally for the tech startups. So we'll get started no hold barred, candid conversation, no scripts, except for the ones that I'm carrying, so let's get started. So I'll start with you, sanjay, first, and especially from the prime venture partners perspective, what has 2025 in store for us?
Speaker 1:2025.
Speaker 1:What, what, what we have in store?
Speaker 1:Uh well, very excited to to say that we'll be uh uh launching our new fund and uh fund, which will be fund five for us, and it'd be similar to the to current fund four, you know, in the 120 million dollar range, and we continue to be focused on early stage companies, backing, you know, four to five new companies per year, as they've been doing pretty much for the last 14 years that we have been in business here and you, you know, the fund itself.
Speaker 1:I think what has been gratifying has been strong support from several of our existing LPs, but there's also been a drive to be much more institutional and we're going to have several new high quality institutional LPs from around the world joining us in this journey as well, as we've seen a lot of interest in India as a whole and met some very high quality, limited partners from really all geographies. It used to be much more of North America and perhaps a bit of Southeast Asia for us, but now we've got LPs from the Middle East, we've got new LPs from Europe and to join us as well.
Speaker 2:Shripati, anything from your side about Prime's approach that is likely to remain the same or change? How are you personally looking at Prime Venture Partners in the year 2025?
Speaker 3:So we will, in many ways, just continue to do what we strongly believe is our way of investing, which is taking fewer bets but going deep in those bets. So we are fairly unusual among early stage investors in that we take concentrated bets, which is four to five deals in the year, but we stay with them through the journey, with the companies you know and continuing to participate in investment rounds and the follow-on rounds as well. So that will remain the same. So we'll be patient investors.
Speaker 3:I feel that we'll be spending a lot of time with our existing portfolio companies in terms of having them both incorporate and navigate the changes that AI and the opportunities that it brings. I feel that the growth stage capital for all companies will continue to be a challenge for which they need to overcome, because, while there has been a very large expansion in the early stage capital which is available in India, there are a number of new micro VC funds which have come up in early stage and even angel checks now are fairly large, which is all positive and indication of our maturing ecosystem but still the bar for raising growth capital will continue to be fairly high. So, looking for opportunities where the entrepreneurs understand that bit and also making sure that our portfolio understands that there'll probably be an impact.
Speaker 2:Amit, over to you, I think, beyond Prime's perspective, I'd also like you to touch upon broad spaces, themes that you are personally most excited about in the year. Sure, so on the Prime front, I would say, firm, like we've said, is over a decade kind of old now, so I think a lot of companies are maturing at a growth stage. So I think this is going to be the year of sort of more IPOs from prime and prime family, but more broadly, I would say, cultivating an IPO mindset across everyone. One of our founders, founder of Navdhan, said it best at Founders Day last year, which was that you know what is the right time to think about an IPO? His answer was the day you incorporate your company or think about incorporating. And to me that is actually really, really profound, because it is very different than reporting some loosey-goosey metrics to VCs and saying it's okay, we'll do. This is, you know, cumulative accounting. This is that kind of accumulated ARR, this is, you know, accrual, non-accrual cashflow. The rigor to run yourself as a publicly traded company is a very, very different kind of rigor. So, helping the broader portfolio and certainly the growth stage companies hopefully you know a couple of them will go IPO next year or this year. So we'll. That is fun.
Speaker 2:In terms of sectors, I would say look, we do a bit of top-down but we're also very bottoms-up investors, right. So, in fact, last year you led a deal in the space of precision fermentation, something that none of us knew about before. You kind of brought that up to there. So I think there are going to be interesting opportunities bottoms up to build for India, for Bharat, for AI, for vertical AI, etc. And then the core sectors will remain right. So fintech, ai plus SaaS, you know, vertical AI those will remain. So those are the areas that B2B that we continue to remain excited about. Shrivati, I know you have been spending some time on deep tech, space tech, robotics, right. You keep tinkering around all those areas. Anything around that that you are excited about in the year 2045?
Speaker 3:Definitely. I feel that both of those which you touched upon, bridge, which is robotics and space tech, are very exciting areas. So, when we think about robotics, there is automation, which is essentially taking a regular process and introducing automation through robots in there, and then there is essentially, you know, the equivalent of self-driving cars, which is autonomous systems. So I feel that we are going to start seeing automation happening a lot more ubiquitous across industries than autonomous systems. I feel autonomous systems are fairly hard and the last 10% or 15% of getting that safe and correct and so forth is going to take a long time. That's my belief. So, on the but, however, what we traditionally usually think about as robotics is a lot of automation and there's a lot of value to be added there. And this happens because now the AI models are becoming smaller, they are becoming much more contained to run. They can be run in their own environment without having to be dealing with a lot of compute. This is the inference piece, because once the model has been made, the inference can actually be much more fine-tuned and run and vision is becoming much more powerful. So they combine all of these things together.
Speaker 3:I think automation is going to be a very big team. We have an industry which is co-led in manufacturing AI, which is an example of that, but doing things which is not possible On the space tech side. There are the force, the taguins here, in terms of both the support which we are getting from the government and also new areas which are opening up for space tech. Both in the defense side and in the private sector side, increased the total addressable time very significantly and I think the Indian startups there are very well positioned because we have both the talent and the ecosystem which is conducive to that. Most countries do not have ecosystem necessarily to do that, so I'm fairly excited about both of those things I wanted to just get back to one sort of point about our fund right.
Speaker 1:We made a very conscious effort to keep our fund size the same right, and I think this is sort of gone against what you know we see, certainly with our peers, whom we have deep respect for and general mindset of, you know, growing a fund. And the reason we believe you know this is the right thing to do is, you know, actually a $100 million fund is a very large fund for early stage where we can write some fairly substantial checks too. So the quantum of check we can write, whether it's anything from 500K to $3.5 million at the seed stage or at the start of a company, it's really quite a substantial amount. And with a concentrated portfolio, because we will typically have 14 to 16 deals in the fund, we actually can deploy anywhere up to $10-12 million per company right For companies that are doing well over the course of a couple of rounds. So I think what we wanted to make sure is that we stay with what has been true to our knitting and what has resulted in some extraordinary outcomes for entrepreneurs, whether it was happy or easy tap or quizzes or companies like my gate wheels, you know, reco, where we could have meaningful time to spend with the founders, and that you hear also now in.
Speaker 1:All of us have entrepreneurial backgrounds. We feel that for founders and more so we're seeing now founders value the fact that they're not just getting a check but they're getting quality time, and they're getting quality time perhaps across the four of us and our extended team. And for that to happen, you actually need to be in this mindset of doing very few deals deals, but spending a lot of quality time with the founders, and that triangulates back to you know, the size of the fund and how we can deliver extraordinary outcomes for entrepreneurs, our limited partners or our investors, as well as for ourselves, right? So it was a very conscious and thoughtful decision to keep the fund size the same and probably involve a lot of discipline and a lot of brainstorming, as you are aware. So I just wanted to put that out there as well for people to understand the life of a VC and the responsibilities of a VC, and the ability to be patient with entrepreneurs and build large companies.
Speaker 2:Absolutely. I think from similar story plays out when you are building a company, that's always easier to raise a larger and larger amount of capital. But eventually it's about building a company that can sustain over a period of time and you raise an adequate amount of capital to achieve that goal. So it's very difficult at times to hold on and stick to your foundational principles and I guess we all went through that period last year, in spite of all the attraction, interest from outsiders. Right, he said, we'll stay true to the fund size that we have, we'll stay true to what we have started out building at prime, and I think that fund size gives us the best equipment to achieve that goal you know a very well-known vc, uh told me in my first week on this job good companies don't die of starvation, but they can die of indigestion.
Speaker 1:And I think the same philosophy is something we also try to practice there. You know, stick to your knitting right. But really excited again, as Shri Patel said, about the opportunities we have seen.
Speaker 2:So we'll go into spending some time around founders playbook and the three of you come with your own operating and entrepreneurial experience, but also decades of now seeing multiple companies from the boardrooms, and I want to talk about specific do's and don'ts, right, what founders should do, should not do. We'll start with you, amit. Right For new founders entering any space or raising capital, what are the areas or themes that you will recommend that they prioritize? If you were to be a new start, new founder in 2025, which areas and themes will you recommend they start out? I think areas and themes are probably best picked by them. In fact, we joke about it often, right?
Speaker 2:This whole notion of you know A market, b team, b market, a team is eventually it's really the team, right, because Sanjay articulates this well that they'll pick the A market kind of thing they should think about in that opportunity, right, which is how can this be a very large opportunity? Not every opportunity is necessarily vc backable, right? Uh, so the size of the opportunity is very, very important. The second thing is that, because you could build a lifestyle business, a very good, attractive business, but it may not be venture backable in terms of both. You know, velocity, speed and direction and and the quantum of the outcome that's possible. The second is depending on the kind of business, people don't spend enough time thinking through distribution. Typically, founders tend to be from a product or engineering kind of heritage, so you're always keen to build something and then we'll figure it out. And not enough time on distribution, right? One of my learnings from the last 10 years has been that, look, it is as much about distribution as it is about product, if not more so. Right, which is a little bit, you know, sad and paradoxical as a product person. But that is one. Think through enough in terms of how are you going to get this to customers? Are the customers ready for this? Is this a real, meaningful top three, top five problem? Will they deploy it, et cetera. And the last one is look through good times and bad. In the last three years have been a bit choppy right 22, 23, 24, now on to 25.
Speaker 2:I think fundraising requires an enormous amount of storytelling and being able to articulate both the narrative and the numbers right. So I would say it's not just to get started, because you could get started just on pedigree, or you're from Magic Pen or Zomato or XYZ or you know you're, but then to say how is this going to be a large company? So I would say a few more things beyond just the here is the product prototype that I'm thinking of would be some things that I would encourage people to think about. So, start the company. If you have to start for the right reasons. Especially, founding is not a cool job, right, it's absolutely not. And I think once you start is when you realize that, if you start for the wrong reasons, that it is a slippery slope, absolutely so Sripati amongst the current founders, right, there has always been every year, there is a dilemma between growth and profitability, or both, I think. What do you think has 2025 in store? So do you think it will be?
Speaker 3:about prioritizing growth, prioritizing profitability. How do you think about it? So one rule of thumb which, uh, which I heard and I believe, is that you need sustainable growth, which means that your unit economics need to be solid when you're growing. But also remember that at this stage, you're a venture company. One point of growth is worth like three points of profitability, and what I mean by that is that you often see situations where founders are very are plagues that why their company is not getting funded when they are profitable, whereas some other competitor has gotten funded and they have not dropped.
Speaker 3:And it's important to understand and this is fairly basic, but it's worth repeating that investors are looking for future growth and future profitability, right, and they're looking at the company state currently to see whether this is a good proxy for a future growth and future profitability. And if you don't have good unit economics, the current revenue is not a good proxy for future growth and profitability, right. That's because if unit economics are not good, it means you have to raise a lot of money to continue your growth and your profitability is an un question mark, right, it's a more risky investment. However, the other end of that spectrum is low growth and good profitability. In that case also, you are as an investor, you're in a dilemma because now you have to bet whether okay, can this actually grow, whether this market is large enough or is the product good enough to access the market size for this to grow. So it is obviously a trade-off which founders have to make and it is important to know that in this case, if you're shown validation that you're seeing signs of good growth yet your utility economics are fine, you might still be losing money. That's okay. That's one which makes for an attractive company.
Speaker 3:And the second is having the understanding that you're not beholden to the market providing you a certain amount of capital at a certain amount of time, in a certain period of time to actually grow your company. What I mean by that is having your own destiny in your own hands, which means that, if needed, you can actually become a very low-burn company and then actually be able to raise when the capital markets open up. We had talked about in the previous podcast about edtech and so forth. You could be a very good edtech company, but if suppose the environment is negative fortunately scenario it's turned around, but if it continues to be negative, you have to just wait you might be a great company. So in those cases, having the ability to just lower the burn and sustain and become close to profitability, these are all like elements of building a business which I feel will continue to be very important.
Speaker 2:And there is always this cyclicality in the startup ecosystem. Right, there are periods of consolidation. Profit is the only thing that matters. Then you will see suddenly a boom of growth, growth, growth at all costs. I think the last two, three years we have been sort of in a good equilibrium where companies are prioritizing profitability and, as you mentioned, sustainable growth. Do you see the risk that it might change in the coming year or in the coming two years, that we might be seeing another bubble form?
Speaker 3:Well, I think this has always remained true. Two 30 years ago. It will be two 30 years from now. These are the companies will be valued in the long term on the current value of future cash flows. So you're not going to go wrong if you're going to believe that now.
Speaker 3:The reason why these things change is that that is the state you want to get to, where you're actually generating enough cash flows and growing and people are going to value that way, which is how public markets tend to look at companies, right, so I feel that founders shouldn't get confused about which way the cycle is going to go and which way the or what the current zeitgeist is in the market. The better way to think about it is that by solving a problem and this is there a large enough market opportunity for me and the solution which I have that actually provide providing that? Yeah, absolutely, and if you can convince yourself that, most likely you're going to be able to convince an investor, and it's okay. The investors are in the business of risk capital. They know how to take risks and sometimes they'd be wrong. Most of the times they might be wrong, but they also understand that at some point, if they're patient, the tide is going to turn B the idea is going to turn in their way.
Speaker 2:If I may add to that, I think now with a lot more companies going public, even on the Indian bourses there is an external benchmark valuation, which was often not the case in the private market.
Speaker 2:Companies were staying private for very long. I don't remember what Facebook went IPO at almost 100 billion market cap or some crazy large number. You didn't really see what the actual value of the business was. Right, because it was only set by, you know, the private market or some subset of the private market. So once there are things that are public so now you can see the stock valuation of a delivery or you can see the stock valuation of attraction or whatever then you say, ah, these are the benchmarks that are out there.
Speaker 2:So I think a random bubble is less likely to happen, although bubbles have been there for hundreds of years, not just dozens of years. So I think they'll come and go from time to time and I think when founders are starting the company, they need to keep this in mind that what their end state valuation, size of the, how this company will be valued is now known Absolutely 10, 12 years ago. Sanjay, you have been on many boards, right? What is one behavior and I will call it, I'll say, your pet peeve in terms of founder behavior that they should absolutely avoid.
Speaker 1:I always believe, you know, in over communication and you know, as the saying goes, good news takes the staircase, bad news takes the elevator and it's very obvious things are not going to plan when founders stop communicating or slow down their communication. I saw this even in some other podcast I was listening to the other day saying, wow, I'm not the only one who's observed this. Right. So I think, you know, trust is a very important part of the relationship, you know, between founders and investors, and investors are not their bosses, right? I mean, if anything, it's the other way around. Right, and it's important for founders to establish that relationship with their board or investors that they can bring and discuss bad news with them. Right, and I think the most successful founders are those that you know will call you and say I screwed up or something has gone wrong here. Right, and there's no shame in it. Right, it is what it is. We are in this boat together. Once you know your logo is on our wall there, we are in this together. There's no choice, there's no easy way out, even if you're bonded to part ways.
Speaker 1:So the reality is you have to start working together and trusting each other, right, and to me, that's the one thing that, as much as most founders sort of figure that out, over a period of time, some of them will struggle right, and they're all human beings Nobody feels great about ourselves when things are not going well. But that's also the opportunity to seek help, whether it is with your board, whether it is with other advisors, other mentors, et cetera. And that, to me, is a pet peeve, and I sense it very often, because we typically will have a WhatsApp group with founders and they'll be sending the most arbitrary of things, which has nothing to do necessarily with their success, because business is going well. But the moment business is going a little sideways, you'll start seeing the frequency of communication come down and I think you know for most founders, that is the moment when they should actually be much more communicative and transparent.
Speaker 2:Very well said you, being a founder in a startup, that's gone through some big difficulties and I think it's typical human tendency to go in your silo, just go hunker down and try and build and get out of that rat hole. But I think the best thing one can do is to actually share, seek help and, finally, that's how relationships increase. Trust right, that's how founders and investors can work together with each other instead of being against each other. Especially.
Speaker 1:Shibati says this from time to time right, being a founder is very lonely and when you're in this and this is all you're doing, this is your life. Right, you may not want to tell your family that things are going poorly, because you don't want others at home to get stressed out Already. They're seeing you working and overworking and so on, and your friends also generally want to believe that you're in control of things, or, with your team, you have to say that you're in control, so that actually leaves the board where you can have these confidential conversations. That's a safe space for founders and it does. Perhaps you know a handful of mentors and advisors, right?
Speaker 1:So whoever you find is in your safe space, you know you should certainly work with the, communicate with them, um, but as investors, you know, I think, um, we are all you know. The other advantage of working with investors is because we have 50, 60 companies on our portfolio and I can guarantee you the other 59 are not having a great time and you're the only one struggling through. What you're experiencing is probably something that many of the others are currently going through or had gone through, and maybe it could be fatal or, most likely, there is a solution that, uh, you know, and you're just, you just be normal no, absolutely.
Speaker 2:Especially when you're founding and building a company, it's very, very difficult sometimes to realize that everyone else might be in same boat as other founder friends of yours. Right, and that's, I think, the board and that place is a very important place to be open and transparent and just believe that you will get out of it safe and sound. On the other side, every company goes through it right. It's not a surprise.
Speaker 1:I think the other thing and it is something that probably I still am working on myself is embracing confrontation when things are not going well. You know, maybe you disagree with your investor. You know this whole. People talk about passive-aggressive right, where you agree in the meeting but actually don't intend to follow up on it. That's probably the worst thing you can do and that adds up over a period of time, right? So I think in general in India we are brought up to not be very aggressive, not confront. Certainly in in India we are brought up to not be very aggressive, not confront. Certainly in South India it's probably more true. I can say that as a South Indian, but you know it's the right thing to do sometimes, right, and it doesn't mean you can disagree without being disagreeable, right? And these are some techniques and this sort of comes back from its point of communication and storytelling and all of these things. They all sort of come together.
Speaker 2:So I'll move to Shripati to you. So 2024 was about the India story. Right, and as part of our own fundraise, you would have interacted with many of the LPs. How are you thinking, or how are they thinking, about the India story in 2025?
Speaker 3:I feel that clearly, if you look at emerging markets, india is one of the most attractive destinations for investment, given just the size of the opportunity we have and just the rest of the ecosystem. We have a stable political system, we have a stable economic environment and, of course, we have the talent and India has always been a place which has attracted venture capital right. So I feel that most of what we are hearing is that it is a lot of the stars are aligned for India to actually grow very well and continue the growth trajectory and for startups to play a very major role, not just in India, but outside India as well. I think there will be certain uncertainties and bumps in the road. I'm very much a thing that's a part for the post, as there's no linear straight line which goes up. There will always be ups and downs, but I feel that we're just very well positioned and some of the areas which we wouldn't have previously thought of as, uh, as interesting area are now becoming, you know, venture invested.
Speaker 3:So manufacturing is one of them, right, uh, because several years ago we were probably unclear how manufacturing is going to uh, you know, really take root in india, what kind of investments we're going to see, and now we're just seeing that shift happen, uh, in a very significant way, and that means that a whole bunch of downstream activities and supply chain and enabling products and so on and so forth become opportunities for us to invest in. So there is a lot of excitement and we think that, as we saw, our participation in our fund is an indication. I think, that the Indian venture ecosystem is going to see much more participation from global investors.
Speaker 2:At least this year, we will see the continuation of India's story or many years to go.
Speaker 3:To the extent that I can predict, yes.
Speaker 2:Yes, okay, Sanjay, I am not going to let you off the hook on the Fintech side. I remember that you. What is it? The Fintech side? I remember that you. So what is it in Fintech that keeps you still excited now and 20 years from now?
Speaker 1:I think, huge gap in access, huge impact and huge profit pools to tap right and with no winner-takes-all requirements here. Of course one would want to be a dominant player in whichever company we're investing in, but you really don't have to be the number one or number two even to build a large company. So, success, the price is really worth winning. I think that's my highest order. But in anything we invest in, is the price is really worth winning? I think that's my highest order bit. In anything we invest in, is the price worth winning? Because I believe it's harder to build a small company than to build a large company. Right, because in the beginning, you know, it sounds really sort of like how audacious is this thought process. But once you start showing success, the world sort of conspires to make you successful. Right, and I think in fintech you'll see several of these opportunities.
Speaker 1:Indians are, you know, just still coming into the digital age and getting you know into the mainstream A lot of businesses have the first piece of formalization happened through digital payments. And then, on the consumer side, yes, that footprint, as well as the formalization of the salary systems and things like that, has brought everybody into a mechanism like MyGate, digitizing all the Maycob Driver Gardner. All of a sudden now there is some digital data about them and people are starting to pay them in their bank accounts. Now you can see all this predictability of income. Maybe one could give them a payday advance loan or something like that. Right Education you know Amit's talked about the third coming of ed tech in the past and people are getting through more and more formal and sort of skill-based you know, learning right. That leads to income generation. They start becoming much more creditworthy Now. You know lending to someone like that again is very effective.
Speaker 1:And you look at the small stores, you know. I know there is a lot of debate about whether Kiranas will survive and that might be true for groceries and stuff. But all the other, you know building construction, whether you're an electrical store, a plumbing store. You know selling car batteries, etc. Working capital is the crucial requirement. It's really oxygen and they've all been starved of it, not because they're not creditworthy, because there was no data to say that they were creditworthy. So all these opportunities which are deemed to be priority sector are core to the GDP growth that we are projecting here in India, and financial services is going to be the lubricant that's going to foster this, and startups will have a huge role to play, so we'll go into sorry, the last one.
Speaker 1:That is also the boom in cross-border right and we've talked about LKM, which is the company in our portfolio. That's the first one there and again there in the cross-border working capital results be a huge requirement. So I think this is a continuous opportunity here.
Speaker 2:No wonder you are excited about for the next 20 years. So I'll go into the last section, which is the section I'm most looking forward to. So I'll ask one of you rapid questions, and you need to reply rapidly, but then you need to slowly explain why did you give that answer? So I'll start with you, sanjay this one.
Speaker 1:I think you should start with going alphabetical order when I'll go with Amit.
Speaker 2:So, amit, one thing founder should do immediately in 2025 pay attention to financials. Pay attention to financials and why. You know, stay alive, know what your cash situation is, know what it will take to grow, etc. Etc. Keep the company going. Keep the company going both at a growth mode and at a survival mode. That will remain true forever. And Sripati, one thing that they should stop doing, the founders.
Speaker 3:Well, I think we should answer that question by saying actually, most founders do not pay attention to dashboards. Okay, so it is a very simple thing, but creating good and actionable dashboards takes a lot of focus and effort. It takes six months, in my opinion, if you're actually focused on it, to actually get dashboards which are consistent. We talk about pet peeves in board meetings. It is just seeing different numbers are different in every meeting. Yeah, so if you have XYZ as your business metrics in your one board meeting and seeing ABC in the next one, what happens with XYZ as your business metrics in your one board meeting?
Speaker 2:and seeing ABC in the next one. What happened to the?
Speaker 3:XYZ right. They are kind of like disappeared and not seeing trend lines. So I feel that it's continuously underestimated. I'll give you an example. Right, start seeing all these adjectives applied to revenue. You have gross revenue, adjusted revenue net revenue.
Speaker 2:Accounting revenue non-accounting revenue multiple variants of that.
Speaker 3:This is like what we have done to contribution margins. Right, we have gone in and completely messed it up. Now. Contribution margin used to be something which is like whatever comes after all your variable costs are taken off, no, you have CM1, cm2, cm2.5. You have, like all these kind of things which which keep coming up.
Speaker 3:So just taking a step back, having a term in your matrix it just says revenue actually, which any big four accounting person it will get from eny or pwc will also agree with and which you might actually one day go public with and and be able to defend, would, for example, be very helpful, right. So these are the kind of things which I'm being a little facetious, but the reason is that taking the time and the discipline to put these things together and then consistently following that actually helps the founders. Good metrics, as Amit has said previously, actually inform behavior, and then it also helps getting the board be educated on the nature of the company. So that would be probably one thing which I would say they should both stop doing and perhaps start doing.
Speaker 2:So on to the VCs. Sanjay, what should the VCs stop doing in 2020?
Speaker 1:I was going to say they should start funding more of our companies and follow up on this.
Speaker 1:And look, I think there's definitely a gap in India at Series B stage right, and that's definitely a challenge.
Speaker 1:I think the bar on Series A in terms of survivability and profitability has gone sort of extraordinarily high.
Speaker 1:I think Series A has really become the Series B of the past, though the check sizes still remain the same, and I think I would certainly like to see a lot more aggression in terms of decision making.
Speaker 1:There are certain VCs who do a great job of it. You know. They come in, they take a quick look and then they pass it. They give very good reasons for it, but it's also done in a very finite period of time. I have deep respect for them, but I think we you know founders have been struggling a little bit over the past 24 months, where people are literally expecting them to be fully profitable companies, even at the Series A stage, and I think that would be one that I think we need to get back into more of this venture mindset, because for those of us coming in at the seed and pre-Series A, it's focusing on the wrong type of investment sometimes, because if profitability is going to be a requirement coming out of a pre-series A stage of a company, then you have to back a certain category of companies and they're missing the high alpha of the company.
Speaker 2:One skill, amit, that every founder should master Storytelling. And why do you feel so strongly about it? Because you require it for everything, right, you might think very obviously for fundraising, but as you're growing your company, you want to attract people that might be 10, 15 years more experienced, older, whatever than you. You have to tell them why should they leave their fancy fat paycheck at a Google, a google or meta or wherever right? Open ai and come join you, right? So for employees, I think also important for your ecosystem partners, right? So this kind of adage fake it till you make it love.
Speaker 2:If you want to go partner with somebody very large, you have to convince them. Why should they partner with you? You're like you want a little ai startup out of hsr layout, right? Like why should, uh know, perplexity partner with you or whoever right, nvidia partner with you? So I think it's a very core scale and I think, when I think about notionally I mean I'd probably get some big bats for this, like US founders versus India founders I think this is one where area where we don't do so well, right, which is that you know telling your story to all stakeholders.
Speaker 3:I don't mean just investors, I mean I'm still adding another piece to what uh myth is saying, right? Which is? It's so important, this piece of storytelling, because while one might think that you know, investments are made by looking at spreadsheets, actually they are made based on the excitement the investor has of being participant in a dream journey, in that journey, right? So how do you actually create that? It's not just about presentation, actually it's not. It is about deeply thinking about what is it that you're building? And they're just picking the most relevant aspects and beating it into a narrative that is relevant and it makes sense, whereas lincoln once is supposed to have said, after having written a five-page letter to his friend, that I'm sorry for writing you such a five-page letter because I don't have time to write a one-page letter, right? And which is hard because you need to both think deep and figure out what you don't want to talk about, and this boils it down to the things which you do want to talk about. So I think that the best stories have that element to them that they just focus on the poor thing, and it's not easy and it takes time and it takes patience to craft it.
Speaker 1:I'm into boiling things down. I'm going to disagree a little bit here. Why?
Speaker 2:And on what point?
Speaker 1:On the point, or the perceived importance of storytelling, because I think most people don't understand what it means to be a good storyteller. I think Sheputi sort of alluded to a little bit to it at the end, right? So it's very important for founders to really have clarity of intake, first, in terms of who they are. Who is their customer? What problem are they aiming to solve for this customer? What is life for the customer before this today, and what is life going to be in the event? They're going to be successful and why their success matters. That's really all they have to say, right?
Speaker 1:And I think, to some extent, what people tend to when they're told they're poor storytellers they go off and they start trying to create a story and then the authenticity goes away from them, right? So, while it is important to be good storytellers, while it is important to be very crisp and factual, you have to stay true to your knitting. You can't become an artificial storyteller. You can't create a story of your life that doesn't exist just because it appears, and everybody, unfortunately, is what Shark Tank and thinks that that's how they need to narrate their story. That is not what we are talking about, right? We are talking about being authentic. We are about being very clear and crisp and saying these four or five things that you need to say in a cohesive manner, right? I think that's the important point.
Speaker 2:So, coming to clarity, Sripati, one question for you what would be the most important metric for startups in Qualified I think it will be more of the same.
Speaker 3:I think it's going to be unit economics and making sure that you craft unit economics that are relevant to your business. We often see entrepreneurs who say, hey, look for my business, daos are this. Sometimes you think back and see entrepreneurs will say, hey, look, you know, for my business, you know, daos are this. Sometimes you think back and see, well, actually, dao might not be a relevant metric for your business because it is not a business in which the customers actually are expected to come every day. Right, the usual behavior of a customer is something else. So what I have seen is that we blindly copy. You know what metrics are supposed to be relevant. Churn might be defined a certain way, something else, retention, et cetera. So trying to understand what is core to the particular business at hand and then crafting the metric around it is an important thing. So I feel that that will continue to be very important, because anything AI is getting funded right now.
Speaker 3:There's potentially a bubble, but we see businesses do go through that. In fact, there's nothing like a normal time. It's only feast or famine, at least in my experience, which I have seen. So there might be feast, but just because you have raised money doesn't make it successful. It just increases the bar higher for you to jump over in order to be successful. So I feel that the founders need to be acutely aware that they are building a real business. What is it that they need to try?
Speaker 2:And for that is unit economics.
Speaker 3:And the unit economics.
Speaker 2:yeah, Sanjay, one piece of advice that founders love to ignore but should not.
Speaker 1:I go back to what I said earlier Communicate, communicate, communicate. Probably the only other thing I'd say is this is a marathon. Things will go wrong along the way. There will be moments when you need to be able to sprint, but for the most part, conserve energy at all levels, and completing is most important. Coming first is more so. As long as you get to the finish line, good things will happen. To get there in the top 10, extraordinary things might happen, but I think focus on first staying alive at all times.
Speaker 2:Amit, any closing thoughts? No, I think 2025 is going to be sort of hopefully kind of harbinger this notion of being more predictable, whether it's in communication, whether it's in numbers, metrics, unit, economic, you know, having the business do what you said it will do and I think this is again back to the IPO mindset that the more predictable you're going to be, it doesn't mean high or low, right, it is whatever it is. That is your stated target. You know, budget versus actual, the very old fashioned kind of way of doing it, and that could be on hiring, that could be on expanding to international markets. So being more predictable is something that I think the folks that do that will be a lot more successful than the ones that sort of wing it. Well, that is it for our first podcast of 2025. Thank you so much, sripati and Sanjay, for joining us and sharing your views and, to our listeners and viewers, thank you so much for following us and look forward to seeing you next time and have a great 2025.
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