Battling ageism

Amongst the most dramatic differences between VC and traditional industries is the time you spend with 20-somethings.

I can go days without meeting anyone in their 40s. Yes, we do get pitches from older founders, but the vast majority of startup founders are in their late 20s or early 30s. This is especially true of business-to-customer startups.

It has been hugely energising to meet these fearless young founders, out to change the world. You can feed off their excitement, energy, and passion.

Even so, I wonder if we celebrate youth a bit too much. It isn’t the celebration of youth that is worrying as is the creeping subtle discrimination against older founders, especially those in their 40s.

Faced with a pitch from an older founder, I sometimes had to check myself to not judge it unfavourably. There is a real reason for this, especially if the founder has had a successful corporate career before starting up. The assumption being the person has enough money and taste for creature comforts to not struggle for too long.

It is actually bizarre that I, in my 40s, can end up discriminating against someone in my age group.

True ageism, as seen in the Valley, isn’t here in India yet, but I wouldn’t be surprised when it arrives soon.

Role reversal

I spoke earlier about how VCs sell to LPs in the context of Blume and other homegrown funds. However, it is not just LPs to whom VCs have to sell. We also sell to founders. A hot space with hot founders can see VCs lining up to pitch to them, instead of the other way.

This is especially true of successful founders starting out a second time. There aren’t too many of these, and when you hear of a founder planning to startup again, there can be a VC rush resembling a feeding frenzy.

Recently, I heard that a successful Indian fintech founder was approached by three different VCs on the day the news of his exit from his present company leaked.

Effectively the demand-supply gap in favour of VCs (versus founders), inverts in favour of founders as we reach the top of the founder pyramid. There simply are more VCs chasing high quality founders than the other way around. In this context then, as Reddy mentioned in a podcast, “the trick of the trade is actually not about you saying ‘I know how to pick well.’ It is whether the best entrepreneurs want to pick you.”

Once you and the entrepreneurs pick each other, the relationship quickly changes. Investing is only the beginning. It is all of the working together over the next few years, and supporting and adding value to the founder’s life through mentoring, sparring on strategy, support on hiring and fundraising, that really helps set the startup for growth and greatness. As this tweet puts it well, the VC business is as much “customer service” as finance, and that is just as good a lens to see this business through.

The shifting sands

My entry in to VC came at a time when the industry was going through two interesting trends:

The first trend, manifested in easy access to capital, is due to greater LP (and international) interest in the Indian market. This is an outcome of not just the performance of the Indian market—exits such as Flipkart and other upround-creating unicorns certainly—but also its inevitability. After all, there is no other large market that can grow anywhere close to the rates the Chinese economy grew at.

A fund manager for Tiger or Coatue sitting in New York or San Francisco, or even an LP, sees the world in terms of different IRRs (internal rates of return, the metric used to determine attractiveness of an investment). With the recent success stories, the Indian market’s IRR is attractive enough for LPs to participate. This manifests in greater allocation by LPs to Indian funds, which means more money chasing founders and rising valuations.

The attractiveness is also seen in more direct investments by the likes of Steadview or Softbank in Indian companies, bumping up valuations and often delaying imminent IPOs, in an attempt to extract as much of the value before the startup goes public.

A related explanation is the emergence of second-time founders in India over the past couple of years, thanks to exits and the maturation of the Indian startup ecosystem. VC funds find investing in these second-time founders a less “riskier” opportunity given their track record.

Accel recently launched Rebound, a programme targeting second-time founders. Other VC funds, too, have such schemes. The result of such competition has been valuation inflation for second-time founders, justifiably or not.

This is also a good segue into the second interesting trend underway: Traditionally, later-stage investors doing seed investments.

Surge is the strongest outward manifestation of this, but there is also Lightspeed’s Extreme Entrepreneurship Program, and other under-the-radar/opportunistic optionality plays from other funds.

The primary reason for this, in my view, is the availability of second-time founder bets. The other is also the increasing availability of highly pedigreed first-time founders or emergence of strong signaling mechanisms (super angels on cap table, YC selection etc.) as the Indian ecosystem matures.

The implications of these trends, and what it means for the Indian VC market, are waiting to be discovered. For now, it is creating a vibrant, or as some say frothy private market, standing out sharply from the lackluster public (stock) market. In fact, this contrast between private boom, reflected in supersized startup funding announcements, and public gloom, manifesting in dropping auto and consumer goods sales, is particular striking.

The mood in startup land is optimistic, but there is a sense that, if the public market and the larger economy doesn’t pick, we may be in for some mild turbulence soon.

The Indian startup ecosystem is a particularly exciting place to be, and I am grateful for the vantage point I occupy in the investment team at Blume. Through this piece I wanted to give the reader a sense of what it is I see and experience. I hope it has been useful, and if you do wish to reach out and ask me questions, I would be happy to help.

We welcome your comments at

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.