Nayrhit B

The Indian Gen AI prosumer, consumer landscape still remains early – Companies have hit power users but are subscale OR have low % of paying users  • Companies do not have enough cohort level data to indicate product love  • Most cos who have managed to cross few hundred thousand users (MAU) are building their US GTM machine  • They have a rudimentary hallucination check AND a rudimentary RLHF in place We at Chiratae ventures are keen to look at – 1) Vernacular AI assistants - Sarvam, Krutrim are foundational model (Sarvam – OpenHathi) based general intelligence assistants very similar to Anthromorphic or Poe, but contextualized to India. They have raised significant capital, but the space remains open still. 2) Vernacular AI search – We do not have a Perplexity, Liner for the Indian vernacular. This is a potential whitespace. We will look for a solid team, with a solid product roadmap. Product risk mitigation playbooks are being built out by investors as we speak  Some companies like Two.ai are building both assistants as well as AI enabled search platforms. 3) Co-pilots for Professional services with pre-existing spend pools which can be delivered digitally – AI generated influencers, AI based gaming, digital professionals/copilots - legal professionals, counsellors/therapists, accountants Please write in to [email protected] if you feel there is something you would like to discuss. If there are products or companies we should look at, please tag them in the chat below Chiratae Ventures Sudhir Sethi TCM Sundaram Ranjith Menon Venkatesh Peddi Anoop N Mandeep Julka, CFA Kailashnath M S, CFA Tanvi Dubey #GenerativeAI #Consumer #SaaS #Technology

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Who would invest in founders who have wasted $50M? Koo, an Indian microblogging platform, recently shut shop after raising $50M in capital. Everyone has their views on why Koo failed. IMO, the biggest reason behind its failure was a lack of PMF (Product Market Fit). Koo spent much money on marketing and didn’t build a product people wanted. It kept harping on nationalism, a Twitter for Indians, made in #India. This approach failed. However, this doesn’t mean Koo’s founders aren’t smart or intelligent. I wrote in an earlier post that we shouldn’t be surprised if Koo’s founders raise fresh capital for a new startup. To many of us, this might seem grossly unfair. Millions of smart, hardworking founders are struggling to raise capital while investors are backing failed founders who have wasted millions of dollars. How is that fair? It confirms the widely held belief that the #venturecapital industry is broken and corrupt where a few people with the right connections get all the capital while others don’t see a dime. It shows that the VC industry is a closed group, a cabal where who you know matters more than anything. While these are just complaints, most people who criticise VCs don’t understand how startup investing works. VCs welcome failures. They embrace them because they know failures are inevitable. When VCs invest in 20 #startups, they know 15 will fail. The goal is to invest in startups that can give them a 100x return. Failures are part of the game. They are unavoidable. The aim is to back founders who can build such 100x return companies. Hence, failures are not looked down upon in the VC industry. It’s similar to the American culture where society appreciates the people who take risks, and it easily accepts personal bankruptcies that result from this risk-taking approach. There’s no taboo in failing in the USA and the VC industry. I’m sure Koo’s founders have learnt from their mistakes. It’s an expensive mistake and not everyone is so lucky to have this luxury to spend $50M on their education. ;) However, most VCs will back Koo’s #founders because these founders know how to raise capital and they know how to not build and scale tech companies. Their past failures have improved their chances of future success. In the VC industry, Failure is Good.

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Rapido’s journey to becoming a $1.1 billion unicorn in less than a decade is a story of smart strategy and execution. Here's how they did it: 📍 Targeted an Underserved Market: - While competitors like Ola and Uber focused on cars, Rapido spotted a gap. - In tier-2 cities, traffic is tight, and narrow streets make bikes more practical. - Rapido introduced bike taxis, offering quick and affordable rides where cars struggled. 📍 Prioritized Affordability and Speed: - They chose bikes over cars to ensure faster, more affordable rides. - Instead of luxury, they offered convenience for everyday commuters. 📍 Relied on Word-of-Mouth: - Rapido didn’t spend big on marketing. - They avoided celebrity endorsements and flashy ads. - Growth came through user recommendations and strong customer trust. - No Bollywood celebs or IPL sponsorships—just organic word-of-mouth success. 📍 Expanded Services: - They didn’t stop with bike taxis. - Rapido added auto bookings to their service portfolio. - They also ventured into deliveries, expanding beyond rides. 📍 Adapted During the Pandemic: - When the pandemic hit, they pivoted quickly. - Rapido adapted their business model to survive and thrive during tough - times. 📍 Lessons for Entrepreneurs: - Identify Market Gaps: Rapido found an unserved need in bike taxis. - Grow Sustainably: They focused on organic growth, not flashy marketing. - Be Adaptable: Rapido stayed flexible, adding new services like autos and deliveries when needed. 🍾 Key Takeaway: - Success doesn't always require big marketing budgets. - Spot the gap, serve it well, and grow smartly. - Rapido’s strategy proves that even simple ideas can lead to unicorn success. - Their story shows that smart execution, sustainability, and flexibility can drive growth without the need for heavy marketing. I'm a 100% remote consultant orchestrator and operator for personal brands, companies, and communities, helping them achieve profitable growth. ♻ Feel free to follow me, Barsha Das for insights, and if you need solutions, book a 1:1 call through the link in my bio!

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I completely agree with Sabeer Bhatia about the PE Mindset of VCs in India. I think as Founders we should focus on convincing the customers. If your product is great and you need funds to scale, you will find many lenders. https://lnkd.in/dDw-a9_i

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Thanks Bismah and Inc42 Media for the insightful coverage and deep dive into the vital role of operator VCs! Bismah's thoughtful analysis underscores the growing need for operator VCs in today's startup landscape. As an operator VC , I've witnessed firsthand how founders increasingly value more than just capital. They seek partners who bring operational expertise, strategic guidance, and an extensive network to the table. These elements are crucial for driving sustainable growth and navigating the complexities of scaling a business. At GrowthCap Ventures , we understand the unique challenges faced by early-stage startups, which is why we prioritize offering not just funding, but also hands-on support and access to our extensive network. Together, we're empowering founders to realize their vision and build transformative businesses. #OperatorVC #StartupEcosystem #Gratitude

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Here's one more theme that has played out over the past decade in India SaaS: SaaS companies that sell into India/Asia (non-China/Japan). There's been a reasonably large set of investors in India who have been default no in this category, based on perception of limited TAM and GTM challenges. However, there is reason to be optimistic for this theme (we are!). A reasonable set of companies in the ecosystem have scaled, such as MoEngage, Darwinbox, Capillary Technologies, Yellow.ai, Unicommerce , Gupshup, CRMNEXT, LeadSquared. Companies like Salesforce, SAP etc have reached multi-hundred million ARR in India. As a result, the potential scale from sales in India has grown from the $15-20mm that people used to talk about 5 years back to perhaps $50mm in India, overall $100mm-150mm in Asia. I think we'll see more companies continue to get funded here as IT demand in India/SEA deepens and local requirements (mobile, India Stack, regulations, languages) get addressed. Founders and investors will need to tune into this being a solid path to go but will take longer to get to impact than US/EU-focused companies. Some characteristics we see at India/SEA-facing software companies: * Many start out in SMB but then find scale & success selling into enterprises. India market has a ton of SMBs (10mm+), a relatively light mid-market and a significant set of large enterprises. * Products tend to have feature sprawl and design-deficit but this can be fixed. * Some large sectors that are pulling at enterprise level e.g. BFSI, multi-sector conglomerates. Early traction from digital native companies (but naturally capped market). * Natural to go to SEA & Gulf countries. Product could remain fairly similar but sales & marketing motion can be quite different. To get really large, feels like will have to end up going to US/EU markets eventually. * ~10 years to $100mm ARR, with market leadership in Asia * Gross margins start out perhaps 10-15 points lower than corresponding companies in the US/EU but trend up over time. * Most India-facing SaaS companies are starting as India Pvt. Ltd. today, compared to 5 years ago (versus US C-corp), with a view to going public in India at $50-100mm revenue level.

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Last year, one of India’s largest chain of luxury watch boutiques approached our SEO team at Schbang with a unique challenge. Their monthly organic traffic had stagnated at 220K - 230K visitors. Despite their best efforts, they could not grow their traffic. So we pitched. Here’s how we tackled this challenge 👉 We began with a thorough review of their website, particularly the pages they had previously optimized. Despite their efforts, the content lacked certain keywords that could enhance its semantic richness. 👉 By identifying gaps and enhancing these pages, we made them more SEO-friendly, ensuring they were optimized for relevant keywords. 👉 We identified the keywords where they were not ranking in top positions. There were two main types of pages: brand pages (e.g., Rado, Rolex) and universal category pages (e.g., Men’s Watch, Women’s Watch). 👉 For brand keywords, we analyzed competitors who were outranking them. For instance, if a search for “Rado Watch” showed a third-party site ranking above the brand’s website, we scrutinized these competitor sites first. 👉 For universal category pages, we noticed they were ranking between the 11th and 20th positions. These pages lacked optimization for price-related keywords, which have high search volume and purchase intent. By incorporating these keywords (e.g., “Women’s Watch price,” “Men’s Watch price”), we gained a competitive edge. 👉 We focused on the top 30 universal category pages, identifying keywords ranking between the 11th and 25th positions. The existing content and FAQs were often irrelevant, so we revamped them and added FAQ schema to improve rankings, particularly in the “People Also Ask” sections. 👉 Internal linking was optimized using relevant anchor texts. From a blog perspective, we ensured all keywords pointed to the relevant categories. 👉 Technically, we addressed issues with irrelevant pages getting indexed due to pagination. By removing paginated pages and adding a no-index tag, we improved the overall crawl budget, ensuring quicker indexing of relevant content changes by Google. Before onboarding us, The total number of sessions they were attracting was around 192K in March 2023. As of June 2024, we're now bringing 397K sessions per month. 🚀 That's a staggering 106% increase in just a year 🚀 We were not only monitoring traffic but also ensuring we delivered on their core KPI. I.e. Leads. In March 2023, they were receiving around 1,897 leads per month. By June 2024, this number has grown to 2,500+ leads per month. 💸 The total number of leads grew by 37% 💸 For the men’s category page, leads grew by 100%, showcasing targeted success in key areas. The key takeaway for us is that a consistent data-driven approach combined with a thorough review process of pages and a deep competitor understanding can yield significant improvements. #SEO #DigitalMarketing #Growth #Strategy #Optimization #Schbang

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Indian venture market has exploded. Someone reported that there are 800+ funds/networks/syndicates/ accelerators active in Indian venture market now. Not sure, if that number is correct but if you are an early stage tech founder on your fundraise journey, chances are, you would meet hundreds of people. While majority of the fund houses are doing incredible work and shaping the ecosystem. There are certain kinds of investors you need to identify & avoid to save time and stay focused: Sharing from my personal experience, top 5 such cohorts to avoid and the takeaways for the founders: 1. Data collectors: At early stage, you don't have historical data to present. Your projections are just that, Projections. I wasted one whole week discussing with a prospective angel investor on why the CLTV to CAC ratio is x, and not y. Takeaway: Discuss high level strategic numbers only without going into the details. None of the projections would be accurate anyway when rubber hits the road. 2. Document collectors: Met few folks, who would watch from the fences and ask for n number of documents, data rooms, statements without sharing the purpose of the ask or even revealing their investment intent. Takeaway: It is supposed to be a bi-directional conversation. Say 'no' often, till the time, an official relationship is established. 3. Valuer (! investor): At early stage, valuation is a function of multiple parameters, the opportunity itself, the team, or anything else except steady cash flows, because you don't have much. I wasted another week with a prospective investor trying to justify valuation, had to shut down that conversation, after both of us started quoting Aswath Damodaran and his valuation principles. Takeaway: Too much content on the internet for both parties anyway. Shouldn't be a bone of contention at early stages. 4. Facilitators posing as investors: Met numerous people, who would go to any lengths to pose themselves as serious investors, even buying paid media articles. Only to reveal at the last: The success fee. Takeaway: Avoid facilitators until Series A 5. Brokers posing as market makers: People posing as market makers sharing tons of gyaan on LinkedIn but are actually deal brokers looking to make quick %. Personal experience: Two rounds of conversation happened and then out of blue, they added a third party in the mail trail, someone who facilitates mergers & acquisitions. There wasn't even a single instance in the past conversations where we indicated any such intent. Takeaway: Avoid name & shame in public but at least share within founder communities. #venture #fundraise #startups #investing

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Can technical founders become effective CEOs? Srinath Sridhar knew he needed to step out of his comfort zone when he founded Regie.ai four years ago. Now he and cofounder Matt Millen have raised more than $20 million and landed on G2’s list of fastest-growing software products of 2024. My full conversation with Sri is in the comments.

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To be honest, most VCs in India have not found product market fit (PMF) yet. I believe, you have hit PMF as a VC when you have – 1. Top 1% founders are coming to pitch to you, 2. The founder is willing to take your money at a lower price than the market might give him/her. 3. You have built capabilities to pick the founder and market you want to invest in and the confidence to pass on deals that don’t align with your vision. Best example of this is YC , ~4.5% of the startups that have gone through Y Combinator since 2010 have become billion-dollar companies.  Founders don’t just take their money—they choose YC’s standard terms even after raising at a higher price from other VCs. That’s true PMF for a VC. #VC #PMF #funding

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Having been in the startup game for almost a decade, here's a harsh truth: The B2B playbook we all relied on is dead. --> Your prospects are making decisions before you know they're in the market. --> Your clients are running operations from beach towns while their teams span 12 time zones. --> Decision-makers aren't just in corner offices...they're part of complex buying committees influenced by AI insights and corporate influencers. But here's the real kicker: your customers are solving problems that you don't even know exist. The winners won't be those with the biggest sales teams. They'll be the ones who can navigate these new dimensions, meeting customers where they'll be, not where they are.

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#Take2 Why the Market May Be Overestimating Quick Commerce's Future Despite Damodaran's Optimism As a genuine admirer of #AswathDamodaran and his insightful #valuation frameworks, it's fascinating to see how his evaluations cut to the core of a business's #financial #health. However, with #quickcommerce, it’s possible that the broader market has overestimated the long-term potential of these businesses. Quick commerce is undeniably enticing in terms of #growth and #marketshare grabs, but as Damodaran himself has noted, the sector faces headwinds like narrow #margins and dependency on high-frequency, low-value transactions. Quick commerce relies heavily on the temporary advantage of local #logistics and #labor #arbitrage, but as cities become more congested and labor markets tighten, these operational “advantages” could quickly erode. Furthermore, the political landscape may not always be welcoming, especially given the impact on local #kirana stores, which are integral to India’s #retail fabric. While Damodaran’s framework rightly emphasizes lifecycle positioning, it may not fully capture the #political and #inflationary risks that quick commerce facilitates and faces as it scales. This could mean that valuations, even if optimistic now, might not reflect the long-term stability or profitability the street expects. One critical factor that quick commerce models often overlook is India's regional #diversity —it's anything but a #homogenous market. Local preferences, purchasing behaviors, and infrastructure vary widely from city to city. Quick commerce platforms will need to adapt to these variations, constantly refining and expanding their product categories to cater to local demands. This could mean shifting beyond the basic groceries and essentials model and embracing more regional product mixes, which further adds to complexity and costs. The sector's reliance on ultra-fast delivery and inventory optimization only intensifies these challenges, as what works in a metro city like Delhi or Mumbai may fail in smaller towns where consumer habits and logistical networks differ significantly. This makes scaling in India particularly #complex, and could limit the profitability of the "one-size-fits-all" model that quick commerce often tries to implement. All things considered, I’m confident that these companies have the talent needed to evolve. Just look at how Zomato transformed from its early days to what it is now. The real question is: what will they evolve into, and will that future model justify the premium they currently command? For now, I’ll take advantage of my exclusive offer on Coke Zero from quick commerce and enjoy it while it lasts.

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Naarica has been smashing it 💯 So proud of how far Shruti Chand has come. When we first met, she didn’t even have a website, just some traction from some offline events. And now, she’s doing Rs. 10L+ MRR with a double digit EBITDA margin. And she’s just touched the surface - the real mission is 1000x larger than this. In India 🇮🇳, there are still 12-15 crore women who use sub-par products (or none at all) during periods. Making women feel more confident, lesser anxious - I feel that’s Naarica’s true mission. A truly women centric brand. I hope there are more and more folks like Shruti who take up such bold challenges. I hope more and more folks get inspired by her and choose entrepreneurship. And truly solve India-specific problems 🙌🏽

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✅ The reality behind the news : TagZ Foods is being bought at a massive loss. It's not uncommon in D2C. But the really unfortunate bit is : 1. D2C cohorts and the idea of D2C as this goldmine 💡 are sold left right and centre & there's lots of information on D2C everywhere but hardly any of that talks about : the massive number of D2C brands that fail or even those who get some traction but the founder gets any returns. 2. Most founders who get into D2C are being misguided by 'experts' and influencers including people from the marketing fraternity. As a result, they either get really happy and committed with their initial traction and /or blow up a large part of their funds and then realise once the money 💰 is over the sales drop drastically. 3. It does not mean you shouldn't get into D2C. If it's something you are passionate about, feel there's a real problem then solve it... or if you are unethical and smart enough to raise funding without a future and get rich yourself ,then do it ! ( maybe then become an angel investor or sell your business to good glam group or even start a podcast 😉) 👉 Think strategically, question what you are being told ; eg this is news from just 2 months before where Tag was covered as among the top 100 D2C brands : "From the cricketer Shikhar Dhawan to 9 Unicorns, the backers of TagZ have pumped in over $4.2 Mn in the startup to date. The growth has also seen an uptick as the D2C brand claims to have logged a 30X increase in volumes in the past 18 months, ending May 2023. " #d2c #strategy #india

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I've built financial reports for D2C brands doing both $1mil and $20mil. They were the same. This is all you need to know: 1) How much does each new customer cost to acquire -> nCAC 2) When do you recoup this cost -> CAC Payback Period 3) When and how many customers return -> Repeat Purchase Rate and Days Between Orders 1 and 2 4) How much profit contribution do you earn from each order / customer / product / category -> LTCM (includes AOV and GM as levers) 5) What's the return on your marketing spend -> ROMI or MER 6) How quickly does your inventory turn -> Inventory Sell-Through Rate 7) How many days of cash runway do you have -> Cash Runway 8) What revenue and cash flow do you project for the next 90-120 days -> Cash Burn Rate 9) When and how much capital could you need if projections didn’t happen -> Scenario Analysis 10) How many days of product overstock do you carry -> Inventory Overstock 11) What’s the dynamic compared to last year or previous period These 11 questions can be answered by a simple report. Don't forget about OpEx - analyze it in detail too. No heavy tech stack. No serious time effort. No crazy financial models. Most other metrics are noise. Simple is always the way. P.S. if you need help with building a financial report, or understanding and actioning your numbers, DM me. #founders #ecommerce

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Zepto announces its $ 665M Series F financing at a $3.6bn valuation yesterday. They started as KiranaKart (part of YC's W21 program) & re-branded to Zepto; the firm has defied all funding winters with crazy momentum ⤵️ June '20: $50K Contrary Capital fellowship Nov '20: $125K YC W21 program  Jan '21: $700K Seed round Oct '21: $60M Series A/B round Dec'21: $100M Series C round May '22: $200M Series D round Aug '23: $200M Series E round Zepto's investors include Y Combinator, Nexus Venture Partners, StepStone Group and even Glade Brook Capital (former investor in Zomato). 📈 And, their metrics in the last few months have been astounding: (1) ~4.5M (i.e. 45 Lakh) Zepto Pass subscribers in 3 months - Initially this was free, then they began charging > ₹99 per month (2) 75% of ~350 dark stores are EBITDA positive - Time to EBITDA breakeven per store is down from 23 months to 6 months (3) ~28% market share in Quick Comm - Impressive given they are an independent company (versus Instamart or Blinkit) ✅ And, Zepto is just getting started:  (a) Entry in non-metro cities next (b) Entry into private label (Zepto Cafe & Meats) (c) Going to x2 the number of dark stores ➡ What I've seen lately in the key metro cities: There is a shift from e-comm to QC. I think it is only going to accelerate as QC co's bring in more categories & tap into long tail SKUs via larger warehouses.. Product searches first moved from Google to Amazon, now they may move from Amazon to Zepto et al. incredible to see how the Power Law plays out - these folks are going to change Commerce in India. Congratulations Aadit, Kaivalya + team Zepto! #startups #india #venturecapital

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I met two founders - no product, no revenue, but raising at $40M valuation🤯 They were super confident that they are building the Next Big Thing and honestly, I love that energy. Every founder should believe they’ll defy the odds. That kind of confidence can move mountains But then we got into the details The CEO said they were planning to raise $2 million for 5% of the company I asked, “Why do you think investors will agree to this?” The CEO said, “Because we’ll be worth $1 billion one day.” This is where it fell apart for me. Red flag spotted 🚩 I get it - there’s no science behind early-stage valuation. It’s messy, subjective, and a mix of belief and negotiation. But this is where most founders get confused So here’s a simple framework to think about early stage valuations: 1️⃣ Raise for 18 months Why 18 months? - You’ll need around 12 months to hit your milestones for the next fundraising round - Then, when you go to the market to raise your next round, you’ll need 3-6 months to close it 2️⃣ Figure out how much money you’ll need Add up your costs: team salaries, product development, marketing, and anything else you’ll spend money on for 18 months 3️⃣ Expect to give away 10-20% equity That’s what most early-stage investors will want. Based on how much you’re raising, this will give you your valuation. For example: If you need $300K (₹2.5 crore) for 18 months and offer 15% equity, your valuation is $2 million post-money So, this is how you arrive at a valuation that works for both you and the investors ————————————————————— If you’re raising funds, I’ve made a step-by-step guide to help you through the entire process of raising money from VCs It’s based on my personal experience of raising $85M+ from top global investors, and you can grab it here - https://lnkd.in/dWUTzp66 Trust me, it’s cheaper than spending hours on bad pitches, awkward investor conversations and walking out of the room wondering what went wrong 🤦🏽‍♂️

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Founders like D2C. It’s just not a VC favourite. While D2C continues to be wildly popular among consumers, as is also clear from the number of D2C IPOs in India, there are mainly two friction points for VCs when investing in them. First, it’s tough to scale brands beyond INR 100 Cr ARR, especially given the poor brand loyalty and fierce competition in the space. These challenges eventually dilute the ROI and prolong exits for VCs. Second, the more the brands raise initially, the more they’re forced to grow later at any cost. This can result in distraction from the main business, severe cash burn, and funding issues. All in all, it is a good business for founders who don’t raise too much money and for folks with self-employment ambitions. Expecting a lot more consolidation in the space going forward - brands that do it well will scale.

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