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Ajay Jain (SilverX) on How To Pitch A VC
1 Playsin 1 hour
Most founders open their VC pitch with a billion-dollar TAM slide. Ajay Jain, co-founder of Silverneedle Ventures, refuses to look at it, and the bottom-up question he asks instead is the real test that decides who gets funded into his ₹800 Cr Silver X deep tech fund.
From his family's money-lending Dukan before grade two, to seven years inside Intel's pre-silicon chip verification team, to incubating 3,000 startups at T-Hub, Ajay Jain arrived at venture capital from an unconventional pipeline. As co-founder of Silverneedle Ventures and the newly launched ₹800 Cr Silver X fund, he is now betting exclusively on Indian deep tech: satellites that launch with ISRO, AI tools that automate bank compliance, brain-mapping platforms for surgical planning.
In this conversation with host Akshay Datt, Ajay unpacks why he ignores top-down TAM analysis, why most founders fail the 30 second pitch test, and why India's $12 billion RDI Scheme has rewritten the math of deep-tech investing. As global SaaS valuations compress and India's sovereign science push accelerates through 2026, this is the operating manual for how to pitch a VC in India's next venture decade.
👉Why Ajay Jain refuses to look at any startup's TAM slide and the specific bottom-up question he asks every founder instead.
👉How Silverneedle's ₹76 Cr Fund I delivered the markups, OnFinance up 5 to 8x in 18 months and Dhruva Space backed by a ₹105 Cr government grant, that justified raising an ₹800 Cr deep tech fund.
👉What the 30 second pitch test actually looks like and why most founders fail it before they even ask for money.
👉Why Ajay walked into HR tech, burned his fingers, and now uses it as a case study for why a big market alone never funds a startup.
👉How India's $12 billion RDI Scheme is rewriting the underwriting math for deep tech VCs and what it means for founders raising in 2026.
Subscribe to Founder Thesis for weekly founder conversations and follow Akshay Datt on LinkedIn [https://www.linkedin.com/in/akshaydatt/] for daily insights.
00:00 - The Dukan To Deep Tech Origin Story
00:13:17 - What Makes A Venture Capitalist Qualified
00:18:00 - Silver X: ₹800 Cr Deep Tech Fund
00:27:43 - Why Most Founders Get TAM Wrong
00:33:00 - Bottom Up Economics For Indian Startups
00:40:35 - Why HR Tech Looks Big But Isn't
00:48:00 - Picking OnFinance, Dhruva Space, BrainSight
00:55:00 - Why Vertical AI Beats Foundation Models
#AjayJain #SilverneedleVentures #SilverX #FounderThesis #AkshayDatt #IndianDeepTech #VentureCapitalIndia #HowToPitchAVC #IndiaStartups #DeepTechVC #IndianSpaceTech #DhruvaSpace #OnFinanceAI #BrainSightAI #RDIScheme #IndianVCFunding #StartupFundingIndia #QuantumComputingIndia #DeepTechFunding #TAMAnalysis Disclaimer: The views expressed are those of the speaker, not necessarily the channel
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Transcript
Sparking Interest in Business Pitches
00:00:00
Speaker
What kind of founder gets funded? Your first pitch is never to ask me to invest. The first pitch is for me to get interested. You need to be able to get my interest in that 30 seconds. So leave the technology, tell me the business. The main thing I want to hear is the
Introduction to SilverX and Ajay Jain
00:00:16
Speaker
founder's story. Ajay Jain is co-founder of SilverX, an 800 crore VC fund. He backs deep tech founders who can deliver 40x returns in deep tech, semiconductors and AI. On this episode of the Founder Thesis podcast, he lays out the exit-first playbook and how founders can get his attention to land a
Avoiding Common Founder Mistakes
00:00:33
Speaker
check. Do not let CA or one of those financial guys create your business plan for you. I have realized most founders don't have any clue on cash flow. How do you become a venture capitalist? To be a VC, one curiosity and ability to take in a lot of stuff every day is critical. You should be able to take a stance that finally you're betting on something. You need to know the best problem to
Key Traits of a Successful VC
00:00:56
Speaker
solve. How trend-driven are VCs?
00:01:05
Speaker
Ajay Jain, you are a VC, you run Silver Needle, ah and now your next fund is called Silver X. Welcome to the Founder Thesis podcast. I want to first kind of ask you this, that what makes you qualified to be a venture capitalist?
00:01:23
Speaker
Thanks, Akshay, for having me on this podcast. So to answer your specific question, I think to be a VC, one curiosity and ability to take in a lot of stuff every day is critical. right yeah You're talking about electric vehicles, you're talking about AI in finance, but you're also talking about how does this all make economic sense.
00:01:46
Speaker
eight So the tie up is very important. So curiosity, analytical skills. nice I wouldn't at least early stage, I wouldn't emphasize on finance as much.
00:01:58
Speaker
But the core business idea, for example, if you're not able to create a business plan yourself, and go deep into it, I would stay away from the whole venture capital world.
00:02:12
Speaker
So that's that's very important. Obviously, you should be able to network. ah those are Those are those finer points that you grow with. ah and And I think you should be able to take a stance that finally you're betting on something. right You're increasing your odds in betting on something.
00:02:32
Speaker
So you take a stance on, hey, look, this is worth investing or not. right And that comes with in all of those plus experience. So so so it's it's not ah it's not a sexy journey when people believe it is.
00:02:49
Speaker
you know We are also a startup in all sense. But I think we sit at the top of the pyramid, right? From a mass loss, But I think ah the interesting part is the learning curve. For me, the satisfaction and the learning that comes through it, satisfaction to help us start on. The learning that I get from you know hearing to various startup pitches, ideas, space tech, health care,
00:03:23
Speaker
is amazing, right? I think if you have that intensity, then this is the right place.
Growth of SilverX Fund
00:03:29
Speaker
Okay. ah Your ah first fund in Silver Needle was 80 crores. Now you're doing an 800 crore fund. ah What gave you that confidence to go 10x?
00:03:41
Speaker
Yeah. So let me put that as two things, right? One, i think I'm doing what I asked my startup founders to do. which is high-skilled. But if i see look at it, ah we would first do only 40% of our fund as first-time checks.
00:04:00
Speaker
which means I'll still do about 300 odd crores as the first checks and then do follow on money. So I am actually doing only four to five X from a scale perspective and then doing follow on. so that's my... So silver needle, fund one thesis is first checks, like precede investing.
00:04:18
Speaker
ah i don't call I don't stick to definitions because they're all over the place. But what I like to say is Fund 1 was idea of 3% to 8% kind of ownership for about 4 to 8 crores kind of tech sizes. That was where we were.
00:04:37
Speaker
We did some which were very low ownership and we did some which are very high ownership as well. But that was the main thesis. ah Yeah, so that was fund one thesis.
00:04:48
Speaker
And these would typically be companies at pre-Series A, right? Series A, you will not get this level of ownership for this. Correct. But we did two Druva space, which we we went in when they were let roughly around 800, 900 crore valuation.
00:05:04
Speaker
Right. Yeah, because we really liked what they're doing. We wanted to get into it. We did Super K also, which was pretty late in the game. But you're right. ah Normally, we would like to do the 40 crore, 60 crore kind of valuation. That was Fund 1.
00:05:22
Speaker
So the confidence came from what Fund 1 is showing us as a result. and And we're already seeing pretty strong ah growth for some of our companies.
00:05:32
Speaker
and And we're positive where we'll end up in in the next five to seven years. And hence hence the confidence of the 800 crore. Which are the... There's power law in VCs, right? Like two of your investments will give returns for all 12 that you have done, probably something like that. so which are those one or two investments which are giving you See, in India, still the power law is not very apparent. So I'm saying that you are still having four or five portfolio companies which are doing good because we are not seeing still the multiples of 100x very soon. right
00:06:15
Speaker
So that way. but But definitely, On Finance is one of those which is doing very well. I think will we are we are already at about 5 to 8x on it.
00:06:27
Speaker
within about 18 months and will will be much more by end of this year is my feeling. Through our space, we are sitting very pretty. So while it cannot give me a because I went in late, but it will give me a 4 and 8x and more assured.
00:06:44
Speaker
eight Super K is also sitting very pretty. There is a 100 crore round after we've rested. So you know some of them, Brainsight, again, are doing very well, things like that. So I think we would have about five to six companies where we'll see decent returns, while OnFinance and a couple of others might give us the outsized returns.
00:07:09
Speaker
And the good part is, among the 16 investments we did for Fund 1, we've already deployed follow-on money for five of them. like So that that clearly shows our confidence in some of them.
00:07:23
Speaker
How are you raising the capital? I'm assuming Fund One, 80 crores, you might have done through your network, but 800 crores is a different beast. Yes, yes, it is.
00:07:35
Speaker
So Fund One, ah it was amazing to touch base with all those people whom you didn't touch base for five, seven years, 10 years, like your school friends, your college people, like so.
00:07:47
Speaker
and it is it is ah And I had a great backing of it. I had backing from people who really believed in me and and put their money. so Really, that was the largest support that I got, the people who backed me up.
00:08:06
Speaker
right Though in Fund 1 also, we had a state government as an institutional investor. We had a few family offices. right So we did that too. But 30% of the money was coming from outside India in Fund 1.
00:08:22
Speaker
So a similar strategy, just more amplified at the institution level. I think Fund 2 would be 30% to 40% outside of here. 30% still would be retail. Retail brings a flavor which is very nice. right It brings in expertise.
00:08:40
Speaker
It brings in people who want to help. And it brings the right credence to the whole fund. Retail, just to clarify, it means high net worth individuals. High net worth individuals, so people people who want to be associated with things that. Like say Kunal Shah is a very prolific... So Kunal Shah, I would treat more as a family office, things like that. And that's the other 30%, right?
00:09:06
Speaker
a These are mostly... ah Yeah, I don't want to put numbers out there, but these are people who are keen to be part of such things. and And typically these people would give like one, two crore or something like that, those kind of checks.
00:09:21
Speaker
ah they can They can range between 1 to 10 crores. I have a range of people like that. right and And again, so the US, let's say again, there will be a majority of retail while we would look for institutions.
00:09:38
Speaker
ah I think where we are so looking at the fund deployment, right that's of immense interest today across the globe. right So for fun two, we are talking about deep tech only.
00:09:52
Speaker
We are talking about semiconductor. we are talking about material science. We are talking where we can see the 40x. eight r You have seen the bloodbath on SAS. i youve seen we are not we will We will never play a game where we don't add value.
00:10:14
Speaker
So we cannot play a true consumer game. like We don't add value there. But where we add value, and my invest and my partners or sponsors can add value,
00:10:26
Speaker
We'll play a game there. Got it. Got So, Deep Tech is the focus for Silver X, the 800 curve fund. Yes. And the first fund, I guess, first fund would have been more opportunistic where you were still trying to form a thesis.
00:10:40
Speaker
Yes, it was still technology as horizontal, right? And and it was opportunistic here, right? But but we never we were clear that we would see. I think find your backing founders.
00:10:52
Speaker
Find your backing strong founding team because that's what will get you whole. nice So yes, we are we are clear where we will not invest.
00:11:02
Speaker
And we're clear we will not invest where we cannot add value. We are also clear that the founder has to see that in us. Has to see the adding value thing.
00:11:15
Speaker
Otherwise, it's a long journey right between the investor and the founder. And we want to double down on our good startups. So I think it's important that both appreciate what each other brings to the table.
00:11:29
Speaker
So now, you know ah given that you have worked a lot with early stage founders at T-Hub, but which was like an incubator, ah you had some 3,000 founders that you were interacting with there.
00:11:45
Speaker
What kind of founder gets funded? ah In a way, your silver needle first fund, you were also like an early stage founder who was raising funds for investing in other startups. So, you know, what kind of founder gets funded?
00:12:00
Speaker
I think those who follow, let's say, for lack of better word, the first principles, right? Understand why do you need the money? Today, it's takess actually early stage, there's a lot of money available. right The government of India is pumping in so much money. are a lot of angel investors, things like that. So I think you need to first appreciate why you need the money. to you I think the simple question is, do you see the 100 crore revenue number in the next x years.
00:12:34
Speaker
right So first, can you can you even think of that number? right If you cannot, then you know don't start knocking doors. The second part of it is,
00:12:46
Speaker
ah you know, match it right. For example, what's my thesis? And it's pretty available out there, right? ChattyBitty does a great job of telling what Silver Needle or Silver X is doing, right?
00:12:59
Speaker
So at least spend some time before you reach out to me, right? So that you're more focused, you know, it's it's a sales approach, fine. Right? And understand your first pitch is never to ask me to invest.
00:13:15
Speaker
the first pitch is for me to get interested. eight So I think those, but but even the pitch, you will have to be very clear about it. For example, I keep saying cybersecurity. When I speak to some of those founders, they get so technical because they really like the subject. They think they're doing something amazing, right which I'm sure they are.
00:13:37
Speaker
But they need to explain why they think people will put so much money as a company to buy their product. Now that is not clear. That is not apparent. It is at times, you know, sheer passion.
00:13:56
Speaker
That, okay, there's a problem to be solved out there. That does not help a lot. ah I keep saying it's not the best products necessarily that sell today.
00:14:10
Speaker
You need to know the best problem to solve. right so So don't confuse the two. right Because it's a kick-ass product, need not sell.
00:14:22
Speaker
right But if it's a, like Leighton Christensen says, if it is a problem that needs to be solved, right That's what people are willing to pay.
00:14:35
Speaker
eight so now understand that. And even if one says, hey, look, when Apple designed whatever they designed, you it wasn't a problem to be solved. No, it was still a problem to be solved. It's just that you didn't see it.
00:14:50
Speaker
right So cit think I think that's important. and And I believe when I compare to the West, we are still not in green into us the idea of this problem to be solved. right we we are We are a little more bent up upon, hey, look, yeah, there's a problem out there. Let's solve it. But we don't understand how big it is.
00:15:13
Speaker
We don't appreciate those details right there. Simple back of the envelope calculations will tell you it can't be a 100-core problem. unless you have a real a way to do it, right? You're charging so little that you'll never be able to make that revenues.
00:15:31
Speaker
Very interesting. ah so Just to recap what you said, the first thing that you have to look at is the TAM, basically, which used the problem to be solved and... is it a Actually, let me go a little deeper there, right? Because today I say you do anything, the TAM is so large. I mean, today, let's agree we are, we are at 8 billion plus kind of a population. So the TAM is.
00:15:55
Speaker
The question is, which part of the TAM is it solving? Right? And why would it solve? Right? Because people give me this TAM number and like, like, let's say I'm doing a battery replacement for an electric vehicle, right?
00:16:08
Speaker
Now you can tell me the time of the world and that's that's huge. but But really tell me where do you think it will apply? right and And we can talk about this SAM and so on. But things is, and that's why I say bottoms up in this case.
00:16:24
Speaker
i Don't go top down. Because top down, an analyst sitting somewhere can do it very easily. But when you go bottom up is when you realize the truth.
00:16:36
Speaker
right and and For some reason, ah we as a country are losing the sales DNA that we had a little more. Right? ah That's the marketing and the sales DNA. We're not as good as we used to be when we will use when were doing dhanda. And I think that's important, right? Because you need to be true to why would you grow.
00:17:03
Speaker
Right? And that's why you don't see and you don't see a lot of brands in India, right? I mean, you don't see like amazing brands out there, right? Which we would like to, right?
00:17:16
Speaker
Exceptions are there, but you don't see that as of right. And I think That has to improve a lot more. ah Help me understand this bottom-up approach through a case study. You're saying that don't do top-down TAM ah ta and maybe the TAM-SAMSOM flow also, if you can help young founders understand what all of this means through some examples.
00:17:43
Speaker
Yeah. Yeah. In fact, I do teach a few B schools, etc. like I take as simple an example as a banana seller. you You think about a banana guy buying his bananas on loan or on rent borrowed money.
00:18:01
Speaker
and deciding to, because it's a perishable good, deciding to sell. so But let me take a more, let's say, let's say equals say let's say you you want to launch your specs. right Now, the immediate question you need to ask is, hey, look what would be the price point?
00:18:22
Speaker
Who would be the target signal? And then you slice it to that target set. And then say, hey, look, you know you cannot, I mean, there's no company in the world, even with the Microsoft, etc. that can say, hey, look, I own 100% of any market. So you tell me, hey, look, for example, the specs idea.
00:18:43
Speaker
Let's say you start in a region, let's say you start in the NCR. You need to say how much time it will take just to penetrate 1% if not 10% of that market.
00:18:56
Speaker
right Because that's the thing i would like to understand whether you have the, at least you have thought through. It's okay if you give me optimistic views, optimistic numbers, but have you at least thought through this idea that you know in Delhi NCR, if I have to penetrate 1%, I need so much money and I'll need at least 24 months.
00:19:20
Speaker
right Because if you're showing me 10% of that region, you're saying, hey, look, the competition is sitting idle. eight you know I have something which is really kick ass and you know the market is waiting to take my plan.
00:19:38
Speaker
which it looks which looks very difficult. Now, if you flip it, right and if you look at OnFinance, for example, OnFinance is a compliance operating system, and I'm i'm giving you a very different example.
00:19:53
Speaker
It's a compliance operating system, which, let's say, helps financial institutions be compliant with the CBE, with the RBI, with the Now, so the problem they are solving is they are saying, hey, look, you have 100 enlist.
00:20:10
Speaker
I will help you reduce that by 10% right? Now, there's a clear problem to be solved. What you have to appreciate as sir ah as a company from the bottom-up approach is, let's say there are 500 such players in India who have this number of 100 enlist.
00:20:31
Speaker
The question is to reach out to them, what will it take you? It might take you three, six months. Let's agree that financial institutions, I'm very happy that they have 40 logos already within 18 months. But but you know it takes time.
00:20:46
Speaker
Then what do you do? you know It again takes you three, six months to do a pilot. right to convince them. And that is when you… So, unless you weave in all this in your thought processes, right it's difficult.
00:21:02
Speaker
I have realized most founders don't have any clue on cash flow. at Cash flow cycles are so critical and people only when they reach a series B or C realize it.
00:21:16
Speaker
But it's so critical upfront. right And founders need to appreciate that, that there's a delay in payment. Your whole numbers are going parry.
00:21:29
Speaker
So, okay, I think sincere advice to founders, al do not let a CA or one of those financial guys create your business plan for you. If you cannot create your own business plan, that's a problem.
00:21:44
Speaker
You need to be able to create your business plan. I'm talking about a simple excellent. I'm just talking about members, right? I mean, a financial guy can help you, but they cannot create it for you.
00:21:55
Speaker
Do not outsource your tech creation also to anyone out there. ah Because you it's seen, i I tell people, hey, look, ChatGPT can do a better job of creating your tech. eight The question is your story. i Okay, so the main thing I want to hear is the founder's story.
00:22:17
Speaker
I want to know why are they in this business? If it is just for making money, It's a little loose. right It's it's it's not not on firm ground.
00:22:31
Speaker
But if it is clearly they understand what the problem they're solving and making money is an end result which is okay, is where I like to understand better.
00:22:43
Speaker
For example, education. right I think most people think, hey, look, because they did their education and all they understand that cycle. That's not the truth.
00:22:54
Speaker
It's a very different field. It's something that you need to know deeper. so So those are things that I think founders need to appreciate right and and get their, like they say, the mom's test, right get their 30-second pitch correct.
00:23:16
Speaker
The elevator, whatever it is. right You need to be able to get my interest in that 30 seconds. And what is it? It is the business. right It is the 100 crore number.
00:23:30
Speaker
So in 30 seconds, you should be able to show the vision that this will be a 100-croward business in X number of years. Correct. eight and the hat's critical right And that's And I am not saying it's easy. And most times, you know, pre-see or reduced time is very difficult to capture anyone's attention.
00:23:50
Speaker
But that's critical. If you are able to do that, you know, I know you have thought through so much, right? Because it takes a lot of thinking. that now you have it where where we will go. And now I am very interested in talking.
00:24:07
Speaker
Then I'll start chasing you. okay because Because I don't want to miss the good one. You know, and my my previous avatar, today I'm a full-time podcast guy, but in my previous avatar, podcast was a side hobby and I used to run a hiring business for which I did attempt to pivot from, it was a recruitment agency, very you old school. You charge one month salary as your fees for helping a company hire.
00:24:40
Speaker
And I wanted to pivot into a more like a tech led approach, more productified approach. ah So showing that 100 KM is very easy in a business like this because so many like there would be a thousand companies paying agencies that so there's a large time and you can say, OK, I'll replace it with better tech. ah But ah what else would I have needed in my pitch to, it's not just about showing, yes, this can be a 100-curve business because what else would I have needed to show?
00:25:14
Speaker
So let's agree that I'm obviously when I told that I'm going a little deeper than that For example, the same thing. Right. And I've burned my fingers in this space. In the hiring space.
00:25:24
Speaker
In the hiring space. okay In the hiring tech space. Right. I think it's an extremely competitive space. And it's extremely difficult to beat the likes of a little bit.
00:25:37
Speaker
or the others. And then you have this whole ATS thing, you're charged, etc. right So when I said that 100 crores, I will go deeper into clearly understanding why do you think you'll replace something.
00:25:55
Speaker
Right. And, and for example, in this industry, right, one, there are relationships. Right. That's, that's almost impossible to break. And there is some hand in glove. That's true. That's true. lot of mom and pop agencies exist because of relationships. Yeah. And then there's some hand in glove and we'll not go there.
00:26:13
Speaker
Right. The other third thing is the technology seems to be too easy for everyone to create. Right. ah Now, while the middlemen who are there, who are providing the actual profiles are making, are melting, it's like the creator space itself, right?
00:26:32
Speaker
Like without the meta and the Google, etc. you They're taking the bulk of the money, right? The same is happening in this industry. So I deny that it will be a hundred crore.
00:26:45
Speaker
revenue company, because I know the percentage of your money is pretty limited. And then the ability of you to break into organizations is also pretty limited right because of the whole reasons how they are structured. right ah Now, now no I'm sure, and I've seen many of these, right? I'm sure people say, look, no software coding. I'll i'll give you the best. Yeah, sure, you would do that.
00:27:18
Speaker
But can you scale it to a million people? I doubt that. Right? that's That's where I i keep pushing. And since it's an opportunistic market, since you don't have You know, people are doing multiple things, right, to get a job, right? You are one of them, right? So the hit ratio is still, let's say, less than 10% for the candidate, right?
00:27:43
Speaker
So I'm saying when I said that I obviously, so, okay, let me explain this. The assumptions of any business plan are the most critical thing for me.
00:27:56
Speaker
right So, if you are assuming you will hit 100 companies because you are in Bangalore and you think everyone is there, that is what I need to push.
00:28:06
Speaker
right And if you are saying the conversion ratio, see if someone tells me the conversion ratio is as I as 40-50%,
00:28:14
Speaker
I'm like, you're sitting on a gold mine. you just You just need to keep salespeople, right? I mean, what else do you need to do? Right. right so So if anyone goes beyond the 10% kind of a number in a conversion no discussion, right then I'm i always skeptical. right so So those are the assumptions that will show you that you can't become a 100 crore revenue company.
00:28:43
Speaker
in the space that you have. right And I'm generalizing. ah it's ah It's a bold bold generalization. but But I'm saying in general,
00:28:55
Speaker
If I were to look at it, that's what I would look at. the ah You said you burnt your hands. I'm just curious, what what was that venture and why didn't it they were working in the civil They were basically building a platform for the whole hiring space. right and And smart people, I mean, even today we are in touch.
00:29:17
Speaker
And i think The whole idea we realized is these profiles, they had to pay so much. And then the hit ratio was low.
00:29:29
Speaker
right And then took then what happened is, recruiters still didn't want a just a technology platform, like which is really very strange. But India has some, you know let's say nuances like this. eight There is inertia in a lot of places. have we we We are not a DIY country. we we we we don't like we do it We don't do it ourselves. We want it done for us. Yes. So so they wanted the other belts and visits. Now, as soon as you want that, you as a startup is saying, okay, I have to spend money here. I have to spend money here.
00:30:11
Speaker
But you're losing money already because of ATS. And then you are confused. right And this, I mean, this was very early and we put small money. So I'm okay with that.
00:30:24
Speaker
right But this was the learning that I realized that the sector itself is so has nuances that you need to understand. Today, for any sector, we speak to SME before we take the call.
00:30:38
Speaker
yeah A subject matter expert. Okay. Sorry. matter A subject matter expert in that area. Right. Because we need to understand these mitigities. Yeah. the You need to question assumptions.
00:30:50
Speaker
Correct. and And in fact, I tell people, look, if you fight if you get 10 minutes, let's say you're doing a lab-grown diamond business. Right. And if you can get 10 minutes of Mithun Sanjati,
00:31:04
Speaker
right That's all you need because he might give you, again, if he's open to doing that, he might give you some nuances that no one else can give you. Whether a franchisee model is great, whether company operated is great, whether you know you look at the bottom line or the top line, when do you look at what?
00:31:25
Speaker
right Is it a marketing-led thing or is it a product-led? approach. eight outset So that's what you need right in the ecosystem, and that's what you need access to.
00:31:39
Speaker
right and And hence, you can always keep pushing 100 crore after that. Okay, interesting. So, which is why as a VC, you have to pick your lane because you need access to subject matter experts. So, you need to pick your lane in terms of where you have access to expertise, either your own or in your network.
00:31:58
Speaker
Yes. So, today we are clear, we invest where we have access, right? For example, healthcare, we have a strong access to it, right? and And we are very keen to go deeper there, right? Semiconductor. How did you build access in healthcare?
00:32:14
Speaker
ah So some of my large investors come from that space, right? And they're very active with us. We actually also we give co-investment rights to our investors.
00:32:26
Speaker
So they're happy you know to get that. So they double down on some of these. Which is why you saw the value of retail. Correct. Because retail will give you a bunch of subject matter experts who, and they have skin in the game, so they will do thorough due diligence. Yeah. So let me take some names there, right? Dr. Avinthanath, who was the founder of Global Hospitals, he sold that hospital to a PE and now he's launching a university. He's pledged that money towards university and innovation, right?
00:33:00
Speaker
And very close ah for me. And and we work, I mean, we meet every week, we discuss possibilities in the healthcare space, etc. right On the other hand, Ramakant, who's a friend from engineering, is a pretty well-known name in the semiconductor e at the actual wafer process perspective, right?
00:33:24
Speaker
And he's an advisor with us right for fun too. So he's giving me access to a if I have a question in a nuclear fission material, right or if I need to know you know if this energy saving chip will really make sense.
00:33:45
Speaker
right And that's exactly what you would like as a VC to grow. and you know so So the good part about the West is it brings a lot of new age understanding.
00:33:58
Speaker
oh and And let's face it, we are, as a country, India is still behind on a few pieces. right and And that's what the best investors can bring to us.
00:34:10
Speaker
So your Silver X thesis is deep tech investing. What are the... realistic opportunities for India and deep tech? and I mean, there would be something where you would be like moonshots, whatever. Like I think trying to do chips, cutting edge chips in India is a moonshot. Maybe you wouldn't want to invest in those businesses or building a foundation model in India. I doubt any VC would want to invest in that just because of the sheer amount of capital needed.
00:34:39
Speaker
But what are like realistic deep tech opportunities? Yeah, no fair fair question. And I think we should understand the government is already moving on a lot of tips, right? You see the RDIF fund, the research development innovation fund, a 1 lakh crore fund that was announced by the prime minister. This is a fund of funds? So of it is fund of funds, is in research.
00:35:10
Speaker
Right. Is it as a grant? You go to an IISC, for example. Okay. Yes. Yes. And it's a phenomenal move. Right. I mean, we are talking about, and they have mentioned Sunrise Industries in that, like a quantum web computing, like material sciences, advanced materials, like semiconductor.
00:35:31
Speaker
And i I lay the land for what my exact response is. Right. We did a MOU with the Andhra Pradesh Quantum Valley. right which is already talking about 10 crore investments in 10 startups in the context space. okay so So I think now let me specifically get to the spaces where we are looking and what we think is.
00:35:56
Speaker
One is definitely space tech. If you understand, about less than 15 countries in the world have space tech as a program.
00:36:08
Speaker
right But the entire world needs it, be it defense, be it communication, be it even rescue operations, etc. ri So India is at a great stage to supply this.
00:36:23
Speaker
The government has opened up a lot in this place and that's an amazing space to be. oops ah Material sciences, I keep saying nickel and cobalt, for example, extraction of that.
00:36:35
Speaker
hey is still a challenge within the Indian ecosystem. nice And anyone who wants, who can do improvements. So, so given the geopolitical considerations, rare earth metals have become important.
00:36:50
Speaker
So, if you're asking me, would I invest? I would definitely invest post understanding the space ah so and post getting the right exports.
00:37:02
Speaker
such so So I think that's an interesting space. Semiconductor is definitely amazing. Now, where would we be, let's say, energy saving? See, the world today is talking a lot on energy, right? We are talking a lot on data centers.
00:37:17
Speaker
So anything to do with that space is an amazing space for us to be in. Obviously, we would not invest in anything that requires huge capital. We are not, you know, we are not a true large, large fund.
00:37:31
Speaker
But we would definitely invest in those that would require money for the IP. And then you know take it to the next level by the larger investors.
00:37:43
Speaker
So those are AI native companies like OneFinance are definitely. So when you talk about foundational models, I do a agree that I might not go deep into a foundational model itself. but I think the world will come to a stage where we are seeing more of these pseudo foundational models, like smaller models coming for specific specific areas, right? Healthcare including, right? like Like a brain site, which our investment is, brain site ahead does brain map of the MRI image and then predicts Alzheimer's, things like that, dot can be used for epilepsy treatment.
00:38:27
Speaker
Now we are talking about modules for brain itself. right So those things, India is at a great stage because there's a lot of data.
00:38:39
Speaker
right Now this data is non-structured, that is correct, but there is enough data. and right So i for that reason, we are at a great stage. right And we have data from different, not only different age groups, different ethnicities, different regions.
00:38:58
Speaker
you know So those are the advantages that ah the country has. And I think ah you know startups can make use of that. What's an interesting data play you wish somebody was doing?
00:39:10
Speaker
that you can clearly see that there is so much data in this. There's an opportunity to aggregate that data, build a model. It's an interesting question you ask. We have given from our fund to, we have given a term sheet to a synthetic data company, right?
00:39:27
Speaker
Where the play is simple, right? For me, the play on three axis. So there is the language axis. There is the sector or segment axis, let's say, healthcare, education, etc.
00:39:44
Speaker
There's a region kind of an axis, right which is saying, hey, look, in Turkey versus in India, right things like that. Now, actually, if you notice,
00:39:58
Speaker
The world has done a great job in the English space, right? English as a language. and And we don't realize, but language semantics is more difficult than audio and video.
00:40:10
Speaker
Okay, so data in language is much more difficult to comprehend because the semantics than audio and audio.
00:40:19
Speaker
So English, we we have done a great job and they're large language page on that. So the question is the next set. right And we talked about servo, AI, things like that. right So the next level, everyone is talking. Everyone will work on that.
00:40:35
Speaker
th I think that's a great play to be. We will serve the underserved but growing market.
00:40:46
Speaker
right And that is always an interesting play. ah I think the English has reached or the semantics on that, etc., has reached an amazing level.
00:41:01
Speaker
Overall, the models are doing good. I'm sure China is doing a lot on the Chinese models. But the rest of the world is not there. right I mean, you don't you don't hear a French model, for example, in the sense you don't open something and start typing.
00:41:18
Speaker
Right. So that's the thing that, so it is much more generic, but if you ask me the top two in my head are healthcare and finance, ah that will take precedence both because of ability to pay and because of the need that is there out there in these two spaces.
00:41:39
Speaker
ah Finance would be what, like AI advisors, investment advisors? Right from anti-money laundering. right, to even compliance, right. See, I think what will get disrupted, advisors and all don't get disrupted easily because remember there's a lot of regulatory and lawsuit kind of, ah you know, issues that can come.
00:42:07
Speaker
What will come up is where there's a lot of grunt work, there's a lot of, you know, human involvement, too many human involvement at a at not so great skill level is where it will be disrupted easily.
00:42:26
Speaker
So like it's easier to replace analysts than advisors of using AI. Mostly, right? Because advisors are not only selling… They carry relationships, which you can't… Correct. Yeah. So they're doing much more, right? And the first call, for example, I have VoiceOut, which does the first call for your insurance.
00:42:49
Speaker
That can be done. But once the person has got into the funnel… It's selling, right? It's it's not so automated. ah Would you invest in experiments? Like when I say experiment, it means like, say, the techno-commercial viability of that technology is not yet proven. But if proven, it would be a big opportunity.
00:43:14
Speaker
Yeah. See, that's the... MOU with the Quantum Valley, as I said, right? I think the government is putting a lot of money in that space and I would consider them the right people to do that.
00:43:29
Speaker
We will partner with them. And once they think it is a great stage, once they think it's a great stage, right? And then we'll come in, right? We'll observe and then come in.
00:43:42
Speaker
But if you ask me, let's agree that I'm still taking money from my investors and you know I have the reason to be careful about that. right I need to you know return the money, etc. So I'm not as high risk taking as in the experimental, but I would definitely work with bodies who are doing it.
00:44:07
Speaker
And as I said, The government is doing a great job. There are large institutions that are doing. And we would like to work closely with them to understand. Okay. Okay. Okay. Got it. up when you know When you're raising global capital, are you selling the India story? Or like what are you selling?
Selling India's Growth Potential
00:44:28
Speaker
Yeah. We are selling the India story. right i mean See, let's agree. ah While the West is still... on steroids, strangely. I mean, we are still seeing multiples coming.
00:44:40
Speaker
but But I think if you see from a value perspective, one can question the valuations. right One can definitely.
00:44:51
Speaker
So when people talk about the bubble in AI, I think we are talking about the actual valuation bucket, right? which Which some of these large ones have, right? And and we're seeing, we'll see overnight billions of dollars reduction, right? I mean, hundreds of billions of dollars reduction in valuation, right?
00:45:14
Speaker
Which is, which again, the smart investors will still make money on that, right? But as a game, I think it's a it's gone into a different level of you know, numbers that we are talking.
00:45:28
Speaker
Right. India is still very grounded in that sense. Right. We are still not talking easily 100 million dollars. Right. We are still talking hundreds of crores of valuation, things like that. Right.
00:45:43
Speaker
So that way, if you see from a value generation perspective, India would be a great space. And yeah, see, I think the global markets are The global economy has actually in the past few years has not followed any known classical economic theories.
00:46:04
Speaker
It is it is it's just random right now. But if you if we scratch the surface and look at US, the valuations cannot be justified of some of these large companies. right And the money that's going in is is humongous. right and And China will keep coming back and beat them at that stage, right at the at the money being spent.
00:46:32
Speaker
so So, India is at a great stage. so So, what I see is the India story is amazing. One, because the valuations are still much more grounded.
00:46:44
Speaker
to you would see a lot more exits in the mergers and equation space. And Antrofik coming to India, talking to startups, discussing stuff, you know you can you can see that happening already. right so So the mergers and equation space will take much more interesting turn.
00:47:06
Speaker
And the secondary market in India will grow robust. right There will be liquidity in the market because of all the you know the exits that's happening.
00:47:17
Speaker
And the SME IPO is a great place to be. hey So I think for all these reasons, yes, we are selling the India story. ah We are bullish about what's happening.
00:47:30
Speaker
I keep saying I think the averages in India are still high, whereas might be the peaks and drops. are much more varied in the US. So you do see a large peak in US, which you might not see in India.
00:47:46
Speaker
Okay. Okay. ah Have you seen the the exit ecosystem evolving? So, you know, like you said, mergers and acquisitions, you feel that there will be more M&A activity, therefore giving more liquidity to founders who can then reinvest in other startups or go on to build second, third ventures.
00:48:06
Speaker
um Have you seen actual action in the ground of more exits? Yes, definitely. See, we have sold, I have personally sold my company to Baidu's or to Mutut Finance.
00:48:20
Speaker
Right? So I've seen that cycle. When you your my company, you're talking of the... Oh, invested companies, portfolio companies. Okay. Yeah. Yeah. yeah Yeah.
00:48:31
Speaker
So I have seen, mean, basically our equity being sold to these mergers. Right? And Mutut is like a legacy business. So that's like a huge... change, symbol of change, right?
00:48:44
Speaker
Yes. So they usually buy this for the people also, right? And and that's what I was coming to. right So equations will happen for two or three reasons, right? One is the product, which is the best, right?
00:48:58
Speaker
Two is the market access to the country. And three is the people. ah We should look at all of those three in the right way. But obviously, if someone is acquiring a company for the product, you are getting a better way.
00:49:13
Speaker
right And you that is proving to the world. But if someone is acquiring for the people, that's great still. right But that's value might be red reduced. so So, yes, you would see a lot more of that happening because let's agree that the large ones in the us also want access to the Indian market.
00:49:35
Speaker
both from a data perspective, but also from a user-based perspective. right And I think that will happen more. Yeah, okay. the I guess this is pretty much my last question. um How trend-driven are
Evolving Focus in Venture Capital
00:49:53
Speaker
VCs? You know, the as outsiders, I read about the herd mentality, everyone investing in AI flavor of the season, whatever it may be. um At one point of time, maybe it was crypto, whatever, whatever.
00:50:08
Speaker
And, and ah you know, I was watching one of your old interviews where you were talking of your thesis as B2B SaaS, which today you are clearly not talking of B2B SaaS because now SaaS has also come under doubt because of AI.
00:50:24
Speaker
Is this just about ah following trends or is it about genuinely re-examining your beliefs and changing your thesis? Yeah. Yeah, I think fair question, right? ah I think it's about exits.
00:50:40
Speaker
Okay. Okay. As a VC, it's about exits, right? And the path to that. So what can I add value? And how can I take my startup to the or my portfolio to the exit? I think that's the main question.
00:50:57
Speaker
I think this trend idea is obviously a bias, us right? In the sense you hear a lot about AI. So you're saying, you know, that they're all VCs going into that space. I still believe 80% of VCs are in the consumer space. area Right? At least the money is going there.
00:51:17
Speaker
right So it's not it's art true. ah Yes, let's say out of 300 odd funds out there, might be about 20 odd are talking about this space.
00:51:29
Speaker
But obviously, it's amplified because it's in the news. right and And that bias we have today for most things you know most things that are trending. But for me, it's clearly the exit.
00:51:45
Speaker
right For me, it is where do I see the 40x? right and And yes, as a country, see, it's it's the macroeconomic factors. Finally, I think macroeconomic factors. In fact, you know the studies have clearly shown timing is the single most biggest factor for the success of any start.
00:52:08
Speaker
Uber wouldn't have been successful Airbnb wouldn't have been successful at any other point in that. So oh yes, the macroeconomics are changing.
00:52:20
Speaker
India as a country moved from agriculture to services, now innovation. And if we don't ride this bandwagon of innovation, we'll be left behind. that That's a clear writing on the wall. right So I think the question is more about the exit strategy for me as a winter fund.
00:52:44
Speaker
And where do I see the multiples? I am clearly saying I want to follow the power law and give a 40x in a few, get a 40x in a few of nice startups.
00:52:58
Speaker
And not be ah you know trying to do a bell curve and get 3, 4x across. right That's not the blame. a And hence, I think these are the spaces that we are targeting.
00:53:13
Speaker
As I said, the value adding will take me to the exit strategy. right So that's where the value add comes. And money is just moneys just one more item on it.
00:53:27
Speaker
So you're saying essentially for a VC, the thing they have to, the North Star has to be the exit.
Exit Strategies for VC Investments
00:53:35
Speaker
ah Exits for your stage of investments or the kind of companies that you invest in,
00:53:43
Speaker
Who's the buyer that you're seeing? Are you seeing the public? Public means like through an IPO or are you seeing other companies like Strategics or are you seeing PE funds or other VCs? Among, let's say, 20 companies i exit they I invest, let's say five or seven of them are anywhere going dark.
00:54:02
Speaker
The rest five or seven, I would exit to second level VCs. Okay. Like a series growth VCs or some growth stage VCs. Yes, growth VCs, et cetera. Another three or four, I would exit to merger set equations.
00:54:17
Speaker
right And other couple, I would exit to the SME IPO or IPO log, is where I see the play happen. And the the reason for Silver X fund to to be such a big fund is so that you can double down on the winners.
00:54:34
Speaker
Correct. I think the strategy is simple. ah We would want to double down 60% of our fund as on our winners. And that's where you would get the outsized returns, the alpha, if I may. hey And I think what we have proven is we have the ability to get the right teams or the right startups.
00:54:56
Speaker
to our table, invest into them. right And now what we've seen with Fund 1 is, might be we didn't have enough money for quality. And we want to ensure that's not the case with Fund 2.
00:55:10
Speaker
like that we we double down much more deeper, go 4-5 million, right? And and then you will see, you know, it it not only does, I mean, there's a law of large numbers that kicks in.
00:55:22
Speaker
So, you know, you're investing a 4 million in a company. And even if that does a 10x, you're already getting a 40 million. you're You're covering half or less, 40% of your fund already, right?
00:55:34
Speaker
so So that and that too, I'm saying with the secondary investment, my primary investment, if it's a million and that gives me a 50x. So I'm covering the whole of my fund through one investment. So that's what it is. And I think to to kind of tie in a few things of our interview, etc., a founder needs to come to me with these thoughts.
00:56:00
Speaker
right Why would I invest a million today? But why would I also invest 4 million later? And then see the journey through. So I think the good founders see the journey.
00:56:16
Speaker
I'm not saying it's a defined journey. I'm not saying it doesn't change. I am saying, come prepared. So a good founder is not only telling you, this round is ah what I need money for to achieve this goal. Once I achieve this goal, my next round will be to achieve this second goal, which is a much bigger goal, which will also lead to much better valuations. Even even if it is not crystallized, I would like to share thoughts. I would like to share the journey.
00:56:47
Speaker
right because Because you know something. right You are see you're spending, let's say, 14 hours of your day in a subject. You better tell me how's the na journey.
00:57:02
Speaker
I keep telling people you know they have to be in control of it. hey t Finally, everyone is trying to increase their odds. it Increase their odds of you know returns, increase their odds of exits, increase their odds of growth.
00:57:18
Speaker
right So how do you increase that is the big question. and And that would happen only. Now you can, like Nawal Ravi Kahn says, right you make your luck so good that it happens.
00:57:36
Speaker
Right. so So now we don't say it's luck anymore. It has to be a journey. Increase the surface area to get lucky. Correct. Yeah. and And, you know, if it means you have to get to the right, then let's do it.
00:57:50
Speaker
Right. So I think those are the things that is that's what a founder needs to go deeper. That's what I think I learned very deep in my Dukhan, if I may have. Where that taught us all of this. right That that how do you how do you not only convince the customer, but how do you build the relationship? wait How do you make sure they come back to you?
00:58:19
Speaker
Because recurring is a great thing. oh you know People say 7x times a recurring customer is valuable than a non-recurring one in most businesses.
00:58:32
Speaker
Those are the things that you need to learn. Right. So sometimes I tell my founder, leave the technology, tell me the business. And why someone would come back to you again and again. Correct. Right. So those are important metrics that people have to think. Right.
00:58:48
Speaker
See, I think it's natural for me also. Let's say I've started SilverX, I'm like very carried away, but but I have to be grounded as to how will I get that 800 crore. right How would I get the right startups to be?
00:59:02
Speaker
Would they see the right value? um I'm talking to you with the whole aspect that you know I'm put in the right way. eight so So people have to do those and and each one for themselves. right There might be different paths for everyone, but the actions will speak.
00:59:19
Speaker
Thank you so much for your time, Ajay. It was a real pleasure. Pleasure is totally mine, Akshay. Thank you so much.