Full Transcript

Utsav Somani: All right, listeners, today's the Monday live stream of the Offline Network. Our first guest needs no introduction, so we're going to go right into it. Karthik Reddy of Bloom Ventures, welcome to the show. Thank you, thank you.

Karthik Reddy - Blume Ventures: Thanks for having me. It's a pleasure.

Utsav Somani: You held the Bloom Day recently to mark your 15th anniversary. And there's one statement that I want to read out, where you said, the most untrue statement in life is, it's just business, nothing personal. Everything in venture business is about people and everything is personal. The business is just a lovely side effect of great relationships. I think that is such a beautiful statement and captures the essence of venture capital in its truest form, right? I think a lot of people see the numbers, headlines and spreadsheets and everything. And on this show, we try to break down what does, I mean, happen behind the scenes when the founder is building a company. So thank you so much for coming on the show. In this 15year journey, where was that one moment where you said, oh shit, Bloom Ventures is happening, this is working?

Karthik Reddy - Blume Ventures: Many, many moments. But I think, see, somewhere, you know, between each fundraise, right? I think there's a very natural pause that occurs in the business. And you are forced to reflect on what the journey has been for the last three, four years and whether it's worth actually pushing through and continuing, right? It's a little different from a founder's life, because a founder is basically building on a one-line continuum, right? Whereas in the case of a fund, you actually take a natural pause every three, four years. And you essentially have to rewire yourself to saying, hey, the minute I put my mugshot on the new deck, I'm stuck for 12 years, right? I have to see that journey through and meet my financial obligations to my investors, because I'm asking them for money. And which essentially means that it forces that reflection. So I keep joking with my colleagues that there were moments in 2014-15, where it was just Sanjay and me who were the co-founding partners. And I thought to myself, it's like, where am I headed? Like, do I need to institutionalize and make this a business and get into like, you know, institutional capital? And do you think this entire journey is going to be worth it? Or should we just be like this cool angel fund-like thing and not be answerable to that many people? And I think the turning point was in my head, hey, we have a shot in hell to become one of the best-run Indian venture capital firms, homegrown, built from the ground up. Nobody gave us a chance at that point, because there were such large foreign capital pools from, you know, US brand names or, you know, Indian millionaires from the US who had built those firms. And we said, like, it's that whole underdog feeling, I mean, which is reflected in our whole t-shirt culture, right? It's always about, like, can we be the David that, you know, stood up to the Goliaths and like and competed? It's not like an arms race. It's not like if we win, others don't win. We all collaborate. But I think there was this thrill of saying, can we build it ground up in India? And it felt like it was possible. And that's when you realize, OK, let's go for it. And, you know, you start taking your first institutional money, our first dollar capital. All that happened in 2015. So I would say 2015 was pivotal in that sense. Exactly 10 years ago.

Dhruv Sharma: Parthak, do you want to talk about that specific dynamic of the venture industry where, you know, you have sharp elbows on deals, but you collaborate to shape an entire industry, you know, with your peer firms?

Karthik Reddy - Blume Ventures: No, it goes back to the line Utsav used, right? So you have like three, four different constituents. You have your own team, of course, which has to believe in your vision and mission to carry them. But then there's founders, there's investors. And then there's everybody who benefits from your capital and your partnerships in that journey. So your co-investors cannot be left behind. They have to feel like they have been they've gotten their fair deal as well. Right. And I've felt screwed over by larger co-investors at times. And, you know, as starting as a small guy, I think it plays on your mind a little bit more that I don't want to ever be seen that way. Right. And I think you work doubly hard to show that like you're a partner to all of these constituents as good a partner as you can be. It's not a perfect world. Like, you know, I've seen bad acquisitions. I've seen bad rounds. You know, you're forced to take a position and you will. Somebody will call you an asshole at some point. Right. And so you can never avoid that fully. But it goes back to that punchline. Right. And I feel it. I didn't say it on my 15th anniversary, because if I didn't believe it, that it is about the relationships. It is about individuals, not even firms. It's not like, oh, you know, that firm X or firm Y, I can screw over. It has nothing to do with firm X or Y. It's the partner in firm X and firm Y. And unlike founders, by the way, and sadly, this is the harsh reality of founder lives. If the founder is not delivered and it's a it's a dud of a company, right, some of them choose to not even stay in the venture funded industry per se. Dependent on the age, dependent on the on the on the size of the collapse depends on whether they've made money. So this is vanish. And for me, that was the first shock. Like, you know, for me, there have been repetitive shocks. The first shock is founders vanish. They don't ever come back after they die. Right. Then team vanished after seven years. The founders started vanishing after the second or third year because you were writing early stage checks. Then the team vanishes. Right. Because somebody leaves and they realize, shit, they were never meant for venture. So they figured it out and they're not coming back. They don't want to be venture capitalists. Then the LPs vanish because the guy thought like, hey, I don't know why I put a crore in this guy's fund. I don't want to, you know, be stuck for 10, 12 years. The co-investors broadly don't go have anywhere to go. No one's going to employ them. So all the VCs are stuck. That's all they're going to do for the rest of their life. Or they will return founders. So ironically, the co-investor relationships have got to be like top notch. Right. Because you have nowhere to go. You're the only guys sitting and making this ecosystem work for 20, 25 years at a stretch. Right. And you can be pissing each other off and hoping to build a great ecosystem. Right. So even when the industry body association thing was offered, I was very surprised. Right. But you know what the irony was? When I became the industry body chair, no venture capitalist in the history of IBCA was ever the chair. It was only private equity.

Dhruv Sharma: P guys. Yes.

Karthik Reddy - Blume Ventures: Yeah. And so it was like, how can we not be represented? How can we not be heard? How can we not all operate as one entity to make this ecosystem great?

Dhruv Sharma: So there's a little bit of that. Which is interesting because the body itself is called IBCA.

Karthik Reddy - Blume Ventures: No, there's a history to it. The regulations written in 1996 for the private capital industry were written as Venture Capital Fund Regulation. Oh, yeah. There was, they didn't understand the idea that there were three, four different asset classes within that spectrum of venture, private equity, buyout, et cetera, et cetera. Anyway.

Utsav Somani: Maybe for a little bit, like, I mean, the work that you do at this venture capital body, can you share that? What are the reasons?

Karthik Reddy - Blume Ventures: It was, see, we rotate. We rotate. It's not like that. That's my job, right? It's like I say, desh ki seva hai. So I'm essentially trying to do the right thing for the ecosystem as a whole. You take on an industry job. A few of us feel more passionately about it. Like Rajan served for two terms. I served for two terms. So we're supposed to rotate out after two terms. But I became the vice chair and then became the chair. And it was a proud moment for me because essentially we were like a homegrown entity. And then we were asked to represent the industry at the biggest sort of industry body, right? But fundamentally, the job is very simple. The job is to build good practices and learning across the community. So, for example, the VCs, because we've seen so many more micro VCs enter, not very common for private equity firms not to be well trained before they start a private equity firm. Whereas in venture, everyone like yourself, others, all of you could be young. You might have seen a lot of aspects of the business, but not the whole life cycle, right? And so, like, for example, in the last three years, there's been this fantastic initiative where we do a VC 101 course. And our industry peers come and attend, right? So VC reporting, I mean, the fact that Crystal does benchmarking on Indian funds, that happened during my tenure. But it's work that the members started five years before I came, right? So what we realized is much like our business, right? These things take eight, 10 years to fructify. Capital gains equalization with public markets started. We started making a noise in 2011. It came through in 2025, right? So the lobbying of sort of fixing what is good for entrepreneurship through the lens of venture capital or private equity is basically what the industry body is for, fundamentally. It's not, we have one party a year, but it's like, you know, there are too many parties every year. It's not for the partying and the networking, right? It's about sharing good practices and lobbying for the right things with the regulators and the government. That's basically what it's for.

Utsav Somani: And I've been picking some certain themes and, I mean, these keywords from your previous few responses, you mentioned micro VCs and the time that you spent across these cycles, right? You started in 2010, 2011 with Sanjay and you've seen many, like, I mean, you've of course published the Omega files as well, where you discussed liquidity. We'll come to that. But across these 15 years, what are the major changes and how does one position themselves if they're starting a micro VC now, what does the next cycle look like for them in terms of liquidity, in terms of outcome possibility and other things that they should think about when they enter this venture ecosystem?

Karthik Reddy - Blume Ventures: A tough one, because I'm not, I'm not envious of them at all because I don't have to be in their shoes anymore. But basically when we started, it was such a little niche that you could be whoever you wanted to be. Today it's tough. You know, if you went back exactly 10 years ago, Feb of 2016, there were just 10 of us of the micro VC category. 10. Today there are 200, right? So, and this is not like, like a fictional number. It's actually through the industry association that you know that that many new AIF managers have been set up in cat one and cat two, right? Doing early stage venture. Now, most of them are beneficiaries of the fact that the ecosystem has done well enough that a lot more people have belief in the venture asset class. So HNIs, family offices, tech entrepreneurs, even CXOs have enough money to give them one, two, three, four, five crores. And suddenly somebody has 50 or 100 or 200 crores much more easily than when I had to raise it. I raised from India 600 pitches, 75 conversions, 100 crore fund two years ago. Now you can shrink all of that by about half and you can put the timelines and the success ratio to about 2x of what I had to be able to get a micro VC off the ground. The problem is you look like everybody else. So you can, you will have to have a right to win and the right to win has got to be well defined. Like, you know, the untitled guys, Anmol and Vedika, tiny fund, but they position themselves as wheelback Barbie founders. And so, you know, then somebody else like, you know, a neon or a, will say I'll do only SaaS. And I will, now that is AI perhaps. And whereas someone like a Allin or a Inuka will say, I'm a generalist, but I know my skills. I'm a product guy or I'm a founder guy and I will be a generalist and try and win. So I think it's, I'm not saying there is zero room for generalists, but if you notice the ecosystem has gotten fragmented into vertical specialized micro VCs today, right? And you got to differentiate on either right to win in a geography or right to win in a sector or right to win at a stage and, you know, and what value you can add. And as a two person team today, back in the day, we used to flail our arms in every direction. We would help them on talent or using a Rolodex on LinkedIn. You could throw, you knew every VC because there was such a small universe. You could say, I can connect you to every VC. Today, no, half of them don't know us, right? They don't even have access to us. So it's difficult then to differentiate yourself. And so this verticalization is important, which is what a Manoj Sauce is doing or a special in Chennai is doing with deep tech. It's much better to be in those positions and win on what you think you can be top three or top five at. That's what, that's my punchline advice. If you don't think you can be top three, top five, it's a tough game. You shouldn't be playing.

Dhruv Sharma: And do you start with the proposition for the founders or the proposition for LPs for someone who's doing this the first time, Karthik?

Karthik Reddy - Blume Ventures: Proposition for LPs is like, I think the wrong way to think about it. I think a proposition for the founders because the founders make you win. And I'm telling you for five to six to eight years of your life as a VC, the founders are who keep voting you back in because you don't have enough financial track record to win the investor any which way, right? So if you're not back the best founders and they're not speaking most highly of you, what good is pitching a great investor, right? Your first set of investors any which way, ironically, they're going to come from your networks. So what are you indexing for them? You have to have great relationships to win them any which way. So the indexing has got to be on how valuable you are to the founders, at least for the first five, six, seven years. Then you're absolutely right. Now, when we think and we sit as a leadership in this very room, this is by the way where Bloom's first office started, this very space and seat I'm sitting at, 14 years ago or so.

Dhruv Sharma: But is this the Bloom Villa, the one in Bangalore?

Karthik Reddy - Blume Ventures: No, this is actually, Bloom Villa was born only December 18.

Utsav Somani: This is Mumbai.

Karthik Reddy - Blume Ventures: This is Mumbai. Yeah. In Byculla. And we've never left this compound. This is the third. We have three offices we moved, but this is the where I'm sitting is the OG office. We took it back, you know, about two or three years ago. But basically, to your point, I was saying the challenges. I lost my train of thought. What was I talking about?

Dhruv Sharma: So we were talking about proposition for founders and LPs. But as you advance as a fund, you do have to recalibrate your proposition to LPs as well.

Karthik Reddy - Blume Ventures: Now, when we sit as a leadership out here, you can't now cater to a lot of the LPs. Because they want to give you one, two crores. By the way, we have this generic email ID where we get somewhere between 10 and 15 queries a month on wanting to become a LP. What do I do with them, right? Like, how am I going to take like a crore from a random person and service it? I'm not a, you know, I'm not a public market like fund. There's so much education and patience in that 10-15 year journey. I don't want to deal with that with an unknown person for a crore, especially when I have an institution which is giving me $25 million. Single check, right, which is my biggest LP. So I have to now start making choices on how do I index strategy? What is my AUM? And so the firm as a whole, even the partners, have to re-engineer themselves to saying, shit, I can't play what I used to love, which is the 100k check. Nobody cares, right?

Utsav Somani: I think I want to switch gears and bring up Omega Files. I think this industry is very opaque. There is lack of transparency as well. Especially the vintage that you chose to unlock, sharing the information, right, 2010. There's literally nobody that you could benchmark with and you delivered good returns in your own words, but not great returns from that vintage. So what was the thought process behind sharing this out in the open? You were hoping that others would follow your steps. I think there was some in the report. India Ocean, I think, came as a guest post and a few others.

Karthik Reddy - Blume Ventures: No, I think it evolved, to be honest. I think it came itself from this classic entrepreneurial attitude, like let me show them I did it, right? So you feel like as a fund manager, you don't get to show that, right? Like not in the public domain, at least. It's all very private, as you said. It's very hush-hush. And the proof of raising another fund is somewhat a proof of the success of having done well, right? But beyond that, nobody really knows from the public domain. Second is, I think, it seeded itself as a thought about two, three years before the fund expiration date came. And it always occurred to me that once the fund is done, like you've closed the fund, you've returned all the money to the investors, what is there to hide? I never understood that, right? Because even if you had done somewhat average, the real guys were actually judging you on the data to give you a new fund, are sitting in a closed room looking at the same data, right? So the only thing could be that your founders didn't think that you were a cool enough fund. That's the only risk. It's like, oh, this guy's like really don't know how to invest, why are we taking money from them? So a 2023 founder might not have thought I was cool enough to take money from because of my 2011 performance. That was the only risk, right? The second, I think, was a sense of like, it's a very, very idealistic attitude. But our point of view, the idealistic point of view is as I'm building a culture of accountability as a set of VCs, because it's not me anymore. It's like three partners and then four partners and then five partners. Like, does the partner understand that the capital we've got and raised collectively and falls today on two shoulders, maybe in the future will fall on half a dozen shoulders. But do they understand that they have to be as competitive with me and outperform me to be able to wow the LPs and the rest of the team? And if I didn't have this sword hanging over everybody's necks that someday your performance will also be revealed.

Dhruv Sharma: It's a forcing function then.

Karthik Reddy - Blume Ventures: Yeah, it's a forcing function, right? It's an incredible, like, long-term pointer on the fact that you need to know you're really good as a venture investor to A, be in the job and keep asking me for another 30, 40, 50 million dollars in every cycle. That's a lot of money, right? And so you can just say, oh, I... Intellectual honesty, I think.

Utsav Somani: Yeah, absolutely. Absolutely, built within and externally, I think.

Karthik Reddy - Blume Ventures: So the side effects, like, as I started documenting the side effects, I said, man, there's so many great side effects of this. Just do it, right? And the biggest risk I've taken is not revealing fund one. The biggest risk I've taken is that I've pledged to therefore reveal all funds in the future.

Utsav Somani: Did you receive any blowback on this?

Karthik Reddy - Blume Ventures: No, just no shock, no blowbacks, only shock. The private is always cute. It's like, oh, you told everybody which companies failed. I said, what's the problem? Like, you know, there's... Yes, you feel bad for a second for the founder. You tried hard, but reality is we got zero out of it. There's nothing. There's no crime in revealing it, right? I mean, every fund has loss ratios. We're not celebrating or we're not slamming him or her for the failure. We're just putting the matter of fact out there. And that's what we double clicked on. I'm going to change the format a little because I don't have a fund to report every year or every two years, sadly. So the next fund is still two years away. So I'm thinking of changing the format. When it gets published, you'll see the format because it's still evolving. So I wrote two editions. I took as much of the learnings from Fund 1. But then already, even though Fund 2's final scorecard is not ready, there's enough learnings from there. So I said, why are we keeping the learnings bundled up for one eventuality? Now that we've started the treadmill, we'll just do it every year with new learnings ever so often. So the intent has actually come down to that itself, that can I translate our mistakes and our wins into learnings for ourselves and for the ecosystem? And here's the other interesting side effect, right? Around the time I was publishing it, we actually, because we became a 250 plus million dollar fund, we suddenly moved from three partners to five partners. And then there was a vacuum. There was nobody below. So we brought in a set of AVPs and VPs to fill that layer. And all of them were like, except one person or maybe two who had some experience with VC, the others were freshers to VC. And so they're basically saying, hey, teach us everything from the first 10, 12 years. And I said, man, that's a lot of effort. And then when the Omega started getting put in place, I got the question a few times and said, just wait another month or two. I didn't know. They knew I was working on something. They didn't know what was coming. And when I published it, they know that there is no different truth that I will tell them than what I've told in the public domain. It's the same set of learnings for my team as well. So my team also now, rather than go and do what I call the sushi chef apprenticeship, which is venture capital, the apprenticeship model is very expensive on time and effort. And if I told them in private, it's either get lost or won't get believed as much. When you put in public, there's nowhere to hide. I've said it to everybody on the planet. So it's the same lesson. I don't have a different lesson for you. I don't have any secrets for you. All the secrets are out. So you can comment.

Dhruv Sharma: Were you hoping for many more of your peers to follow your lead?

Karthik Reddy - Blume Ventures: No, but I'll put it blatantly to everybody who's listening. It is a competitive advantage. My peers don't put it. It's actually, they're suggesting something else. Either they think it's not too cool to put them out or they're saying subtly that we don't have a better performance. But I don't know if you've noticed this. In the last two years since the first Omega came out, the number of folks who are now talking publicly about their exits, about their... So at least the good stuff is all getting knocked out.

Dhruv Sharma: There is a knock on effect.

Karthik Reddy - Blume Ventures: Yeah, they don't have courage to maybe put the bad stuff. That is the tougher part. But the good stuff is all getting published, which is great. Because then now what's happened is LPs think, oh, finally these guys know how to exit. They're getting some secondary exits. They're getting some IPO exits. So everything gets published now, which is great. Partly driven by the public markets itself, because there's so much more data and a lot more of the exits are getting public. But even when you get a 25 bagger in a private transaction, it gets widely reported, right? The papers publish it. The fund does its own LinkedIn post. There is like a calculation and math showing it. It's great, right? Because at least you know how the hell money gets made. You don't have to go through 10 years of your own learning to get to that point. And by the way, it encourages founders to think about that responsibility as well. So you talk about side on knock on effects, side effects. It's crazy. Founders say, oh, let me just fulfill that obligation from my end because it's been 8-10 years. Then these guys won't pester me. I can get on with my life. So they have started engineering their exit roadmaps because there's so much conversation around it suddenly. Not that they wouldn't have done it, but other than if you were a part of like eight, seven, eight mega funds and their portfolios, you wouldn't have known this.

Dhruv Sharma: We've noticed that subtle reminder next to brackets. Whenever you give a shout out to a portfolio company, always remind them which fund did you make that investment out of? So the clock is ticking very publicly.

Utsav Somani: Guys, I want to bring up an unpopular opinion that I think many VCs have said in private, especially the latest stage ones and some who are even starting up now, where they said that the industry is becoming extremely competitive. As more people come into this boutique industry, the alpha is getting chased away. Might be looking at a venture vintage where 15% is the expected IRR with the added sort of this flaw or benefit, depends on which side you look at, of lock-in of 10-15 years sometimes. So how does one think about generating alpha in this industry? Do you think there are only certain number of companies which are getting created every year where most of the returns lie? And for a venture fund, I think it's exciting to be in one of these. Why I ask this? Because according to past data that you put out, the Pencil Club, there are, I think, few handful number of firms which have done 60% of CDZ of these unicorns, the 97 number which you quoted in your industry report as well. So where is this industry headed? Do you think it's competitive? Alpha is getting crushed?

Karthik Reddy - Blume Ventures: Yes, I think it's bound to unless you see a sort of a matching of pace of acceleration of the aggregate economy and how you want your companies to scale up itself. So the problem I see is that there is an artificial push towards a very rigid boundary constraint. So what I mean by that is like if you look at in e-commerce, for example, if you have a finite gross margin to be made and your consumption economy is only growing at a certain pace, you can't fund more than n number of startups in that space which can create values, right? Everybody else is going to get consumed at 50 million, 100 million, best case scenario, which is why you see in consumer brands a lot of acquisitions happening. It's very difficult to have, you know, a billion dollar single product company. And it's also difficult to build a billion dollar multi-product company. Sometimes it's easier to hand over that 350 million dollar product company like a minimalist to a Unilever who can then grow it 10x. It's not easy to grow it yourself. So in some sense, for the funds who backed minimalist, the alpha has been generated because of the speed and the value. So there are two elements, two variables to alpha. It is speed and size, right? So you got to compromise on one. So the folks who backed them, they got rewarded on speed. So it made good returns. It made the alpha, right? Whereas if the same outcome had been generated over 10 years, it would have been bad alpha or rather more beta, right? And so this was not fully understood by everybody in the ecosystem. So to your point, Utsav, I think both an existing manager and a young manager has to index a lot more on that. And I'll be blunt with our own strategy. We were very patient. We used to take pride in our patience. But there is no value in that because you're losing money on an IRR basis every year. So we would bet on a deep tech company and say, wow, we are driving Indian deep tech growth. Five years, no series A, right? And you're saying, what is this? I'm not here for charitable service, right? And it was OK when you were a $60 million fund. It's not OK when you're a $250 million fund, right? So I have to recalibrate. So now I've skipped the seed rounds in every deep tech company. I can't do a seed round in a deep tech company. But thankfully, somebody else has come to take my place. And I think what you're asking, Utsav, is what eventually, inevitably has to happen. I think in venture, I can't speak for private equity. I don't know the asset class as well. I don't track it as much. In venture, I think there is a natural size of funnel in the number of players that sit in every part of the funnel. You artificially expand or contract parts of the funnel, and the funnel breaks. Outcomes break, right? Because you're not giving the capital to be able to grow faster or grow more accurately. Founders, on their part, have to understand that they're a part of the same game. You're a part of the funnel. If you can survive out of that, you build bootstrap like Zerodha, my friend, or more power to you, right? Build profitably and keep building. Don't come into the funnel and complain. So I always call this, like, my favorite term for this is rules of engagement. Everybody who's in the game has to understand the rules. You can't say, I'm a novice. I didn't know who let me in. I'm at series B. No one told me the rules at series B. No, dude. You've got to learn the entire rule book before you jump in at seed from an institutional investor. Otherwise, stop. Check out at seed. Sell. Die. Whatever. Don't come and bother us at series A, right? So the funnel has gone. What's up to your point? You talk about competitiveness. This was the funnel when Bloom started. We expanded it by like a little micro inch of this nature. Now you know how it is? Like this. So I have no business being at the top of the funnel. I just trickled down to the first, just above the mouth. Because the mouth is the series A, series B. To your point, there is no new series A and B players per se. So I'm sitting one level above that and trying to catch the highest velocity or traction that I can afford to pay for. I can't play the $10-15 million check, but I can play the $4-5 million check suddenly. So I look like this new kid in town with flashy check sizes who can write $4-5 million and saying, why should I subject myself to this torture? I'll be the guy who can pick at $3-4-5 million, right? And I think this is a reset in our lives. The first decade was very different from the second decade. It's inevitable that this constant recalibration of the funnel will happen. And that is, I think, by definition how a venture capital ecosystem works. Now if you say, hey, why isn't the whole thing broadening? Why is it shrinking like this? Why isn't the whole thing broadening like this? So that depends on outcomes. So if you had actually delivered multiple $10 billion SaaS and AI outcomes on the US market, this funnel would have at least grown by this much. Reality is, you don't have any for all the hype of the last 15 years. You don't have a single company above 10.

Utsav Somani: Yeah, the SaaS cycle. But let's also, I think, no chat with anyone from Bloom Ventures is complete without mentioning India 1, 2, 3. Something that Sajid Bhai, I think, coined as well. So 2025 highlights. Stating some key facts from the report that you put out, the Indus Valley Annual Report. India 1 was 140 million people, 15,000 per capita income. And you said that it's deepening, but not widening. And the real unicorn count is 91, not 117. Then another stat that you mentioned that Quick Comm is pulling consumers from Kirana. And the final thought, one of the highlights was for me, firstly, that India may have a deep-seek moment in AI. Any of these thoughts that you want to expand on for our listeners? They're all very interesting threads.

Karthik Reddy - Blume Ventures: I think the way to think about the deep-seek moment is because we're fresh off the AI Summit and that's the hot button topic. Like half of the tech universe spent some part of the week last week in Delhi. I think, you know, as much as we may tom-tom our own models, I think the key learning or takeaway for me is that there is so much infra. It reminds me of, I'm old enough to know the 1999 boom and the 2000 crash, right? So that was my first two years in the US, by the way. And it was like very revealing about how capital markets and hype cycles work. So I'm, different debate for another half an hour on where we are in the AI cycle. But the good news, the way I see it is that we're going to be over capacity on infrastructure, on AI, which to me then means, translates into our ability to build a more and more cost-efficient layer of applications on top of that infrastructure layer. I'm not, I'm not like losing sleep over the fact that we have to win on sovereignty alone or have to build our deep-seek per se. If we can take a branch of any open source and start building our own for our own applications, which cater to everybody outside of the 140 million, to me, that's more interesting. If you're building only for that 140 million, you actually shouldn't be in India. You should be in the US and actually build to an even richer set of people, right? Why are you catering to like a rich crowd, which is very selective and very choosy and has a global knowledge of every product that's out there? If you're building for the next billion people, and that could be education, that could be skilling, that could be higher productivity. So you, the form, it was infra, then it was form factor, then it was again infra with digital public infrastructure. So similarly, if you have an infra, I'm combining all the points you raised yourself, trying to be clever about it, that to me, the ability to build AI applications, which cater to the billion people is a more interesting problem as where I sit today, right? Because it allows me to then imagine 45 billion people who I can go and sell that to, which no American company can do, is my thing, right? And I don't want to compete with the American company. And I think the Chinese are going to be happy catering to their local market and trying to win different battles on drones and deep tech and hardware. And so I think there is a UPI moment waiting to happen in AI.

Dhruv Sharma: Is that why the frame has shifted to diffusion now?

Karthik Reddy - Blume Ventures: Maybe, maybe. But it's also the reality of, I think, what the country needs, right? Like, so you haven't built consumption power or earning power or high sort of factor output or productivity or utilization of labor in the first place. What are you trying to, like, what are you solving for them? Like, how can you solve more consumption for them, right? And so I think everything should be geared towards making them more superhuman than running a bike at this point, right? And so that's kind of, if that's our future, then we're screwed anyway. So that deepening is what's going to happen and the widening will not happen. And we need the widening moment to happen. And I think we should take advantage of this cheaper and cheaper AI and try and build stuff which can solve for that. Like, I feel like you can rewrite and leapfrog, for example, education, like, afresh, given what tool sets you have today versus just the fact that, oh, there's connectivity and I can push it to the frontier using a mobile phone. That's not good enough, right? Here you actually can replace all relatively poor teaching, you know, mechanisms in every part of the country and then just try to level up and get every kid.

Dhruv Sharma: This can literally be personalized tutoring at scale.

Karthik Reddy - Blume Ventures: Also, we tend to trivialize it by thinking of it only from our lens. You have to think about some kid who's born in a village and basically doesn't have English as a home language and is not in a city and still has to, by year four or year five of their life, look equally competitive in terms of their ability to pick up and grasp the knowledge that you're giving them.

Utsav Somani: Intent and motivation, right? I think you give somebody, I mean, everyone has access to ChatGPT, but what do they do with it also? Assume that language barrier is solved, intent and motivation.

Karthik Reddy - Blume Ventures: I think all of that, like not being dependent on ChatGPT, which has its own agenda, its own price point, we need to start evolving these at like price point scale applications, which ChatGPT shouldn't even care about, if you ask me, right? Because that's not their audience, right? And so it's like, if you think about it, YouTube is far, far more punchy and powerful in this country than Google, right? I don't think as many people use Google search engines every day as they use YouTube, right? And so it was a need of this. I mean, Google happened to happily have both products, but we could have built a better YouTube if we actually had the tech. And maybe that wasn't possible 20 years ago, but if you're making that excuse now in 2026, we have a problem.

Utsav Somani: Karthik, we have a couple of minutes with you. I have one final question. You've spent 15 years in the startup ecosystem. You've dealt with so many founders. You've assumed that listener has already listened to everything that you've written and said. What are three things that you'll say, which you've never said before as general company building advice for the future that we're heading into?

Karthik Reddy - Blume Ventures: See, I think it's become, I don't know if I have three, but like, I feel with each passing, like this funnel has become so difficult for a founder to overcome. And, you know, the government will sit there and say, oh, you know, startup 2026, 10-year anniversary, we should fund every nook and corner in the startup. They don't understand capital markets are not aligned like that. We're not a charitable service. We're trying to make money. And now because of this funnel, like widening, deepening, simultaneously trying to widen, deepen and generate the alpha outside, the size of the outcome and the scale and the timeline it's taking to build that. Basically, if a founder is not ready with an idea that they're madly passionate about, you know, solving for 15, 20 years, don't even get started. Just go take a good job. They're very good startup jobs right now, right? You don't have to complain that they're boring startup jobs or, you know, I have to go and be a banker or a consultant. There are great jobs. Go solve that problem elsewhere. Check out every two, three years. No problem. Don't go and waste your time being a founder. So that's one. I think you have to be like, I just came off a pitch like that before I started this call. He's mid-20s. And I think I believe him when he says he'll be building for the next 20, 30 years. When Rajan of Slice was told, asked by the RBI, are you capable of running a bank? And he said, yes. He has to believe that he's going to run it for the next 20, 30 years. So I feel like that's my biggest takeaway for founders. There's no shortcuts. You can make money in four years and you can check out. I don't think you'll be remembered. You'll be forgotten by the eighth year, is my take. Right. And I think that's the biggest takeaway. We haven't built legendary Nasdaq-like tech companies in this country. So that's the other lens. I feel, maybe people have heard it before, but my favorite wish list for this country is that we have a Nasdaq 100 equivalent in 2040. 100 great companies, which are all publicly listed, have been listed for 5 to 10 years or 15 years before that. And that people are buying their tech index day in and day out. The fact that we don't have a small cap fund for tech only. We don't have a nifty tech index, new tech index. And it's just appalling that we haven't even built that many tech companies worth indexing. And so that has to happen. And I think in that path, how many of our IPOs you can count off between 2010 and today? I think we're going to do 100 between today and December 31st, between Jan 1st of this year. So we're on a 20-25 per year run rate ad infinitum, if you ask me. Because I think India's public markets are far more resilient and capable of taking far more of these companies than anyone imagines. There's a lot of appetite to buy at 500 crores, 1,000 crores, 2,000 crores, 5,000 crores. Everything doesn't have to become a unicorn before it lists, which then lends into my first point that you need to be able to build to perpetuity because that's what a public company wants, public investor wants. And so and then to tie that up, fundamentally, you need to know your rate limiting factor on how much capital is required to get to profitability. It's a choice not to be profitable, but not knowing how you can get to profitability is stupid, right? And of course, risk capital should take all those bets in the first two years, three years, four years. That's why series A and B and seed capital is all risky. But you can't cross a... Like Praveen Jadhav of Dunn told me, made a fantastic line. He said, I can't talk to your AI, talk about your AI companies or deep tech companies. If you're building for the Indian consumer or SMB market, and you haven't figured out how to be profitable after raising 100 crores of capital, you should bloody kill the business because you're doing something wrong, right? The math of how you're building is wrong, right? And maybe quick commerce and things like that will not qualify because there's a network effect. You're trying to build a nationwide business overnight, which is not easy. But those exceptions apart where, again, infrastructure elements are very, very expensive. If you're building like a digital business or you're building like, you know, something which has unit economics, which haven't been figured out after you've raised 100 crores, there's something wrong.

Utsav Somani: All right, Karthik. I think that's a good note for us to end on. We'd love to have you back. Bring Sajid Bhai as well. I think Sajid Bhai will also break down India 1, 2, 3 for us and give us a taste.

Karthik Reddy - Blume Ventures: Yeah, absolutely. I think he's dreaming up the new edition of the Indus Valley. So sooner than later, he'll be on your show because we pushed out the release dates. We usually used to do it around the bloom day, the last three editions or four editions. And now the fifth one's deliberately being timed differently. So he'll tell you more about it when he catches up with you.

Utsav Somani: We'll have him break it down on the show with us. Thank you for coming on the show, Karthik. Thanks for having me. Yeah, see you. All right, listeners, let's welcome our second guest for the show today, Vineet of SuperTales. Vineet, welcome to the show.

Vineet Khanna - Supertails: Hi, Rishabh. Hi, Dhruv. Thank you for having me.

Utsav Somani: Actually chatting with two dog lovers. There was a point where I was telling Dhruv that I want to bring my pet onto the show, but I was worried that he might pee on the camera or the wire. So I think I might have had some technical glitches there. But you guys started out delicious. At what point did you decide we have to get into the pet care business?

Vineet Khanna - Supertails: So I think even before we started, me and Varun, we know each other for almost 18 years now. He was my junior at campus and my co-founder over here. Back in 2017-18, when we were leaving Snapdeal, we were thinking about this category, the pet care category. There were enough markers to show that India is going to evolve into a bigger and a less nonniche category of pet care in the country. But I think we felt that we were not ready to build a business. We didn't know how to raise funds. We had some understanding of how to build teams and scale businesses. That's why we ended up joining Licious. But back in 2021, when COVID happened, we had this theory about why pets would grow in India. And we saw it play out during COVID.

Utsav Somani: Global income, no kids, one pet. Was that the thesis that played out?

Vineet Khanna - Supertails: Actually, a little more than that. Delayed marriages, lower kids because of fertility rate drop and a lesser intent to have kids. And money in the pocket, which means rising disposable incomes. Now, if you combine all three of them, you need to spend somewhere and you need to also fulfill your hormones around companionship, which you're not getting from a partner. You're not getting from a kid, which is the next best thing to fulfill that. Scientifically, it's pets. Now, this theory got accentuated during COVID because people were marrying even lesser because they were uncertain about it. You know, what's a fun in a 15 people marriage? Because, you know, government had put restrictions that more than 20 people can't be there for a marriage function, etc. People were also not planning families then because again, uncertainty was looming large. So people should have kept more pets.

Dhruv Sharma: And yes, I might have a different theory to... I'm sorry. I might have a different theory to offer you on COVID and pet ownership, right? Off late, I've been reading this book about Siberia, where, you know, they have an eight-monthlong winter and they care deeply about their pets because apparently when, you know, it's an eight-month-long Siberian winter and you're locked indoors, they say the pets act as emotional buffer zones between family members. Interesting.

Utsav Somani: So in India, we don't have winters.

Dhruv Sharma: So we had COVID, but we had COVID. So yes.

Vineet Khanna - Supertails: So interestingly, Dhruv and Utsav, in any other evolved pet care economies, whether it was the US or the China, there was a life event which happened in those countries which led to rise in pet ownership. The single-child policy of China, the Great Depression, the World Wars, all of those kind of big events have led to rise in pet ownership. That was the catalyst that India needed in the form of COVID. And this category was on the right side of the pandemic. And ever since then, it has only been growing.

Utsav Somani: And what is the market size now? I read a number 34 million. Is that accurate? In terms of number of pets? Yeah. Or households having pets, I think.

Vineet Khanna - Supertails: Yeah. So now, at this point in time, India has about 40 million households having pets, which is India, interestingly, the fifth largest pet population in the world, whereas it is not even in the top 100 pet categories in terms of revenue or market size in the world. To add to those 4 crore pets that are inside a household, there is an equal number out there on the street as well. So we have community animals, which is slightly larger than the ones which are inside the household as well. Now, there is no dearth of pet population in the country, or there is no dearth of animals who can become pets or who are already pets, because adoption is also becoming a big thing now than just getting purebred dogs or cats. So at 40 million, it's a decently large market. What the category is growing is not on account of just pet population. That would have been an obvious lever of growth. And then it would have been growing in late single digits or early double digits as well. But what is compounding this growth is not just growth of population, but growth of involvement and growth of awareness as well. Involvement, the pet has moved from being a guard dog to sitting beside you on the couch. The cat is no longer looked at as a taboo, but it is considered a sibling by the new Gen Z, Gen Alpha pet parent. And there is a lot more awareness as well. There is a lot of things that pet parents didn't know needed to be done with their pets, which was leading to lower spends per pet, lower categories exposed, et cetera. Now that is changing. Growth of involvement, growth of knowledge and of course, growth of population. All three bode very well for the category for the next couple of decades, at least.

Dhruv Sharma: Oh, yes. Vinit, how much does an average pet parent spend on having pets these days in a year?

Vineet Khanna - Supertails: So see, in India, the pet parent spending on their pet is seen in a very different lens. The simple reason is that in India, more than 90% of the pets still eat home cooked food. Now, that doesn't count anywhere because it is probably sitting in a big basket, bill or a delicious order, or maybe a purchase from your local grocery store. But a dog's got to eat when a dog's got to eat. So which means they are eating every day. Now, what is actually spent in the terms of organized, you know, pet care spend averages to about 3,000 to 4,000 per month per pet. But actual consumption, even if we were to feed our pets, just simple dal rice, chicken rice at home, the actual consumption is four to five times of that, which means if every pet was having the diet that they need, this is already more than a $10 billion consumption market. However, it translates only into a $2 billion or so actual pet care market because the remaining seven to $8 billion is sitting in various different categories disguised as human food.

Dhruv Sharma: So that is- Maybe the other question to ask is if this, let's say if they're spending a hundred rupees in the year, what's the breakdown of how those hundred rupees get spent across consumption and also, of course, health and, you know, other forms of upkeep and even getting someone to walk them and so on?

Vineet Khanna - Supertails: So there are large to broad buckets, which is supplies and healthcare. Any other services apart from healthcare is very small and upcoming in India. It is not a very large proportion right now. Almost 60 out of the hundred rupees goes into food and all forms of pet supplies, whether it is, you know, their daily occurring nutrition, whether it is their litter supplies, whether it applies to a cat, whether it's non-food accessories, clothing to bedding to whatnot that is growing now. About 35 rupees or so out of these hundred rupees is spent on healthcare with an almost equal division between medicines and the healthcare service. The healthcare service being a visit to a vet, a vaccination, any form of OPD, general checkups, and even the less frequent IPDs or surgeries or procedures. India is a young pet economy right now. The average age of the pets in the country is close to four years. Four to five years. So, which means that the pets have yet not aged for them to even grow into healthcare. In an even more evolved economy, let's say a hundred billion dollar market like US, or now it's actually 150 billion dollar market. This split goes down to only 40 rupees for supplies, 40 rupees for healthcare, and 20 rupees for the other services. In India, you can see there is scope to grow in each of the three. One is only penetrated at five rupees, which means it is very, very underpenetrated. Healthcare is still below its average of what the category is represented outside. And food, whatever it is worth right now, it's only 20% of the actual consumption that is happening for the pets. So, whichever category you pick up in, whichever subcategory you pick up in this category, everything seems like a desert. You pour any amount of water, it would just soak it in.

Utsav Somani: Let's talk about the headlines. You announced a $30 million round. So, congrats on that milestone. Thank you. Where does this money go?

Vineet Khanna - Supertails: I think before, if I could throw light on what this money would do, it would be important for us to talk about what SuperTales is building, because that's the context of where we put it. So, we are not building a commerce marketplace for pets. Commerce marketplace can be built by many people, but what we are building is a form of pet care infrastructure. We are building an ecosystem which brings continuity of care. And why, I'll dwell a little more about why this category requires continuity. It's a very, very emotional category. In an emotional category, trust is never built again and again. Trust is built once and you would want to continue that trust for every touch point and every need that you may have as a pet parent. Quite honestly, in India, pet parenthood is harder than it should. A pet parent should be able to take care of a pet in a much, much easier way than what it is able to do today in the country. The reasons, on one side, there is a fragmented ecosystem, which means continuity of care is not there. Food, hair, medicines there, medical records nowhere. And on the other side, the pet parent is knowledge deprived. They don't know about actually what is right and what is wrong as well. However, emotion is extremely high. Now, if you club all these three things together, continuity is the best solution. I don't want to be running from pillar to host for the different needs of my pet. So what we are building is an infrastructure which builds continuity. What does that continuity means? Is these three layers of infrastructure. The first infrastructure is immediate needs infrastructure, which means the pet supplies, the medicines, all the products should be available quickly. And hence, we are spending on, you know, quick delivery infrastructure for pets. It might seem like, you know, why do pets need food immediately? But the Gen Z pet parent and the mission critical use cases that even reside in the pet category, which is the food is just over and, you know, your pet has got to eat in the evening. Your litter box is smelling and, you know, there's no litter at home. And stuff like that. So there are mission critical use cases for which we are building the immediate needs infrastructure. The second infrastructure we are building is the healthcare infrastructure. So whether, you know, the pet parent needs an access to a veterinarian, which is not easy to find. There is a supply gap there in the country, especially high quality veterinary access. When that pet parent needs a vet, the vet should be available across channels, across formats. So we're building an infrastructure wherein the pet parent can get access to a vet over a chat, a call, a video at home or a 15 minute driving distance of a clinic. Now, no matter what the need is, from the smallest query to the biggest, you know, healthcare need of the pet.

Utsav Somani: This ecosystem should be integrated and be able to fulfill that. And what's the scale of this ecosystem? What are the latest numbers that you can share publicly?

Vineet Khanna - Supertails: So we're close to about 7 lakh customers at this point in time. We're closing in on our, you know, our million consumer base. We do about 250 crore analyzed run rate at this point in time. While most of the layers of this infrastructure are just getting built up. So for an example are, and I'll actually close the answer of the infrastructure of the third aspect, which is how do you connect all of this? You have supplies somewhere, you have a supply chain ecosystem that you're building. You have a healthcare ecosystem, which is a completely different ballgame, you know, high touch point, dense, offline and in at home infrastructure. How do you connect all of this? And that's where we have built and we've been successful in building the data infrastructure. You know, what is this data infrastructure is that I know your pet. I know that he or she is a Labrador. He or she is six years old. He or she is due for a vaccination next month. Probably time to change their nutrition because, you know, they are in that phase. I also know many, many more things about the pet, which any transactional commerce business cannot even imagine or dream to know about. Now, this data builds the continuity across the different offerings that we have, because if the pet parent that is doesn't have the knowledge, then it is our job to build the continuity through relevance, through recommendation and through preempting the need before the need actually comes. It's a long shot at building this, you know, infrastructure because we feel an emotional category in an underpenetrated geography like the country and not a hundred billion dollar market size. Size is not at our side at this point in time. There is no other way to build a large outcrop. The only way to build a large outcrop is get a pet and a pet parent into your ecosystem and then build four walls around them, not in a suffocating way, but in an enabling way, in a way where they feel enough trust to be able to get all the needs of their pet through that ecosystem. And the needs of that pet, like the needs of a human kid, are unique. They are not cookie cutter needs. What a need of an eight month old Persian cat is going to be very different from a four year old Shih Tzu. Maybe residing in Delhi, even different from, you know, one.

Dhruv Sharma: Do you think very often pet parents don't realize that certain, you know, categories of animals or breeds just don't belong here in our climatic conditions and still insist on bringing them on board?

Utsav Somani: Like huskies and stuff, even Rottweilers, of course, for different reasons, for safety reasons, I think they were banned in, I don't know, at least in Delhi, where you can't have a Rottweiler or a husky.

Dhruv Sharma: I think to a large extent, our urban lifestyle is that loggerheads with pet ownership. And I think therein lie the opportunities to solve all of these different problems. And then, of course, a lot of time, a lot of people are coming into first time pet ownership and lots of opportunities there.

Vineet Khanna - Supertails: I think what's more interesting about this category is that the category is, category 10 years from now is not going to be defined by anything from the past. It's a 10-year lifespan category, which means the category that will exist 10 years from now, the shape of the business or the shape of the consumer needs that will exist 10 years from now will be from pets and pet parents for which the pets are not even born today. They will be born in the future.

Utsav Somani: It is actually a company in the US and I think they've made some headway with a lawyer, I mean, it's called Loyal, where they're trying to get this drug out in the market. The trials have been successful where they extend the lifespan of a dog. I think it's dogs or maybe cats also, but dogs definitely. But as a final closing question, we need, unless Dhruv, you have something else? No, go for it. Do you guys have pets?

Vineet Khanna - Supertails: Yes, all of us have pets. I have a dog whose name is Satchmo. He's now five. He's not my first pet, but yeah, he's my latest one. And Varun and Aman, both of them have cats. Before, you know, we didn't touch upon that point, but I think India is on the verge of a cat pet population explosion. You know, all the variables that we mentioned, add smaller apartments to that, add lesser time available to that, add the hardships of a pet parenthood to that, cats fit in very well. You know, lower maintenance specs, contrary to popular belief, equally loving than dogs. And, you know, that's why the growth in the cat population is way, way farther than, you know, any other subcategory. In fact, while the population of India is 80-20 in between dogs and cats, the business on our platform is in favor of cats. So the cat business is bigger than that of the dogs. Cats are obligate carnivores. They can't eat home cooked food. We shouldn't give them milk contrary to popular belief, once again. But yeah, that's why, you know, the packaged food penetration is much higher with cats. The growth rates are higher with cats. And hence, two of the three founders have cats.

Utsav Somani: All right. I think that's a sweet note to end the show on. Thank you so much for coming on our Monday stream. Greetings. Cheers.

Dhruv Sharma: Thank you, sir. Thank you, Dhruv. Thank you so much.

Utsav Somani: Bye-bye. All right, listeners, we'll see you on Wednesday at four o'clock. Thanks again for tuning in. Bye-bye.