Prayank Swaroop joined Accel and Dev Khare joined Lightspeed in 2011, the year InMobi became India’s first unicorn. By that time, GV Ravishankar had already spent five years with Sequoia India, which is now Peak XV. The three have had a ringside view of the evolution of India’s startup and venture capital ecosystem. Swaroop, now partner at Accel, Ravishankar, managing director at Peak XV, and Khare, partner at Lightspeed, tell Forbes India what the journey has been like, what they are investing in now, why, how, and, most importantly, in whom. Hint: Founders remain the most important factor.
GV Ravishankar: I joined WestBridge Capital [which later became Sequoia] in 2006. At the time, nobody understood what venture capital [VC] meant. Apart from WestBridge, there was only ICICI Ventures. Most investors focussed on BPOs, IT services and a handful of internet companies. We felt India also offered opportunities in sectors such as financial services.
Things began changing between 2010 and 2012 as internet access improved and smartphone penetration increased. We started recycling capital into technology-first businesses such as CarDekho and Truecaller. The real disruption came in 2015-16, when Jio was launched; data prices fell and smartphones became cheaper.
Dev Khare: In the run-up to 2016, multiple changes happened. It was the year demonetisation took place, Aadhaar reached a billion people, Jio was launched, and Donald Trump got elected for the first time.
From category creation for e-commerce in those first 10 years, the 10-year period from 2016 has seen a lot of value creation. SaaS and fintech got built, and crypto had its moment in the sun. A third wave is starting now, which is the intelligence and AI wave—and it is going to be bigger, as AI gets infused into consumer offerings.
On e-commerce and distribution in India
GVR: We have hundreds of millions of people with internet access, cheap data and the ability to consume content and services online. On top of that came the UPI and digital payments revolution, which made it much easier for people not just to browse online but also to transact. Without that layer, people may have had access to services but would not necessarily have been buying things online.
India has traditionally been a market with relatively few strong consumer brands. For a long time, companies viewed it primarily as a price-sensitive market. At the same time, there were plenty of consumers willing to pay more for better products, but they were often underserved because companies focussed on chasing volume at the bottom end of the market.
The problem is that India often looks poorer from a distance than it actually is. There are tens of millions of consumers here—essentially the size of a large European market—who can spend on quality products just as consumers in developed markets do. Many of them remain underserved, and that is the opportunity a lot of new-age brands are targeting.
We have invested in a company called Sweet Karam Coffee, which sells premium snacks largely through quick-commerce channels. We also backed First Club on the belief that a growing number of consumers want better-quality fruits and vegetables, cleaner food products and healthier ingredients delivered within 30 to 40 minutes. On the consumption side, I think India will remain a very large opportunity for a long time.
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Prayank Swaroop: In India, distribution has always been a challenge. Around nine years ago, I was in China and there were nearly 21,000 meaningful fashion brands, compared to the Indian ecosystem, where hardly 300 brands made the cut. The manufacturing base in China is very strong, and my takeaway was that supply chain can impact so much of e-commerce.
On manufacturing and India’s indigenisation push
PS:
We have been investing in manufacturing for the last decade, but the pace has increased significantly over the past three years. It is an attractive sector, which is why we are allocating more capital to it. At the same time, manufacturing is not easy. Setting up factories in India comes with a range of challenges, from execution to infrastructure. However, those very challenges can become moats, because they make it harder for competitors to enter and scale.
Unlike consumer internet businesses, where companies often fight for the same customers and market share, manufacturing in India remains a relatively underserved, blue-ocean opportunity. In the early years, manufacturing companies can grow at very high rates—sometimes as much as 300 percent annually—although that does not continue indefinitely. The larger point is that these businesses can build sustainable scale and grow profitably over the long run.
GVR: Another theme that has become increasingly important is sovereignty. India has realised it cannot remain dependent on foreign products indefinitely and needs domestic capabilities in critical sectors such as defence, AI and semiconductors.
India has long had the talent through global technology companies and institutions such as Isro and DRDO. What was often missing was the ambition, or the belief that private investors would back these efforts.
The defence-indigenisation push accelerated this trend. Today there are perhaps 50-60 funded defence startups working on meaningful technologies. Deep-tech funding remains early, and these companies follow a very different trajectory from traditional startups, often taking years to develop products and reach commercial scale.
Dev Khare, Partner, LightspeedOn the founder profile investors look for
GVR: Ultimately, investors look for founders who will take a business wherever it needs to go—a combination of ambition, hustle, grit, intellectual horsepower, hard work and the ability to sell. The question people keep coming back to is: Does this founder genuinely care about the problem they’re solving? Real commitment usually comes from a deep personal connection to the problem. That’s why so many founders frame their ideas around personal experiences. While that has become a familiar narrative, founders who genuinely come from that place often show a much higher level of conviction and persistence.
I also remind my younger colleagues to stay humble. None of us are as effective without the platform behind us. Founders are rarely saying, “I want Ravishankar’s money”; they’re saying, “I want Peak XV’s money”. We’re beneficiaries of the work done by many people before us, and it’s important not to lose sight of that.
DK: We look for founders who are highly opinionated about the future, have a bias for action, can tell a compelling story and possess deep domain expertise. Recently, we have seen more young founders building from first principles, more AI researchers, and more repeat founders and experienced operators entering entrepreneurship.
On made-for-India solutions versus building for the world
PS: Every Indian founder is effectively competing against counterparts in the US and China. In some sense, it is like giving the IIT-JEE again—but on a global stage. So we look for battlegrounds where Indian founders have better odds of winning.
One category is India-specific opportunities created by local market conditions, regulations and consumer behaviour. Companies such as Razorpay, Zerodha and Groww are good examples. They built products for uniquely Indian needs that would have been difficult to replicate elsewhere.
Another is manufacturing, where India stands to benefit from the China-plus-one shift. The opportunity is to build from India for the world, based on genuine expertise and capability rather than simply competing on lower costs.
DK: India’s background in services and outsourcing gives it a lot of process knowledge in areas like health care, content production, and consulting—offering AI-led services. Another area where India is leading is AI companions. There is a lot more happening in India’s consumer AI than in the US today. In the US, the focus is on ChatGPT doing everything for everybody. What we find in India is that people want dedicated applications for specific use cases—one thing to help with social credit, another for health, another for shopping, and so on.
People often confuse technical innovation with business-model innovation. India has consistently produced business-model innovation suited to local conditions, and many of those ideas later travel globally. We are increasingly seeing technical innovation emerge as well.
On India’s place in the global AI story
GVR: India is more likely to be a fast follower than a frontier innovator. The country has not had large-scale AI research labs for long enough, which puts us at a disadvantage. But the rapid progress of Chinese models, despite significantly lower spending than their US counterparts, suggests that open source could become the dominant path for model evolution. We may not build the next Anthropic, but we can excel at voice agents, customer-support tools and other applications tailored to Indian needs, and do so at much lower cost.
The real question is whether India will innovate at the technology layer or the application layer. My view is that we will be application innovators. We did not invent the internet, but we built successful businesses on top of it. Similarly, India will make AI work at Indian price points and for Indian users. Cost, language and access will be the key vectors of innovation. The next 500 million users will not be fluent in English, and products will need to accommodate multilingual behaviour and local preferences.
DK: India is additive to the global AI story because it has a unique set of market conditions. Companies such as Sarvam can build products tailored to governments, enterprises and Indian users.
We expect far more companies at the application layer than the infrastructure layer. Our investments largely fall into two categories: Nation-building technologies such as Sarvam and Pixxel, and globally competitive software companies.
Prayank Swaroop, Partner, AccelOn opportunities and the funding landscape
PS:
AI is attracting a disproportionate share of global VC today, which could make fundraising more challenging for other startups in the near term. However, the positive development in India is that IPOs are happening and investors are beginning to see liquidity from the first generation of startup successes. Many Indian startups are still waiting to go public, and it will be interesting to see how public markets value high-growth businesses with relatively low margins.
Another encouraging trend is that even companies valued at $300-400 million are able to access the public markets. VC cannot rely solely on producing $10-billion outcomes; it also needs a healthy pipeline of smaller companies going public.
The other major shift over the past seven to eight years has been the rise of domestic capital, from family offices and HNIs. At a time when global investors may be more cautious because of factors such as geopolitics, energy prices and AI-driven capital allocation, domestic investors are becoming increasingly important. Growth capital may become scarcer, which means startups will need to focus on profitability earlier and potentially go public sooner.
GVR: The final piece of the ecosystem is the late-stage investor—firms such as Kedaara Capital, ChrysCapital and Multiples—which back companies before they go public. Many of our exits have come through them. While seed capital has exploded, the Series A market remains relatively concentrated among a handful of firms. The size of outcomes has also changed dramatically. Groww alone would have generated gains of more than $2 billion for us. We now have three companies that have delivered more than $1 billion in gains.
VC is ultimately driven by power laws. Success is not about being right most of the time but being spectacularly right a few times, and in India those outcomes are becoming much larger.