Decoding Bain’s India Venture Capital report with the authors
With Aditya Shukla and Aditya Muralidhar, veterans at Bain & Company.
Every year, Bain & Company publishes an India Venture Capital report. It is one of the more rigorous attempts to track the country’s private markets — which, unlike public markets, have no centralised data infrastructure, making the job of understanding what is actually happening genuinely difficult.
For three years running, we had been meaning to sit down with the Bain team and go through it properly. Third time’s the charm.
The guests are Aditya Shukla, a Partner at Bain who has led the financial investors and private equity practice for twenty years, and Aditya Muralidhar, an Associate Partner working at the intersection of PE, AI, and tech. Together, they have co-authored this report for the past four to five editions. This year’s edition is themed Warm Currents and Cold Seas. You can read it here.
They didn’t go slide by slide through the data. Instead, they went around the report: how private market data gets made in a country with no Bloomberg equivalent, how the LP landscape has shifted over six years of tracking it, what family offices are really doing and why, where VC held up even as PE saw headwinds, and what founders should know before they walk into a room with a cheque on the table.
They also spent time on quick commerce — a sector whose evolution surprised even the people watching it most closely — and on the growing pressure facing SaaS companies that have not yet figured out what to do about AI.
Some of the things they said stuck with us — especially our hosts, Dinesh Pai and Bhuvan. We’re sharing six of them here.
On how private market data gets made
Unlike public markets, Indian private markets have no centralised data infrastructure. Every number in the report has to be built from scratch. Aditya Muralidhar on what that actually involves:
“It’s genuinely like piecing together a jigsaw puzzle. We start with the broad aggregators — Tracxn, Capital IQ, Venture Intelligence — which gives a broader picture to understand deal activity, exits, and fundraising. But we augment that quite heavily with very granular secondary search, going sector by sector, sub-sector by sub-sector, to make sure we are not missing any key deals. Then we speak with investors and lawyers to make sure we’re broadly covered — and that’s further validated to make sure we’re looking at the right numbers. Some of them can be a mix of equity and debt. We have a team of at least three or four people that spends about a couple of months just cleaning the data up. The database we have accumulated over the last decade or so is probably the best source of truth out there when it comes to Indian investing activity.”
On why family offices are becoming LPs
A decade ago, serious Indian family offices mostly wanted direct deals — the cap table access, the upside. The shift to becoming LPs in VC funds is more recent. Aditya Muralidhar on the logic behind it:
“Earlier, family offices largely looked to go solo and make the direct investments. Their evolution into LPs makes a tonne of sense because getting access to the best quality assets out there — I don’t think family offices necessarily felt their ability to get their foot in the door as strongly. What it also enables them is a broader top of the funnel, lesser work when it comes to doing diligence, because as long as you have the right partner, they’ll do that work and hold that bar for you. It’s a more efficient way of diversifying into a more fragmented asset class.”
On what goes wrong between founders and investors
Bhuvan asked the question that every founder thinks about but rarely asks directly: what have you actually seen go wrong? Aditya Shukla’s answer was less dramatic than expected — and more useful for it:
“One is just that your individual styles don’t match — the specific people that you’re going to be working with. You may not gel with somebody. The second is: I want to run a D2C brand, you’ve invested in me, you want me to become a platform — and that will create friction at some point. The third thing that can generally go wrong is just lack of transparency both ways. And the fourth thing is that there are moments in a company’s lifecycle when they need more active help, and there are moments when others should be hands off — and sometimes there’s misalignment there. That’s when things sometimes go south, and that’s when you see a lot of these fault lines come to the fore.”
On quick commerce outgrowing impulse
Quick commerce was supposed to be for midnight snacks and forgotten essentials. Aditya Shukla on the shift that surprised him most — and what it has meant for the brands that moved early:
“Quick commerce has given many consumer brands an opportunity to go into market very quickly. If you have a good product, a certain niche, and the segment itself has seen tailwinds — take snacking, take savoury snacks, take Indian sweets, take ice creams, take pet food — these are categories where quick commerce has helped you distribute to hundreds of thousands of people’s homes, which you would otherwise have had to do through offline GT distribution. That velocity of distribution has come because of quick commerce. The only thing that really surprised me about quick commerce was that a lot of people thought it would be an impulse purchase. But it moved to not just being an impulse purchase — people are stocking up on quick commerce. That is just expanding the use case and the TAM for quick commerce.”
Some of those early-mover brands have crossed ₹300–400 crore in top line almost entirely on dark stores. The next stage, for those wanting to scale past that, will require going general trade.
On the warm currents hiding inside cold seas
The report title captures a genuine surprise. Going in, the Bain team expected a broadly difficult year for deal activity. Aditya Muralidhar on what the data actually showed:
“We see the investor ecosystem day in, day out, and we knew that there were headwinds to broader deal activity in India. What caught us by a little bit of surprise is that this little sliver that we call VC and growth was actually still doing quite well. The way we define VC and growth investments is anything deployed by typical VCs, family offices, corporate venture capital funds, and micro VCs — it also includes the growth arms of typical PE funds, and all activity in consumer tech, health tech, wealth tech, fintech, and SaaS. Because typically the nature of those investments still ends up being more growth-oriented. That segment held up, and even if you strip out the top deals from last year, it still grew versus 2024.”
India’s biggest VC-backed sectors — wealth tech, quick commerce, health tech — are largely domestically insulated and don’t move with global macro. The one exception is SaaS, and the headwinds there aren’t macro-driven.
On SaaS companies that haven’t figured out AI
When Bhuvan asked whether Indian VC is exposed to global macro volatility, Aditya Shukla’s answer was mostly reassuring — with one clear carve-out. Aditya Muralidhar then extended the thought:
“SaaS companies that could not or have not reinvented themselves — either organically or through acquisitions of AI offerings — will face headwinds. They may have a certain cash position on their books, but growth will slow down.” — Aditya Shukla”
“Where my eyes are at are some of these thin API wrapper companies that came up in a burst last year. What remains to be seen is which of those teams actually go after the stickier parts of the workflow. Because right now, horizontal generic workflows are fast becoming commoditised — native capabilities are being built into the models themselves. So there are two opposing forces: creating a solution has become relatively easier, but enterprise buyers don’t want to create an in-house solution for every piece. The question is whether you can monetise it — are you in a segment where someone will look at what you’ve built and say, ‘I see the value, and I’m willing to pay for it’?” — Aditya Muralidhar”
Where both of them see real legs: vertical AI in regulated industries — BFSI and healthcare — where the moat is workflow depth and tacit knowledge, not just the model on top.
You can listen to the full conversation on YouTube, Spotify or Apple Podcasts.
The transcript below was generated with AI assistance and may contain errors.
Dinesh Pai: Hi everybody. My name is Dinesh and I’m here with the Bain team, and also my co-host Bhuvan. I’ll let him introduce himself. We are here to talk about a report that’s been put out on the VC ecosystem 2026. Bhuvanesh, do you want to introduce yourself?
Bhuvan: My name is Bhuvan. I work for Dinesh.
Dinesh Pai: [laughs] No he does not.
Bhuvan: The reason I wanted to do this is because the Bain VC report is one of the best resources to get a sense of what’s happening in the Indian VC ecosystem. And that’s not me just saying that because you guys are here. It’s been a report that’s been informative to me since the very first year. I still remember one particular tweet, and we were looking for private markets data. So I went through all the reports, manually typed all the data points from your report, and we did a nice infographic. This was in 2021 or thereabouts?
Aditya Shukla: Pre-cloud era.
Bhuvan: Yeah. Pre-humanity. So I’ve been a big fan — both the Indian report and the US report — because we are also a broking company with a VC arm attached. We figured, why not do it with the best. The way we’ll do it is the Bain team and I will both ask a lot of basic questions, because I don’t think people get the definitions. And people also don’t get the context in which VC is a thing. In India, at least in the metro areas, VC might seem like a big thing, but if you step outside the bubble, I don’t think many people even know that VC is a thing. So I’ll ask a lot of questions that will evoke eye rolls. Bear with us, and then we’ll get to the report.
Dinesh Pai: Do you guys want to share twenty seconds each about what you do at Bain and why you’re so interested in the report?
Bhuvan: And why are you both named Aditya?
Aditya Shukla: I think we thought Aditya was a more unique name, but here we are.
Aditya Shukla: I’m a Partner at Bain. I lead the financial investors and private equity practice. I’ve been at Bain for twenty years now. Along with my fellow Aditya, we’ve been authoring this VC report for the last five or six years. We also do a private equity version of the report — for India, and globally as well. The PE report has a longer history; the VC report we started just before the pandemic, which is when the market really took off. Very happy to be here.
Aditya Muralidhar: I’m an Associate Partner, also in the financial investors and private equity practice. A lot of my work sits at the intersection of private equity, AI, and tech and software. So this was a natural extension of my interests. We’ve been writing the report together for probably three or four editions now.
Bhuvan: Out of curiosity, what’s the backstory behind doing the report?
Aditya Muralidhar: Around the time of the pandemic, when we started seeing an absolute inflexion in growth equity and VC investing, there was a lot of interest in the market to understand what the insights were for this class of investments — apart from the broader private equity report we were already putting out. The second thing is that certain sectors — consumer tech, software, fintech — naturally saw more minority deal activity and more growth-oriented investments, which needed a different treatment, given the stage companies are at and how investors are looking at them. That gave us the reason to create a separate, called-out report.
Aditya Shukla: We meant it both for founders and for the fund ecosystem. Can there be one consolidated source of everything happening — both quantitatively and qualitatively? And can it also be helpful for founders? In some of the early editions we focused a lot on SaaS companies, around 2021-22. Then health tech, fintech. The idea was to do a broader picture, and then depending on that year or the last two years, if there are specific sub-sectors that have either seen more interest from funders or more traction in terms of companies being formed, we go deeper there.
Bhuvan: It’s becoming very granular by the year.
Aditya Shukla: Yes. We are working harder for it.
Bhuvan: Which — even as somebody who tracks public markets closely — good quality data is a perennial problem. I’m assuming it’s even worse in private markets, especially in a country like India where private markets aren’t really a thing even today. Where do you get the data? How do you go about it? How painful is it?
Aditya Muralidhar: It’s genuinely like piecing together a jigsaw puzzle. We start with the broad aggregators — Tracxn, Capital IQ, Venture Intelligence — which gives a broader picture to understand deal activity, exits, and fundraising. But we augment that quite heavily with very granular secondary search, going sector by sector, sub-sector by sub-sector, to make sure we’re not missing any key deals. Then we speak with investors and lawyers to make sure we’re broadly covered — and that’s further validated to make sure we’re looking at the right numbers. Some of them can be a mix of equity and debt. We have a team of at least three or four people that spends about a couple of months just cleaning the data up. The database we have accumulated over the last decade or so is probably the best source of truth out there when it comes to Indian investing activity.
Bhuvan: By the way, does the team remain after Claude?
Dinesh Pai: I’m happy to say I believe they will exist. What percentage of the report this year was it easier to produce with all the AI tools available?
Aditya Shukla: Not dramatically, because when you go very deep into specific subsegments, whatever productivity benefit you’re getting, you kind of bake it in when you’re planning. Some of this stuff — because we work closely with most funds in India and outside — you have access to actually go and check the numbers, see if they make sense. A lot of that will still remain. If there are new sectors — say, verticalised quick commerce, well-tech platforms — some of them are so nascent that it’s anybody’s guess where they go. You still spend a lot of time piecing things together. Where things have gotten faster is the number-crunching and consolidation.
Dinesh Pai: I think what Bhuvan was also getting at — you must be speaking to a lot of LPs, family offices, institutional folks. All of that was manual last year. First question: what are they thinking about India? What are people outside India thinking about what’s happening here with VC and PE? Because companies that have raised money since 2021 — some VCs are sitting on inflated valuations. What are they thinking today?
Aditya Shukla: Most LPs we speak to are excited about India. They don’t see it as an India-versus-US or India-versus-global trade-off. They’re excited for a few reasons. One, some sectors are very specifically unique to India — quick commerce, innovations in health tech, everything happening on the wealth tech side. Some of these are uniquely Indian, either because the problem is uniquely Indian or because we’re at a point where these solutions are finding product-market fit. Second, LPs have seen some exits in the last three or four years. Maybe a decade back — or even in 2017-18 — there were no IPOs, no strategic exits. LPs now say: these exits show there’s a robust, thriving secondary market here, and that gives us the confidence to deploy more. VC fundraising for India was almost five to five-and-a-half billion dollars last year, and portions of global capital will also get deployed in India.
Bhuvan: When I started tracking the VC space I was always wondering — where’s the money coming from, because India is poor. Today, across all deals in India, how much of the capital is domestic versus global LPs?
Aditya Shukla: Global LPs are still very dominant. Sovereigns from Southeast Asia — GIC, Temasek, CPP, and others — continue to be pretty active. But now you’re seeing a lot of Indian LPs as well: family offices, offices of conglomerates. The mix is still skewed towards global.
Bhuvan: If you could put a number on it?
Aditya Shukla: More than half will be global.
Dinesh Pai: That number used to be much, much higher.
Aditya Muralidhar: Much higher. And you might call it a low base effect, but the momentum from family offices and institutional investors has been significant over the last four or five years. It gives increasing robustness to the market.
Bhuvan: When you say family offices — these are second-generation-money people who’ve had exits?
Aditya Shukla: People who are trying to create a new engine of growth. They’re trying to diversify away from their core business. They see VC as a very separate asset class from private equity — a lot of them would have first gone into PE funds as LPs. They see this as different, and that’s why they get excited. And many of them will also do direct investments if they can get cap table allocation.
Dinesh Pai: Why are they really investing in venture capital? The data isn’t really clear about whether there’s any benefit to diversifying away from public markets — which seem better because of liquidity and visibility. And some of these sectors they’re getting into, they probably have no expertise in. If a manufacturing company is investing in deep tech in a space they understand, there’s some nuance there. But investing in quick commerce through a fund — how are they even making peace with this?
Aditya Shukla: I don’t think you need to know the sector. A lot of times, even in public markets, people take large positions in companies where they have no expertise. If I’m a consumer company today — a D2C brand or an offline consumer brand — and I have a large consumer conglomerate as a strategic investor, the amount of access and information they can give me about distribution is very valuable. That’s a kind of information asymmetry about the market. In general, I don’t think you need deep expertise if you’re doing a private investment for returns. Public market returns in India have been somewhat of an aberration — they’ve been very high. Some individual VCs have actually done well; the issue has been more on distribution of returns. One challenge is that in the 2020-22 vintage, valuations were very high. A lot of investments happened then, and when you look at DPI, you have to look at the entry timing and entry value. People need to be more disciplined. But comparing VC as an asset class to Indian public markets over a four or five year window is probably wrong. Even gold has done very well.
Aditya Muralidhar: Just tying the threads together: earlier, family offices largely looked to go solo and make direct investments. Their evolution into LPs makes a tonne of sense. Getting access to the best quality assets — I don’t think family offices necessarily felt their ability to get their foot in the door as strongly. What it also enables them is a broader top of the funnel, lesser work when it comes to doing diligence, because as long as you have the right partner, they’ll do that work and hold that bar for you. It’s a more efficient way of diversifying into a more fragmented asset class.
Bhuvan: A mutual fund for family offices, basically.
Aditya Shukla: Exactly. And many of these family offices are building big investment teams now.
Dinesh Pai: Is the volume and interest from family offices still high in 2026?
Aditya Muralidhar: It’s a gradual increase. Last year, if you combine micro VCs, family offices, and corporate venture capital — those three broadly — they went up maybe about fifteen percent in value over the last year. What we’re also seeing, which is a bit of a forward indicator, is the infrastructure they’re building internally. I don’t think the capital deployed today has the same flavour as three years ago, in terms of the partnerships they’re taking to market and the way they’re thinking about deploying. There’s a certain cautiousness now about which sectors to really double down on.
Aditya Shukla: Many founders who’ve found the right family office say these investors are — and usually are — more patient. Though some may not be, because they’re not used to this asset class.
Bhuvan: Until recently, public markets were the only game. I get to see my pricing every second. I get to see the twelve percent guaranteed number year on year. How has that conditioning affected the behaviour of newer investors? And was there a tourist phenomenon in VC, similar to what happened in public markets post-2020?
Aditya Shukla: There were some family offices that were very savvy — people who were individually LPs in other funds, inside and outside India. They understand that this asset class is more unpredictable and has a longer gestation period. If you’re going into deep tech or climate, your holding period and expectations need to be much longer. Those people were fine. But some had to get used to the model: you won’t see price movement every day, you can’t ask for an exit every year or two. If it works, the returns are disproportionately higher — you have to live with that uncertainty. What we’re seeing is corporate arms and family offices building teams and investing in getting people with investment experience, to get better governance and discipline around underwriting and diligence.
Dinesh Pai: Family offices seem to be chasing trends that are reaching their peaks. Do they know when everybody else is exiting and they’re being sold something at the top?
Aditya Shukla: Many of them are very savvy, actually.
Dinesh Pai: Are all the people they’re hiring specialists in particular sectors, or generalists?
Aditya Shukla: Mostly generalists.
Bhuvan: How has the VC ecosystem matured over the six years you’ve done the report?
Aditya Shukla: If you go back ten years, from 2013 to 2015-16 there were a bunch of consumer tech companies, and that was really the only game in town. Some of them still survive. Then there was a moderation, and then pre-pandemic you saw doubling down on the consumer tech winners — the horizontal players or the verticals that had scaled. They got funded, went to IPO. Then during the pandemic, you saw a lot of India SaaS for the world. Huge driver for VC: great talent that had worked at top US tech companies, examples of FreshWorks and Zoho scaling, companies selling to Fortune 500 customers — mostly enterprise SaaS, not SMB SaaS. Then 2022-23, a slowdown in funding, a consolidation phase. Now a gradual uptick again. The ecosystem is maturing in terms of expectations that funds and LPs have about return profiles and investment process. The diligence questions, what they look for in a given sector — that’s definitely improved.
Aditya Muralidhar: In a couple of areas. At Series B today, versus maybe three years ago, there’s a definite ask for more metrics — cohorts, burn multiples, runway as a concept. People are really focused on: where does this start rolling by itself? The second area is governance — what governance needs to look like has quite dramatically shifted. We’re hearing what we used to hear for Series C: audited financial statements, let’s start there. And for family offices, a lot of that learning is happening fast through partnerships with other investors.
Dinesh Pai: A lot of founders watching this will want to know — what approach works for family offices versus VCs? When you go to a VC, it’s numbers: growth rate, unit economics, target segment. Family offices are more nuanced. Is the approach to evaluation different?
Aditya Shukla: Especially if the parent conglomerate is in the same sector as you. The discussion happens at a very different level — first principles: what are you solving, how will you really build distribution, what is the user behaviour? It’s less about saying “in five years I’ll be at this number” and more about why are you doing this. They spend a lot of time on that.
Bhuvan: For newer investors — family offices and corporate venture arms — is some of this because they can’t build the newer models themselves, and startups become a way to acquire capabilities?
Aditya Muralidhar: The view of these companies as a way to get to the next level of capabilities — I would describe that as a majority. It’s less about idle capital sitting around. It’s a pretty smart move — you see this mirroring what happened in Europe and the US. The synergies these strategics can offer are non-trivial, which is why they end up being fairly competitive in some deals at a valuation that standalone investors can’t compete at.
Dinesh Pai: Should a founder have a mental framework for when to approach a VC versus a family office?
Aditya Shukla: First question: do you even need external money? Not all models need it, and it’s totally okay. Many public market listings that have grown from small to mid-caps are companies that generated cash flows and never needed external capital. So first question: do you need it? Then: if you’re doing something that requires a long gestation period and high amounts of capital for iteration, and you don’t know if product-market fit exists — go for institutional capital. They’ll write larger cheques, help you raise subsequent rounds, connect you to their portfolio companies. If I’m building a Talentir-equivalent in India, I should go to VCs. If I’m building a men’s face wash company for Tier 2 and Tier 3 — like Mudra, which was acquired by Mamaearth — you don’t necessarily need to raise capital, or you can go to a family office with expertise in that field and a willingness to wait. Family offices usually won’t write as big a cheque as VCs because their capital pool is limited.
Dinesh Pai: But isn’t the family office approach often better? I’m diluting less today, and having a well-known consumer conglomerate as a backer is a strong signal.
Aditya Muralidhar: When you think about VCs — especially ones with depth or global presence — the one thing you can’t underplay is access to knowledge. The best playbooks for the country, augmented by the best of what happens elsewhere. These VCs also have much deeper connections in the ecosystem, and it’s a pretty friendly one — they’re happy to introduce founders to others. Second, most deals aren’t single-investor deals — ninety percent-plus involve syndicates. VCs, family offices, and others often come together to get the best of all worlds. And finally, for something experimental where the timeline might stretch to two or three years, global VCs might be more understanding of that than a family office.
Bhuvan: Both of you — what have been the horror cases when companies have chosen the wrong investor? What are the generalisable lessons?
Aditya Shukla: One: talk to other founders who have taken money from that individual fund. If I strip this down — what are you doing when you take VC money? You are saying: I have an idea, I’m going to make it into physical reality, it will achieve a certain size and scale, and I need help. If you come on the journey, at some point in the future you will make returns. You should be very clear about the kind of VC and specifically the people you’re going to be working with. What can go wrong: one, styles don’t match. Two, I want to run a D2C brand, you’ve invested in me, you want me to become a platform — that creates friction. Three, lack of transparency both ways. And four, misalignment on when to be hands-on versus hands-off. That’s when things sometimes go south.
Aditya Muralidhar: The only other thing people watch out for is how much capital they’re accepting and at what valuation. Discipline on that has improved over time.
Bhuvan: What about the pressure points — where you’re expected to do things you don’t want to do, like entire new lines of business that have nothing to do with your core?
Aditya Muralidhar: The pressures are very real. It all goes back to alignment with the person you’re getting into the deal with. In the best cases I’ve seen, forward-looking founders have preliminary conversations even before the deal — laying out where the market might go and which direction they’d head. Then right after the deal, really sitting down and talking through: when we’re at a crossroad, this is kind of the direction we’re heading towards. At the end of the day, it comes down to your equation with that specific investor.
Aditya Shukla: There are many less obvious decision points too. Should I hire a Chief Investor Relations Officer at Series B? Do I expand internationally? Velocity of growth is usually a big source of misalignment — I want to grow at a certain pace and I’m being told to grow at a different pace. Sometimes it works; many times it doesn’t, because the original business model wasn’t attuned to that pace. To the extent you can solve this before you get into the partnership, do. But I understand that many times you won’t have the choice.
Dinesh Pai: The one thing most founders tell us is that transparency helps enormously — just saying what you’re thinking, very often. A lot of misalignment is because a founder has been sitting on an idea for six months and assumes everyone around them knows it. If you want to grow only fifty percent next year for whatever reason, say it out loud. That conversation shouldn’t happen seven months down the line.
Dinesh Pai: Most people watching will want to know — what sectors should someone building from the ground up today be looking at from a ten-year perspective? If you’re a twenty-two-year-old out of engineering college trying to build something, what could it be?
Aditya Shukla: Funds have become bigger, dry powder for India is larger, and they’ve seen exits and IPOs. You should be okay with longer gestation periods. So: clean energy and renewable-focused startups. Deep tech — still very nascent in India compared to the US. Generative AI native solutions — we’re doing a lot of AI, but a lot of the early work was around layers and wrappers rather than something fundamental. There are a few now, but there’s room to build something very fundamental. The second theme: manufacturing — EMS and the entire manufacturing value chain. It may not be a very glamorous industry, but that’s changing as VCs start backing some of these players. Third — and this might be contrarian — consumer. People think there’s a glut of consumer companies. But there will be a continued trend towards premiumisation. Consumption slowed down, yes — but over a four, five, ten year period, I see little reason to believe consumption in India won’t go up in a country that has largely been savings-focused. Either value retail, focused on mass distribution, or premiumisation plays in niche sectors that will not stay niche. Beauty and skincare — the per-capita ladder is moving up, and there’s no reason to believe India won’t get closer to where more developed Asian countries are.
Aditya Muralidhar: A couple of additional thoughts. One: looking at fast-growing spaces and thinking about what enablement opportunities exist. Quick commerce enablement is a good example. As new industries come up, thinking about verticalised solutions for that space is not only solving a need gap but positioning yourself well for potential acquisition later. Second: don’t play down research-backed ideas. The less research and knowledge that goes into your idea, the less moat you’ll end up having. Beauty and personal care is an example of this — because of how well-equipped the ecosystem is for manufacturing, someone can come in with a new trend and disrupt you. Is there a knowledge moat you can build? Third: how do you think about your addressable market? Building for India is a great stepping stone, but you need your eyes on either the India-US corridor or at least a regional corridor.
Bhuvan: On the research point — we don’t have a great research-to-startup ecosystem. In the US, the first wave of startups came out of universities and government-funded programmes. Is that changing in India?
Aditya Shukla: Huge opportunity. What are the four or five elements needed to really create a startup ecosystem anywhere? One: capital. Two: top talent. Three: relatable heroes — people you can look up to who started something, sold something, IPO’d. Four: some wave or tailwind to ride. Five: a physical environment. Why can’t you have Y Combinator-type setups in India? A lot of funds are trying to do this through accelerator programmes. Some of the top institutes are getting their alumni together to try it. But it needs to spread beyond the IITs. It can’t just be Bangalore. I’ve met exceptional entrepreneurs in Lucknow and Indore. If you get that environment right — through government, through private institutions — you can help entrepreneurs who can build for the long term. We’re not doing it enough.
Aditya Muralidhar: I’d qualify the optimism slightly. The opportunity is massive — but the question is: are we aligning ourselves toward the direction that will get us there fastest? Funding needs to come from somewhere — patient funding that understands the nature of this game. It needs to go into the right catchments: post-grad schools, undergrad schools, specialised institutions. It needs the right talent, the right infrastructure to attract that talent.
Bhuvan: On consumer — I’ll give you all the cynical numbers. Consumption growth has gone nowhere. Remove the premiumisation trend, and across the board the sales of listed consumer proxies have been flat. Real wage growth since COVID has been flat or negative. Three straight years of poor rural economic performance. If you take away the premiumisation trend and the disposable income of the top X million Indians — can the consumer opportunity actually spread beyond those things?
Aditya Shukla: I think it can. Is there a structural consumption issue in India? I don’t think so. A lot of large listed consumer companies saw flat growth, yes. But there are pockets of very strong growth — Zudio, several others in value retail, QSR chains. The reason: there’s a huge amount of unbranded consumption outside the big cities. If you go to that population — educated, aware, aspirational — and give them a branded experience, a good retail experience that becomes almost a community outing, that’s a huge premium to their lives. Will it displace some local stores? Inevitable. Many will continue to exist. It’s happened with pharmacies, with single screens versus multiplexes. You can find examples across categories. If I’m building only for the next two or three years, the environment is challenging. But if I’m playing a seven to ten year window — which you should as a founder — there’s enough opportunity. You need to be very clear on your moat. If I’m running a skincare brand and I don’t own my formulation, my only moat is marketing — specifically performance marketing. That is not a very sustainable moat. The premium segment will become much larger because our premium is not global premium yet.
Bhuvan: We haven’t actually spoken much about the report itself.
Dinesh Pai: No, but all of this is the context — because the numbers are out there.
Dinesh Pai: While you were drafting this report in 2025, did you notice anything out of the ordinary — something that was the antithesis of what mainstream media was writing about the startup ecosystem?
Aditya Muralidhar: Not with respect to what people are writing specifically, but a contrast we found — which is why the report is titled Warm Currents and Cold Seas. We see the investor ecosystem day in, day out, and we knew there were headwinds to broader deal activity in India. What caught us by surprise is that the little sliver we call VC and growth was actually still doing quite well.
Bhuvan: Can you define VC and growth?
Aditya Muralidhar: Anything deployed by typical VCs, family offices, corporate venture capital funds, and micro VCs. It also includes the growth arms of typical PE funds, and all activity in consumer tech, health tech, wealth tech, fintech, and SaaS — because the nature of those investments still ends up being more growth-oriented. Any buyouts are excluded. That segment held up, and even stripping out the top deals from last year, it still grew versus 2024.
Bhuvan: Everything happens in a macro context. How much does whatever is happening globally have an impact on the VC and growth ecosystem? And is the trade-off calculation between public and private markets changing?
Aditya Shukla: It doesn’t have as big a bearing on VC as it does on private equity and buyout funds. The PE industry typically invests in larger companies with stable cash flows — manufacturing, consumer, pharma, mature businesses with acute linkages to global markets. In the VC ecosystem in India, look at who’s getting funding: wealth tech platforms, quick commerce, health tech. The direct correlation with what’s happening outside is more limited. There aren’t many VC-funded companies with direct global linkages. The one area is SaaS and AI — but that impact is less to do with the macro. It’s because of a huge AI disruption that’s happened. SaaS companies that haven’t reinvented themselves — either organically or through AI acquisitions — will face headwinds. Growth will slow down. In that context, VC is relatively insulated. Last year you saw a dip in total PE value, but the VC market grew. Even stripping out the top deals, it still grew versus 2024.
Bhuvan: Has the valuation tempering actually happened on the private side?
Aditya Shukla: It’s happening in some places — older SaaS and software in particular. New-age GenAI solutions — probably not, still pretty aggressive. SaaS companies are raising at not-crazy valuations. Some have done down rounds, but many have integrated AI offerings and continued to grow. It can be structured in ways that are hard to read from the outside.
Bhuvan: Before we started recording, you mentioned how the fates of old businesses have changed because quick commerce is now a thing. Several old-school businesses have found new life. Can you recap that?
Aditya Shukla: Quick commerce, in the last three or four years, has given many consumer brands an opportunity to go to market very quickly. If you have a good product and a certain niche, and the segment has seen tailwinds — snacking, savoury snacks, Indian sweets, ice creams, pet food — these are categories where quick commerce has helped you distribute to hundreds of thousands of people’s homes, which you would otherwise have had to do through offline GT distribution. That velocity of distribution has come from quick commerce. But going forward it will get more challenging — quick commerce platforms are constrained by dark store space, and it’s still not a full discovery platform. People largely know what they want. So if you start the tenth ice cream brand only because quick commerce will give you acceleration — that might be harder now. But many brands have seen explosive growth, some crossing ₹300-400 crore in top line almost entirely on quick commerce. Those brands at some point will need to go general trade. Quick commerce is still a top-twenty-five-cities phenomenon. The only real surprise for me was that a lot of people thought it would be an impulse purchase. But it moved to not just being an impulse purchase — people are stocking up on quick commerce. That’s expanding the use case and the TAM.
Bhuvan: Other interesting patterns — non-obvious behavioural shifts that founders should watch out for?
Aditya Muralidhar: One trend of the last three or four years: VCs are also looking at businesses with physical presence. Two prominent examples: we saw VCs investing in affordable housing finance companies and MSME loan companies — very uncharacteristic for VCs. But the thesis makes sense: not winner-takes-all markets, big TAM, it’s about being on the ground with sharp execution. The other area: Tier 2 and Tier 3 retail chains doing well and expanding thoughtfully. That’s grabbing the attention of otherwise tech-first investors.
Dinesh Pai: But why? You’re also betting against local trust — kirana stores that people have shopped at for decades.
Aditya Shukla: Consumption will grow. There’s a huge amount of unbranded consumption outside big cities. If you give that population a branded experience — good quality, a family outing almost — that’s a huge premium to their lives. Will it displace some local stores? Yes. Many will continue to exist. It’s happened with pharmacies, it’s happened with single screens.
Bhuvan: Any final observations — things that might not have come across yet?
Aditya Shukla: On the consumer side: people spending on themselves. As more people see some degree of affluence, spending on yourself across many categories — hair transplant chains, cosmetology clinics, skincare. Wherever you have the right target market, you’re seeing this behavioural change. Third: media. Still a huge opportunity, though it’s been a graveyard for business models. As a consumer habit — are people consuming more content, whether video or audio? The answer is yes. How you monetise that is the hard problem. But that behaviour is only increasing.
Aditya Muralidhar: Taking the same thread further: experience as something people are spending more on — curated experience companies. Exploring tourism in India is a big theme. The IPL is an experience. Movies — people said theatres would shut down post-COVID. That hasn’t happened. Occupancies depend on content quality and many factors. But for most people, going to the theatre is still a community outing, a social experience. If you have the right content, you can create real tailwinds. The event space — footfalls at events, whether niche music events or larger events in smaller cities — why are people going? They want an experience. Interesting opportunity, but likely a longer gestation period and a more capital-heavy model.
Bhuvan: The most cheerful question of all: when is it all over? How many more months before we’re all redundant?
Aditya Muralidhar: The route India’s VC market is taking makes the most sense from where we are. Most of the money is still going into applications rather than infrastructure, and increasingly into vertical applications. Take BFSI and healthcare — workflows that need deep knowledge, have regulatory complexity on either side, and where the use cases, if you push through, end up being mission critical. In the US, BFSI and healthcare companies actually spend quite a bit on AI-driven use cases, so there’s definitely something for Indian companies to pursue. Where my eyes are — and this is more sceptical — are some of the thin API wrapper companies that came up in a burst last year. What remains to be seen is which teams actually go after the stickier parts of the workflow. Right now, horizontal generic workflows are fast becoming commoditised — native capabilities are being built into models themselves. Two opposing forces: creating a solution has become relatively easier, but enterprise buyers don’t want to build everything in-house. And these are institutions set up to be risk-averse — risk teams, compliance teams, procurement teams. Nobody wants to be out of a job because they jumped on the shiny new thing. So the vertical use cases in regulated industries — those will have legs if they can push through.
Bhuvan: Personally, how are you thinking about AI’s disruptive impact?
Aditya Muralidhar: The way we think about it is across two dimensions. Every software category — can AI help people do things better, or completely replace them? And within that, is AI re-imagining how things are done, or just adding helpful bits here and there? If you truly plot it, a lot of companies fall into the category where AI is not entirely reimagining the workflows. But there’s a lot of scope for AI to either assist or replace. The question becomes: who is best positioned to capture that value? If you’re a system of record — you hold the data, you hold that enterprise knowledge — you have the first right of refusal in a lot of large enterprises, because they don’t want to go elsewhere. The second big question: once you’ve created that AI feature, can you monetise it? Are you in a segment where someone will look at it and say, “I see the value and I’m willing to pay for it”? Personally, I see it more as an opportunity than doom and gloom. We’ll see a divergence: some companies will come back out strongly, some won’t.
Dinesh Pai: Does Bain Capital do early-stage VC investing at all?
Aditya Shukla: Bain Capital is a different firm — originally its founders were part of Bain consulting, but it’s now a completely separate legal entity. They do have a venture arm.
Dinesh Pai: Are they investing in AI companies? Because they must be looking at some of these.
Aditya Shukla: Management consulting has a few different layers — expertise and execution. You can’t just prompt an agent. You have to go and talk to a distributor to convince them to sell something. It won’t go away. It’ll increase productivity, it may change pricing models. For example, call transcripts — there are solutions that can do this pretty quickly now, still not fully accurate, but they’ll get there. It’ll make you more productive and faster. But hopefully we all still have a job.
Bhuvan: Hopefully.
Dinesh Pai: Hope is the word with which we end this podcast. Thank you so much.
Aditya Shukla: Thank you.
Bhuvan: This was absolutely insightful. I had a blast.