Summary

The Offline Network Episode 4: New Capital (aired 2025-09-08). Guests: Vaibhav Domkundwar, Kushal Bhagia from Better Capital, All In Capital. Vaibhav: "You're looking for the right set of founders who can essentially build a company that they're setting out to build in terms of your assessment of the market and their ability to essentially, you know, get it right." Vaibhav: "I think the first call commits sound very fancy, but they are really an outcome of sort of an intent that you've built over a long period of time, context that you've built over a long period of time." Topics: venture capital and funding, AI and LLMs, consumer brands and D2C, B2B/SaaS. The Offline Network is India's live show on startups, tech, and venture — streaming M/W/F at 4 PM IST on YouTube.

Full Transcript

Utsav Somani: Hello, and welcome to the week two of TON. I hope you enjoyed the week one where we try to bring the best minds in AI, consumer investing and many other spaces to you just so that you could learn with us. And I hope we've made all of this fun as well as we bring these unique insights to you. Today we're bringing two of the best and the smartest minds in early stage capital allocator ecosystem of India. They're friends of us, and they run these two funds known as Better Capital and All In Capital. So you'll hear from them in a very short while. But before that, let my friend Dhruv run you through what's happening in the world of startup news.

Dhruv Sharma: And even before we get into the world of startup news, what's this thing we're hearing about called the Great Lock-in of 2025?

Utsav Somani: Man, it's a TikTok trend. I think that's what our team told us before this recording. Yeah, and I think the idea for us is that we're starting TON in September. So we're already locked in. So let's just get ahead with it. We're fully locked in. Yes.

Dhruv Sharma: So in the world of news, I think the big headline is Oyo is doing a rebrand. Oyo is going to be now known as Prism. Boy, this company's been on a long arduous journey itself.

Utsav Somani: Yeah, they've entered many new spaces as well across this. They were a cloud kitchen in the middle. They have done townhouses. They've done co-working spaces and even motels in the U.S. And a bunch of them came through different acquisitions that they've done. So they've really become a formidable group. And I think this is coming at the right time as they're making that third attempt for the IPO. They're targeting a $7 to $8 billion valuation for this. And I think the group has recently turned profitable as well for the last two financial years.

Dhruv Sharma: Very interesting. And yes.

Utsav Somani: So yeah, I'll go into the next one. But before that, I think the funny thing about this rebrand is that they invited 6,000 applications across a post on social media via Ritesh Agarwal. And I think 6,000 applications were shortlisted and they've really gone ahead with Prism. So it's a very interesting rebrand. So the crowdsource names. Crowdsource names. One of the very interesting approaches. GST. Somehow we can't not have direct or indirect taxation being discussed in the show. Zomato and Swiggy, and even Amazon for that matter, have started adding platform fees. And this is because finally gig working class of this country has been trying. I mean, they're trying to formalize them. They're not registered with GST. So these platforms have been asked to pay GST on their behalf. The delivery charge that gets added to your invoice. The platforms are liable to pay GST. So it's going to be approximately of 150-200 crore hit for Zomato. So they're trying to make up for some of this. And Indians will finally have to pay for the convenience, right? And some of these restaurants even overcharge on these platforms, just because of the thin margins that these platforms allow them. What's your take on this?

Dhruv Sharma: I mean, if you've ever noticed the bill that you get from either of these platforms, it obviously breaks down in different line items. And if you, for instance, if you're, let's say, a Zomato Gold member, they just waive off delivery fee. I'm sure Swiggy does this also. And so what's happening here is the GST Council has formally recognized something, I believe they're calling delivery services using e-commerce platforms. And just as you said, they're, in a sense, opening up space for formalizing the gig, like the gig workers. But the thing is, they're not GST registered. So even though in GST, in the GST universe, they will count as suppliers here, the suppliers themselves are not GST registered. And so the platforms will have to discharge the GST liability without being able to claim input tax credit for it. And so maybe we should expect a hike up in the platform fee, or maybe some other way that they'll find to pass on these costs to consumers. What's, again, very interesting is it's happened just before the festive season, which is where everyone's going to order their kajal cutleys and whatever else India loves binging on during festive season, and should be interesting to watch.

Utsav Somani: But this is a globally recognized practice, right? I mean, Doordash or JustEat in the world or Deliveroo's of the world, they all charge you a convenience fees. India has been hesitant as a nation to pay for the convenience, but I think finally, the platforms are pushing back. They're trying to, as they get ready for the public market listing, or are already listed, they're going to introduce some of this to show that the businesses are resilient and they're solving a real, real need. Because if you're subsidizing at one end, and then providing that same value, I think the product market fate or the dynamics of the business might look very different that way.

Dhruv Sharma: What I find very ironic about this is, as a shareholder of either of these two companies, you'll question free cash flow, but every metric as a shareholder, as a customer, you will refuse to pay any more than you've been paying. So that ends up being very interesting.

Utsav Somani: One industry that's been shy of the public markets is EdTech. They've gotten a lot of hype, especially in the COVID pandemic, where people were consuming content, they were studying online. I mean, schools were being conducted online, universities, overseas universities were shut down, so they were all conducting online. But India as a market, we had all the hype and the makings for a good EdTech ecosystem, but we have been... But, right, I think the public markets have not been ready for the kind of numbers that the EdTech players were looking at. So one of the big ones, we've been talking about IPOs a lot, Physikwala is going to get listed. They're doing a 3,800 crore IPO. Break it down for us, Dhruv.

Dhruv Sharma: Yeah. I think they've filed a DHRP with SEBI on September 7th, and they're looking to raise close to about 4,000 crore rupees. A lot of that is going to come from the fresh issue. They also have a reasonable block for the offer for sale, seeking a valuation of nearly $4 billion. And is this, from what we know, is this predominantly still an offline business itself?

Utsav Somani: 50-50. I think you'll see some stats on the screen. Most of these businesses, and even the Unacademy founders, I think that's why Gaurav had made a statement publicly that he's not interested in running a hardcore coaching center. And Physikwala has been doing a big push in offline. They've acquired Sarthi IAS as well. For a 40% stake in that company, which is a UPSC mentorship platform. So many of these businesses have a good flavor of offline in them. Online, I think the propensity to pay and just the willingness to commit to a course, I think that's just generally been low overall.

Dhruv Sharma: So I think- Within EdTech, if you single out test prep, do you think the jury is still out on whether offline is a better medium for test prep versus online? Or by now, do we have a unanimous decision?

Utsav Somani: I think online courses are plagued from not having a good completion rate. So I think EdTech in general, globally has had low motivational factor online. So I think that could be the reason why these platforms or these businesses are able to charge a good amount of fees for offline aspect of their business and also gets attendance that way, right? So they will continue to have these in-person presence for sure, yeah. Yeah, all that glitters is gold. Gold has been making headlines and making new highs ever since, I think, a couple of years back. What's the reason and drive behind this?

Dhruv Sharma: I mean, it's definitely been increasing in price. It's up 37% this year. It was up, I believe the number was 24% last year. Look, one of the reasons obviously is gold is recognized as a safe haven assets by individuals, institutions, sovereigns, and central banks. And from the looks of it, central banks globally can't get enough of gold at this point in time.

Utsav Somani: And what's also very interesting- New politics at play basically also.

Dhruv Sharma: Yes, it's always a good hedge against unknowns. And the RBI, I believe, is sitting on gold reserves right now, something like 880 tons. But you know what will blow your mind is Indian households have more than 25 times as much as RBI does. They have some 25,000 tons sitting in gold. And we now have an entire group of gold-related startups as well.

Utsav Somani: So JAR and Rupik are the two names that come to mind. India Gold as well. And all of them are offering different services. JAR, I think, pioneered this new category where it's micro-saving in gold, right? And I believe you've studied this company. What's your take on them?

Dhruv Sharma: I mean, it's an interesting category. It's an interesting category, and it still is unregulated. And so only a matter of time before they have a set of regulations purposely drafted for their space as well. As an Indian consumer or gold purchaser, look, what options do you have? Either go buy jewelry or gold coins or physical gold, or you, for some time, we had sovereign gold bonds, you remember. It was a very attractive- Not existent anymore. But yes, I think the last issue was maybe November of 24, if I'm not mistaken. So dated. Gold ETFs are an option, and they've been seeing some 10,000 crore rupees in inflows. And then there is digital gold, which is largely unregulated, but that's not holding back 40 million consumers from seeking exposure to this particular asset class.

Utsav Somani: All right. So I think we've run down on the news. And let's welcome our first guest. We go long back, right? He was one of the first customers, if not the first customers at AngelList India. And I think I got my investing career started alongside him as well. And he's developed a much more vibrant ecosystem around himself doing content, community, and of course, thing. So it'll be interesting to hear his perspectives. Let's welcome Vaibhav. Vaibhav, welcome to the show. I think you're on mute. How are you Vaibhav?

Vaibhav Domkundwar (Better Capital): Good to be here.

Utsav Somani: Yeah, Dhruv and I are very excited to have you on the show. But let's, I think, quickly dive into it. We don't have too much time with you. So we want to get the best out of you. 2018, 2025, you've seen it all happen. And you've written about gritty founders as well. What are you seeing differently from this crop of founders in the recent cohort versus say when you started investing in 2018? Were you looking at different things or have things just generally changed in general?

Vaibhav Domkundwar (Better Capital): I think the fundamentals remain the same, right? You're looking for the right set of founders who can essentially build a company that they're setting out to build in terms of your assessment of the market and their ability to essentially, you know, get it right. So I think all of that has remained the same. What has changed is I think the kind of founders, I think in 18, you had sort of the first set of founders coming from the scale companies. And I think now what we're seeing is kind of an explosion of that, right? So you had the first set of scale companies and the next set of startups and the 21 hype and things like that. So I think it's a broader set of founders. Probably a lot of first-timers right out of college more than what we had in 18. So I think definitely slightly different. Obviously, everything is AI now. So the right to win is very different, which means that, you know, founders are looking at that perspective in terms of what they can do very differently than what was in 2018. Plus, I think the India for India and India for world, both the opportunities have dramatically changed, which means somebody who was really strong in 18 may not look as strong in 25 and things like that. So definitely some changes, fundamentals remain the same though.

Dhruv Sharma: Do you want to give our listeners a sense of, in today's time, I mean, nowadays, how many times do you speak with a founder before you come to a decision? I'm sure it's changed over time, but as in date.

Vaibhav Domkundwar (Better Capital): I wish I had some data to share around that, but I think it varies a lot. Look, as you guys know, I'm a solo GP, which means I have the same 24 hours that anybody else has, which means that we have to do everything that we can within those constraints, right? So I think we take fewer meetings than anybody else, just because we can't. I do the first call, I do the last call, which means that I can't speak to everybody. I can't boast speaking to 5,000 or having 5,000 people apply to Better Capital or something like that, right? So we take fewer meetings, but then when we take those fewer meetings through, we are already sure why we are speaking to that person or that company, which means that our funnel is quite different than most others. So from the first meeting that I would take to coming to a yes or no, our percentage is much larger than what you would see with other firms who would have larger sourcing machines, right? But as you know, we've done many first call commits. We continue to do that. I think the first call commits sound very fancy, but they are really an outcome of sort of an intent that you've built over a long period of time, context that you've built over a long period of time. We did a lot of quick commerce, but a lot of friends I have actually bored over the last three years about why vertical quick commerce will be a real thing. I think they sort of heard me out, thankfully, as friends, but I think we've seen allocation of capital happening into that segment only in the last nine months. But when we took those bets, we took those very quickly because we sort of knew that we had conviction in that.

Dhruv Sharma: And is there an ongoing trend that you're happy to sit out?

Vaibhav Domkundwar (Better Capital): Ongoing trend that I'm happy to sit out? Well, I'm infamous for saying SaaS is dead. So we've sat that out for a while. I think D2C is something that we set out, we'll continue to set out from a branch perspective. Not that it's not a great segment, it's just not something that we understand. Yeah. I think the generic AI sort of hype or everything around it, we're being very cautious about it, to be honest, right? Because I think there is absolutely very little right to win. And if you're looking at Indian founders building in the AI segment, I think that right to win actually becomes even worse. So I think we're being very cautious there.

Utsav Somani: And you mentioned Skip India Movement, which got a little bit of a flack on the ex-post that you did. Break it down for us. And Skip India, I think Akrit also mentioned that India, I mean, we had him in our first week as well, and he mentioned that India has different rights to win, maybe in AI, like data labeling and any of the other segments. But like building LMs and going after that CapEx heavy segment is probably not India's forte right now. So where does this land? What is the Skip India Movement?

Vaibhav Domkundwar (Better Capital): Look, I think Skip India was just me articulating a trend that was already happening, right? So I think we all have to choose whether we want to be honest and truthful about the facts or not. And I was just kind of articulating what was already happening. Every Indian founder who's building in AI today is moving to the US, right? Every global founder who's building in AI is moving to San Francisco, right? Whoever can. So I think it is not about anything other than noticing that fact. And if you talk to any of these founders, they're essentially learning more in 90 days after landing in SF if they are smart enough than the three years that they spent building in India, correct? So, and I think it's something that we noticed long back, our B2B portfolio should have performed a lot better than it did. And I think the primary reason was that we were just so far away from the market. So we actually, within the portfolio, created this program where we said, I don't want any of us to be visiting the US. I want us to stay there for a long time. So multiple of our companies essentially rented houses in Palo Alto and San Francisco and essentially stayed there, right? So you can't build US native companies visiting from Bangalore every once in a while, right? So I think it's part of that global trend that look, if you're building for an Indian consumer, please stay in India. If you're building for somebody in the US, please stay closer to your customers. I think it goes back to the basics. It's not about India or US, it is about the customer that you're building for and are you close enough to that customer or not?

Utsav Somani: And I mean, in terms of your AI investing, are you taking any bets in India or in founders or are you looking at the US? And that's been a trend amongst most of the US when Indian venture firms were now shifting base and investing attention to the US. Weak Teens got a partner there, Elevations are trending, YC Demo Days, all of these Indian funds are now focused on making active US bets. And these might not be just Indian founders, but just founders where they're competing against the likes of Sequoia or any other tier one US fund. Are you taking the same approach?

Vaibhav Domkundwar (Better Capital): No, great question. Look, I think there is a fundamental right to win that we have to address as investors, I think, right? And in AI, if you're sitting out of India, your right to win is actually very, very low. So that's why if you're seeing a variety of different activity from all corners, and it is what we've got to do, right? I think the way we are looking at it, again, within the constraints of our fund size, our bandwidth and everything is that we've built conviction on one particular segment where I think we can build companies that can leverage cross-border stack quite well, which is what I call as outcome as a service companies. So these are companies essentially who use AI to deliver outcomes directly instead of delivering software as such, right? We sort of had early insight into this through a couple of our portfolio companies, and we've doubled down a lot. So if you ask me in AI, the two primary segments that we're investing in is outcome as a service, which is focused on US as the target market. And the other one is India consumer AI, which I think is very early, but I'm actually very bullish on India consumer AI. It's still undefined actually. I think most definitions are fairly shallow. I think we are learning as well, but those two segments we really like.

Utsav Somani: Other than that, I think- As a service, like I want to double down on that point because you coined that term pretty much, I think, right? And I mean, that post has been shared widely as well. People have debated and discussed both sides of it. For our listeners tuning in for the first time and hearing it for the first time, what are some good examples of this?

Vaibhav Domkundwar (Better Capital): Yeah, so I think it's actually, there's a lot of confusion around it because everybody is looking at it from very different perspectives. We really look at it from the perspective that the world essentially created software at the promise of productivity. And the whole process was that you have to, humans have to use software to get productivity out. Now we are going from software to intelligence and the way it's working now is intelligence is using humans when required to deliver productivity. So I think there's a fundamental shift. Around the shift, essentially what we are saying is, let's take an example. One of our portfolio companies, a company called DPD Zero. It's a collections AI company, right? So we actually first built software, gave it to our customers. They said they loved it. They never used it. So I think that led us to asking, hey, how do we best solve this problem? And the customers essentially said, can you use it for us, right? I think in the rawest form. And I think that essentially sort of gave us very good insight into what the customers are really looking for. So DPD Zero essentially works with some of the best lenders in the country today. And they essentially use AI on the backend, human in the loop on the backend, and a lot of other things to deliver collections outcomes to the lenders. All that they do is they don't buy software from us. They don't pay for licensing. They don't pay for annual maintenance. They don't do anything. They actually just get collections done and they pay based on what we collect, right? And increasingly on the backend, we are doing increasing amount of autonomous collections as well as the technology improves. So I think that's a great example. We've got some of that in US healthcare as a segment as well. We've got about four investments in that segment. And I think it's a very tangible market segment to go after that we're very bullish about because my personal background is B2B as well. And I think enterprises are done buying software. So we'll see a lot more outcomes as a service, you know, companies that will find success.

Dhruv Sharma: Vibhav, I have a couple of quick questions for you. So oncome as a service, is it safe to assume that you're seeing within the better portfolio companies that are aligning their pricing models with outcomes are able to unlock budgets more easily when they're trying to close the software sale?

Vaibhav Domkundwar (Better Capital): Yes and no. No, because I think you have to go through a transition yourself before you can, you know, get to that pricing, right? So the product and the offering is to evolve. But when the product or the offering is evolved, we totally are seeing dramatically lesser friction because, you know, your buyer is very different. Your buying process is very different now. So we're definitely seeing a lot more success when they're able to explain what the outcome is, deliver the outcome, and then define how the pricing model is going to scale where the customer believes that they're always buying value. They're not buying liability of, you know, making something work, which is in the software world.

Dhruv Sharma: Yeah. And the other question, Vibhav, was even as a solo GP, you worked hard to assemble a fairly expansive portfolio of better funded companies. How do better funded founders get to take advantage from being part of that same community, that same network from each other?

Vaibhav Domkundwar (Better Capital): Oh, I think I'd like to say it's one of the best groups in India right now. And honestly, I think what we've seen is, it's a very simple format we have, wherein we literally have a WhatsApp group, but we have an AI agent within the WhatsApp group as well. So we've stuck to keeping the WhatsApp group very, very focused on sort of Q&A only. And you'd be surprised the level of detail that we go through in terms of strategic as well as tactical aspects. And the amount of help they give each other is incredible. I mean, you know, it's a very common thing to have a WhatsApp group of portfolio founders, right? But this one is a goldmine. And our AI agent essentially makes sure that none of the insights ever get lost. So when you ask a question, it actually surfaces everything that has been said about the topic, and that's been incredibly powerful.

Utsav Somani: In your personal journey as a solo GP, in the recent tooling that has come out, I know you're wearing the Ray-Ban Meta glasses as well, but any AI tools that have really improved your workflows? Like apart from the regular chat GPDs and granolas of the world?

Vaibhav Domkundwar (Better Capital): You know, my personal stack is very basic. So we've talked about this in the past, right? Even before AI, it's essentially Apple Notes, Gmail, and that's it, right? And WhatsApp. So I think the only one addition is chat GPT. I sort of like to own the workflow in a way, and I think chat GPT allows me to do that. So I think it's really just working the AI app to say what works best for different parts of what I do. My stack is very simple. My process is simple as well.

Utsav Somani: And in terms of, I mean, your micro VC journey, you've come this far. I think you're on fund, if I'm not mistaken, or fund two. You plan on scaling up. You've seen these solo GPs in the US, like Allard Gales and Lockheed Rooms of the world raise massive, massive funds. I mean, playing in that Sequoia, full-stack capital territory now. Any intention, or you want to stay lean, stay small, or that's too early to think about these scale-ups right now?

Vaibhav Domkundwar (Better Capital): Yeah, no, no. I think we've been made to think about it for the last three, four years. So we've thought about it a lot. But I think the, here's the way I look at it, right? It's essentially asking Usain Bolt, hey, are you going to do the marathon or the triathlon or something like that, right? I think you've got to figure out what you're best at, right? And I think we spend the last five, six years building our core DNA around taking that early stage bet at day zero and require four times the capital that we raise. So I think we're going to stick to what we do best. In fact, kind of go deeper and deeper on the early stage to solve that problem at scale. And I'm yet to find a convincing argument which says, hey, you've got to go from the 25 million fund to the 100 million fund to the 200 million fund because you're just playing a very different game at that point. And you're essentially saying, hey, I win. I set world records in 100 meters, but now I'm going to compete in the marathons. So yeah, sticking to what we're good at, hopefully.

Utsav Somani: And you made a comment about managing people is your biggest time burn, right? Anything's changed on this thing or you will eventually have to get into that?

Vaibhav Domkundwar (Better Capital): No, no, I'm going to be very clear. I'm not going to be managing anybody. So I work with a lot of people, but I think I'm part of the team. I'm never managing them. So I have done it for 20 years. Nothing against it, but I loved it. And there's just so many stories about working with teams and scaling them and things like that, right? Really enjoyed it for many years, but I think the next 20 years are going to be just me doing my thing.

Dhruv Sharma: Beb, the bias for 35 to 55-year-old vine, I think is what you've called it recently. Is that going to become a reality?

Vaibhav Domkundwar (Better Capital): You know, it's incredible. I just talked to a vine this morning and it's just incredible how it is truer and truer that it's an opportunity that is not being tapped. Look, Better Capital started on a small insight. I think Utsav knows the reality quite well. I think whether we double down on wine or not, we'll know in the next few months, but I think it's a real opportunity. And I think it's also something, especially in AI, right? I think somebody in the US wrote this note that AI opportunity is going to be incredible. You know, AI researchers who will solve problems and hire the context and experience. I actually think the exact opposite. Because what we're seeing on the ground, guys, is that, you know, when we have really sharp engineers who built a great product, they actually have to onboard the gray hair to go in front of a life sciences company saying that we're going to transform your workflow with AI. Nobody's going to listen to them, right? And so I think, yeah, vine must exist, whether we do it or somebody else will see.

Utsav Somani: And as a closing note, you've taken baby steps with Tom Kunwar Foundation. What's that about?

Vaibhav Domkundwar (Better Capital): Ah, yes. I think that's one of those projects where we've thought about as a family, how to give back. All of us think about it, right? And I think they haven't acted on it for far too long. And primarily because I think I've always wondered what is the right way to do it. It's not that, you know, we are multi-billionaires looking to give away a lot of money, but I think whatever you give away, how do you think about it? So I think our view there is, can we think of ways where there is a multiplier effect, sort of taking a cue from our venture journey itself, right? So every project we do there, it will, I think we're basically saying it has to have a multiplying effect to itself. So it's not about donating 100 rupees, it's about saying, can donating 100 rupees to a cause create a multiplier effect of, you know, it becoming or reaching a potential where lakhs and lakhs of rupees are donated, right? So I think we're just working on that. This is the first year.

Utsav Somani: More power to you. Thank you so much for dialing in, Mehboob. Thanks guys, it's a lot. And now we have another friend and who's a leading mind in the startup world as well. And he's made progress and good progress with All in Capital. And we're excited to hear his perspectives on the early pre-seed and seed market of India. Welcome Kushal.

Kushal Bhagia (All In Capital): Thanks. Thank you so much for having me. Good to see you too, Dhruv. Nice to see you like you're sitting in the outdoors. No, no, it's just I have some plants in my office.

Utsav Somani: That's actually very nice. So tell us about All in Capital. You've built a good community, people who help with you, diligence these deals, source these opportunities. How do you work with them? What's the story of All in so far? Break it down for our listeners.

Kushal Bhagia (All In Capital): Sure. So I started my career in tech in India about 13 years back. I came out of bed, started a tech company back then, startups were not a cool thing for sure around them. I think I was only, me and my co-founder was only from a batch who started our company. Now every batch has probably 10, 20, 30 startups that come out. That number would be higher. No, I think a lot of risk-takers are still there. So I wouldn't say it's higher than that. But probably every campus has five or 10 startups that actually seriously start after bits, you know, people who don't take a job up.

Dhruv Sharma: What's in the water there, Kushal?

Kushal Bhagia (All In Capital): It's a special place, man. I think there's a whole lineage of seniors you look up to and that bar has just kept on. When we were on campus, Redbus was a company we would look up to. Then it became Swiggy and then Postman and now Pixel is the cool new company that everyone looks up to.

Utsav Somani: We had a base on the show very recently.

Kushal Bhagia (All In Capital): Yeah, so the bits ecosystem was an amazing starting point for me. Then I worked at UpGrad for a couple of years. That company did well. Post UpGrad, I ran this fund called FirstCheck so you know very well we ran through the AngelList platform. This was under India Quotient. FirstCheck is where I really kind of discovered that I love doing this. I like working with people who are just starting their first company and I like being there for them and helping them whenever they need me. I figured out founders need just three things, either get them new investors or new employees or new customers. And if you can do any of that, they love you and you already outperformed most of the VCs in the ecosystem. I realized I'm good at that. That's kind of gave me the conviction to start my own fund. January 22, we set up All-in with my partner Aditya. That was a journey preceding the fund. FirstCheck was a scout network. It was India's first scout fund where we had a network of founder angels from ShareChat, then from Mishu, Aparamaya from Taxi For Sure and so on. These guys would source wheels for us and we would basically invest with them. That's how the founder community led model evolved. Though it started from that, what we did differently is in the US, scout funds are very under the radar. Nobody announces I'm an A16G scout. We took a different approach where we made a public brand and anyone could come and approach us through our listed scouts. That led to a deal flow explosion for me. By the second, third year, I realized people are just coming to me saying, hey, I want you to invest. I got this great vantage point to see all the pre-seed deals happening in the country. That's how that over time evolved into All-in. When I started up, these guys all backed us as LPs and they still work quite closely with us.

Utsav Somani: And you've shifted to Bangalore because of this, right? Just one quick one, Dhruv. You've shifted to Bangalore. Do you think geography matters that much in pre-seed and seed?

Kushal Bhagia (All In Capital): I know he's done well, but I felt meeting the founder in person before investing is a must. I made some decisions in the COVID era, which I regretted. And I realized that you can't really see someone's charisma on Zoom. That charisma is way better read in person. I had these cases where I backed someone and I met them and I was like, oh, I don't think this guy can build a team or I don't think he can attract talent, right? So that feeling of the person's charisma, you can only read in person, I feel. So that was one big reason. The other one, I think I was just traveling so much to Bangalore. Every month I was making two, three trips to meet other people in the ecosystem, meet my own founders, to meet people that were pitching me. And then I was like, yaar, kap tak yeh karunga? So let's just move and I have a little lesser travel in life. So we moved here about two years back. And yeah, I'm quite happy with the decision.

Dhruv Sharma: Kaushal, I was going to ask you about the founder collectives. Yours was like with First Check, yours was first of many now since then we've had many more like them. What's the learning? Like what works, what doesn't work if you adopt that approach?

Kushal Bhagia (All In Capital): So we actually had a lot of learnings. I think what I learned was that founders have an edge at a particular time in their own journey. Like when you're between series A to B or series A to C, that's the ideal time. Like those angel investments of yours will be the best one to make. Because after that, you have too much money in your life. So you don't really care that much, right? So you start doing 20 deals a year, 50 deals a year, right? So there's no signal left in the angel checks you're doing. But when you don't have a secondary done yet and you're saving up money from your salary to back someone else, then you're really, really picky on who you're backing. And like you will think 10 times, you'll do like maybe two deals in a year, maybe and you'll put like 3 lakh rupees, you know, 4 lakh rupees. Those deals are the best deals because like it's like the founder knows who he's backing, he or she's backing from college or they're really tight with this person. So I realized that signal is the most powerful one as opposed to, you know, it was like, let's say, once you become a unicorn founder, you are going to get 50 cold inbound pings every day. And like, so you don't know how to choose from them, right? So, and sometimes you have other agendas, like you might just back someone because you feel bad about saying no, like, okay, this guy was mad, like beyond a certain wealth profile, you will do, you start doing pity checks, right? Like you find, if he can't do it, I'll give him 5 lakh. So reading that is, I think, crucial. Like if you're investing with someone on their conviction, you have to understand why they're doing their deal. And is it, do they really admire this person so much or is it just like a, you know, relationship check or what's, what's the thought process behind it? I think that plays out in very different ways in your fund, if you're going to invest with them. So that was my biggest learning.

Utsav Somani: But in terms of the funding environment right now, I mean, you're seeing an explosion of number of funds being raised, right? Almost every other day, there's like a VC fund being announced in different stages, sizes, even sectorial focused. Do you think the number of opportunities to invest in India are increasing at the same pace or is it a hidden, controversial, unpopular opinion that you want to not say here?

Kushal Bhagia (All In Capital): No, I feel it's a positive sum game. I don't think that we have only so many companies that will get started. I think it's compounding at a pretty fast rate and people are doing stuff now, which earlier were not even thought of as startup sectors, right? So Aves is a great example, like nobody would have thought you can launch a satellite company from India. And that bar is going crazier and crazier. People are doing, you know, wearables and rocket companies and we see all kinds of wild ideas. I think the reason why you see so many smaller funds is because it's easier to raise a smaller fund than raise a hundred million dollar fund or something bigger than that. And the class of LPs who can put in 10 million, 20 million cheques are not many in India. So the ones that are abroad tend to back managers who spin out from a Sequoia or Accel or just keep backing the same names again. So I feel there's definitely a drought of capital at the series A stage and beyond. There are basically 10-15 funds in India that write you a cheque more than 10 million dollars. If you're a pure play tech company, maybe 20. So that I think should double or triple. There's definitely a big space there. But at pre-seed, I feel pre-seed seed, despite there being so many larger funds, they typically don't back the people who are, like they wouldn't back the Aways of 2019. They'll wait for him to become the Aways of 2021 and then they'll put in a cheque in Pixel. So you still have that opportunity to back these young founders who are doing something super ambitious and have a chip on their shoulder. I think there's enough of those opportunities. And the good news for all of us is everyone needs one Aways to run their fund, right? So that's how many there are in India.

Utsav Somani: Hello. Dhruv, do you want to take the next one?

Dhruv Sharma: Yeah, no. So Kushal, in setting up all in, so let's put the question this way. Now, for whatever reason, you chose to set up a fund and it's a SEBI regulated fund. Do you want to tell us, by the way, is your LP base predominantly domestic or is it a combination?

Kushal Bhagia (All In Capital): Yeah, so our fund too is a SEBI fund. Now it's a pretty much all domestic pool. We do have a vehicle outside, which is pooling capital outside and bringing it into the Indian fund. We realize that people who care most about India are Indians and their money is locked here in India. So they can't really back you if you set up a foreign vehicle. It's very tough for them to back you there. So if you want to scale your capital base, you have to do India unless you spend time outside and you have a network with institutions there. But that's tough. Like let's say you're an endowment fund in the US. India itself is not really on all their radars. Some of them may be interested. The ones that are interested already are in Accel or a Matrix or a Sequoia and so on. If they want to back an emerging manager for them, a Bloom is an emerging manager or an India Quotient is an emerging manager. So they'll either go there. They wouldn't touch a fund less than a hundred million dollars.

Dhruv Sharma: The definition is very fluid. But when managers come to you asking for advice first time, maybe they've done SPVs, maybe they haven't. What's a good reason for them to do a fund and what's a bad reason for them to consider doing a fund?

Kushal Bhagia (All In Capital): I think if you're confident, you can really get ownership in these companies. The big jump from an SPV to a fund in a fund, your ownership matters a lot. That's all that matters that you're winning companies. How much do you own in them? So in SPV, it doesn't matter that much because every deal offers at work, you will make money. So you can even enter at a hundred million and if it goes to a billion, you made a 510x. But in a fund, if you enter at a hundred and it goes to a billion and you've done like 50 other checks, it'll do like 510% of your fund for you. It will not make any money on that. So the question to ask is, do I have differentiated access to some companies? Do I have differentiated picking insights maybe in some space? And most importantly, do I have a brand strong enough where I can win a size allocation in a deal where I'm the lead investor? Depending on how big your fund is, you need to take at least 510% ownership in these companies to really make money. So if you feel confident on all three, that you can be the Kushal at Allin or Webovet better and win deals against us, then you should do it. But it's tough.

Dhruv Sharma: You and Adi like to talk about Allin Capital's right to win. And of course, you've worked hard to shape that right to win. Tell us how it worked.

Kushal Bhagia (All In Capital): I think it's hard earned. Like you, the biggest right to win is when a founder connects with you through someone they know and trust. Right. And that person recommends you to them, then you already won. Now you don't need to sell yourself.

Utsav Somani: They are going to choose you over somebody else, right? Because in today's capital abundant environment, like especially at the early stages, they're making the decision to go with you versus another similar or even a late stage fund. Then I think that's true validation.

Kushal Bhagia (All In Capital): Exactly. So but the reason they do that is because they've heard really good things about you. Or let's say Utsav sends me a deal and somebody Utsav knows is starting up and Utsav, I was just for me saying, hey, whatever you do, you need to go raise money from Kushal, right? So if the intro is that strong, then you won. Then I don't need to sell myself to the founder who would serve on that for me. And so that happens very often for us because now I have back 300 plus founders in India. At first check, we did 100 companies. We did 50 more in Orleans first fund. We've done 15. So we've done 165 companies that are back to 300 plus founders. I think by the time I'm done, my goal in life is I'll back 1000 people to start their first company in India. And that compounding keeps going. So if you're starting today, you don't have 300 people to vouch for you, right? You will have maybe five. So that's my right to win.

Utsav Somani: And you and I discussed about the complexities of managing regulations in India. And AngelList India Dhruv, the team has done a phenomenal job in abstracting most of it away. What are three pain points that you still see while running a fund?

Kushal Bhagia (All In Capital): I think the outside to India corridor is horribly broken. If you want to raise any money from LPs outside India, they need to set up a Demat account in India and a PAN card, which no one's going to do. But if you want to set up your own vehicle outside and then bring that money to India, that's painful. Which we went through that pain, right? So I think that's a big problem for someone to solve. Within India, I think SEBI's rules are quite elaborate and they keep changing them as well, right? I mean, you have to follow the law, so you have to do what they ask you to do. But I don't know if that can be solved. But for example, there's this exam requirement, which all fund managers have to go clear, right? I know managers who are billionaires who failed the exam twice. So stuff like that you have to deal with. Three, I think also probably the... I would say the LP base in India is also way more service oriented. Like in the US, people log in on their own to a portal and download reports and you don't have to pick up calls.

Utsav Somani: Do it for the market. India is not a DIY. Exactly.

Kushal Bhagia (All In Capital): In India, some guy from the LP's office will call you and say, sir, he told me to get this report from you. So it's a way to use it. That means you also need a team. Otherwise, you will be fielding these kinds of calls all the time.

Utsav Somani: But do Indian LPs... I mean, compared to your US LPs, do the Indian LPs require more info as well and hand-holding in terms of regular calls, regular check-ins?

Kushal Bhagia (All In Capital): No, I don't think so.

Utsav Somani: That's changed.

Kushal Bhagia (All In Capital): At least when we bring them on, we also educate people. And if someone doesn't pass that filter for us and we don't bring them on to the fund, so we've not had this experience where someone signs up and expects a weekly update from us or something like that. We do send quarterly updates to our LPs on what's happening in the portfolio. And we send a monthly update on the new deals we have done. Beyond that, we also do annual LP day where you can come and meet our portfolio and see what they're up to. Yeah, that's about it. Apart from that, of course, we also share reporting on the formal documents on NAV and so on. So I wouldn't say Indian LPs are more painful. It's just that they're not used to going to a platform like AngelList to download stuff. We'll keep getting calls saying, can you send this to me? The person who's investing doesn't have time. So they typically have some EA in their office who does it for them. So yeah, just the way they work is slightly different.

Utsav Somani: Good moment to launch or plug in that feature that you've just mentioned.

Dhruv Sharma: Yeah, and also we just have seven days left before people have to file for their taxes. We actually solve this in an interesting way, Kushal, which is just give LPs who have a team around them, a family office structure, anything they have their accountant, they have their advisors. We've just given them backdoor, limited backdoor access to the LPs documents. And they can, it's called WALT. It's called AngelList India WALT. Your accountants as LPs, your accountants can just simply bookmark a link. They have their own login credentials. They never have to ask you for an AngelList India or taxrelated document ever again. So there are ways in which you can solve these things.

Utsav Somani: Yeah, pretty cool. So final question before we wrap up this episode, Crystal Ball Gazing, and also a little bit look back in the past, like five companies, the last five companies that you've invested in, what are the spaces that they're operating in? Is there a trend that's coming out of it?

Kushal Bhagia (All In Capital): Don't have to mention the names unless they're probably- I think consumer AI has gotten pretty hot this year. Last two quarters, we've seen more and more use cases and different applications. I think what's my thesis here is develop, the ways developing, I think whatever services the rich can afford, everybody will now get for like 200 rupees or 500 rupees a month with a UPI or to pay subscription. So like you may have great tuition teachers for your kids. Everybody will have a great tuition teacher now or you have a nutritionist who designs what food you eat. Everybody will have an AI nutritionist now or you have a tax planner who tells you where to invest your money, how do you manage it? Everybody will have a great money manager now. So I think that this democratization of elite services is what I call it. I think that is the big theme for us last couple of, maybe last two quarters. We've done a company which is doing an AI wellness companion. So that's part of it is nutrition. We've also done a company, and I found one supernova, which is a AI English tutor. So people who can't speak English well, they talk to supernova and get better at speaking English. That's taking off really well. And we've just done one company, which is a loneliness or a companionship for mass market India. For people who don't have someone to talk to, they want to share how their day went or they basically want a friend that they can spend time with. So I think all these three, this AI consumer is definitely a big theme. Apart from that, I think we continue to be pretty bullish on people building B2B AI tools from India and selling them globally. But there we feel the quality of founder you need to be able to go sell in the US is that that bar is very high. So and very few people in India who start companies have some prior experience of doing that. So it's tough to find teams doing that, but if you can do it, there's a huge, huge part of world to be won towards them. And then deep tech is also pretty interesting. The things people are doing, like what someone added, this company Mave together, which is doing really well. Or they built these headsets to help treat anxiety and depression. In a new fund, we've done a company which is building cameras for drones. We've built up, we've just done a company which is doing kind of like AI for robotics for robotic arms that are deployed on manufacturing floors. So yeah, it's a bunch of, these are the three main, I think consumer India, AI from India for the world, and then deep tech. Those are the three main themes that we do as a fund.

Utsav Somani: And I mean, I cannot wrap up this segment before asking this question because I chat with you and Aditya both. You guys talk about pricing a lot. Like you're okay with saying no to a founder just because of the price. I personally never had that concern. And I don't know, jury's still out if that works or not. But how do you deal with that dilemma?

Kushal Bhagia (All In Capital): I mean, we made a piece with that, that if you want to return a fund, your entry price matters a lot. And like this great quote, investing, it's like going to a buffet. You eat what you like. There's enough for everyone to go around. So it's okay to miss some deals because they're overpriced or whatever. But as long as you're getting what you need for your fund, then it's fine. I think I'll give you an example. In my first eight days, we had two companies which got to 300 million valuation in like two, three years time. On one of them, we had made a 100X plus return. And on the other one, we had made a 10X return. And the reason was, one, we entered at a 1 million valuation and the other one, we entered at a 10 million. So it was 75X and 10X, right? But that's how much difference. So if you put a crore in each, you have 75 crores here and you have 10 crores here. There's a huge difference in return. The risk is the same. You're backing people on paper plan stage, right? Both of them didn't have a product when we invested. You can justify the price by saying, oh, this team is great or there's a second time founder and so on. But the customers don't care about all that. The customer just cares about what is the product you're giving me and how will it supplement my life? So if you take that lens, then these are all like very risky bets to make sure you might not even make the ones which are at a very decent valuation.

Utsav Somani: All right. Thank you so much for tuning in, folks. Thank you, Kushal, for giving us your time today. Hope to have you back on the show very soon.

Kushal Bhagia (All In Capital): My pleasure.

Utsav Somani: And to our audience, thank you for tuning in. You've seen and heard from two of the best minds in the capital allocating ecosystem. They're dominating in the pre-seed and seed states. So hope you've learned new things as we have as well. And you've seen how speed and trust do matter in this ecosystem. But we'll see you.

Dhruv Sharma: I have to say it. So we put out our upcoming guests on our socials ahead of time. So if you have things that you won't be asking them, keep an eye out and let us know. And we'll be sure to bring up your questions when our guests tune in. Kushal, such a pleasure to see you today. Thank you for tuning.

Utsav Somani: Thank you, everyone. Bye-bye.