Mar 21, 2025 · 1h 18m · neon-show
10 Unicorns, 5 IPOs, 26 Acquisitions – India’s OG VC, Avnish Bajaj On Why Only Founders Matter
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In this in-depth conversation on The Neon Show, Avnish Bajaj, founding partner of Z47, breaks down the mechanics of top-tier venture investing, the shift toward operator-led funds, and the dynamics of backing repeat founders. He offers an extensive analysis of India's macroeconomic inflection, the evolution of global LP capital, and the urgent imperative for Indian entrepreneurs to build deep-tech and AI powerhouses.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Siddhartha as informed peer 5.0 Guest teaching 3.8 Guest disagreement 1.5 Siddhartha pushing back 1.2
speaking balance: gold is Siddhartha, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 58:40 Urgent callout of Indian deep tech complacency
Bajaj forcefully rejects the narrative that Indian entrepreneurship is ahead of the market in AI and semiconductors, criticizing engineers earning $400k in Bangalore for staying in comfortable jobs rather than building foundational companies.
Hardest push from Siddhartha ▶ 1:07:55 Challenging the premise that seed is the only battleBajaj playfully dismisses Ahluwalia's thesis that seed is the sole stage that matters in venture, asserting that long-term relationship compounding and preemptive growth rounds matter just as much.
Biggest teaching moment ▶ 38:20 Unpacking brutal LP perceptions of India ventureBajaj educates the audience and host on institutional LP psychology, detailing the historical lack of venture distributions and candidly recounting brutal LP acronyms like 'India stands for I am not doing it again'.
Siddhartha holds their own ▶ 1:02:30 Diagnosing the enterprise software scarcity mindsetAhluwalia demonstrates deep operator domain expertise by using vivid cultural metaphors to explain why Indian SaaS founders historically underpriced deals and struggled to move upmarket to large enterprise ACVs.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Siddhartha as informed peer | Guest teaching | Guest disagreement | Siddhartha pushing back | Why |
|---|---|---|---|---|---|---|
| Winning Second-Time Founders and Building Reputation as a Moat | 6 | 2 | 1 | 1 | Ahluwalia and Bajaj establish an easy, peer-to-peer dialogue discussing second-time founders. Ahluwalia shares his own experience as a founder-turned-fund-manager and cites concrete examples like Atomicwork. | |
| Operator-Led Venture Investing and Long-Term Relationship Building | 5 | 3 | 1 | 1 | Ahluwalia brings up Grey Labs to discuss deal access, and Bajaj explains Z47's operator-led investment model and multi-year relationship cultivation. | |
| Engaging Hyper-Curious Repeat Founders and Community Thought Leadership | 5 | 4 | 2 | 2 | Ahluwalia questions if celebrated repeat founders guard their time too closely. Bajaj flips the question back onto the host, explaining that hyper-curious founders always make time for high-value thought partners. | |
| Sector Pod Specialization and Compounding Flywheels Across Markets | 4 | 3 | 1 | 1 | Ahluwalia asks how Z47 competes across diverse categories like B2B, fintech, and consumer. Bajaj outlines their sector pod structure and compounding referenceability flywheel. | |
| Tracking People Over Deals and Disciplined Valuation Playbooks | 4 | 3 | 1 | 1 | Ahluwalia inquires about other competitive moats. Bajaj shares their Monday meeting habit of tracking people rather than deals and maintaining strict valuation discipline. | |
| Evolution of India's Digital Infrastructure and the Birth of Z47 | 4 | 5 | 1 | 1 | Ahluwalia asks about Z47's evolution in aggression over the past five years. Bajaj provides a historical masterclass on India's DPI buildout from 2016 to 2020 that unlocked larger fund ambitions. | |
| Transitioning from Hustle Culture to Deep Processing and Operator Talent | 5 | 4 | 2 | 2 | Ahluwalia asks whether team KPIs are based on coverage and observes the shift from McKinsey consultants to ground-up operators. Bajaj nuances the observation, explaining how mindless hustle becomes a liability as markets deepen. | |
| First-Time vs. Experienced Founders: Archetypes, Risk, and Velocity | 4 | 5 | 1 | 1 | Ahluwalia probes Bajaj's preference for second-time founders. Bajaj breaks down empirical data on value creation shifts and contrasts first-time fearless disruption with experienced founders' distribution-first approach. | |
| Defining Founder-Market Fit and Capital Custodianship | 7 | 2 | 1 | 1 | Ahluwalia articulates a compelling definition of founder-market fit using family business analogies and introduces the speed versus velocity distinction, which Bajaj enthusiastically endorses. | |
| Historical LP Perspectives on India: From Scepticism to the 2024 Inflection | 5 | 6 | 2 | 1 | Ahluwalia asks how global LP allocation to India has evolved across cycles. Bajaj delivers an unsparing analysis of LP cynicism toward India and the historical lack of venture liquidity. | |
| Beating Public Market Equivalents and the Shift to Profitable Scale | 4 | 5 | 1 | 1 | Bajaj explains the PME benchmark and the critical transition of Indian startups toward EBITDA profitability and sustainable public market listings. | |
| Global LP Asset Allocation Dynamics and Evangelizing India | 5 | 4 | 1 | 1 | Ahluwalia and Bajaj discuss geographic allocation mechanics among endowments, sovereign wealth funds, and fund of funds, sharing a mutual sense of responsibility to evangelize India globally. | |
| Backing Digital Industrialists and Multi-Business Tech Founders | 5 | 4 | 2 | 1 | Ahluwalia questions backing single founders across multiple distinct ventures like Bhavish Aggarwal. Bajaj passionately defends tech founders as modern digital industrialists akin to Tata or Ambani. | |
| Overcoming Complacency: The Urgent Imperative for Indian Deep Tech & AI | 6 | 5 | 4 | 1 | Bajaj delivers a sharp critique of complacency in the Indian deep tech ecosystem, highlighting high-salaried chip engineers in Bangalore who avoid entrepreneurial risk while Ahluwalia adds color from Silicon Valley. | |
| Rapid Fire: Founder Resilience, Enterprise Sales, and Shedding Scarcity Mindset | 7 | 2 | 1 | 1 | During a rapid-fire exchange on enterprise sales, Ahluwalia introduces the concept of the Indian scarcity mindset causing founders to sell too small, which Bajaj praises. | |
| Identifying $10B Outcomes and The Massive Service-as-a-Software Wave | 6 | 4 | 1 | 1 | Ahluwalia brings up Atomicwork taking on ServiceNow, prompting Bajaj to elaborate on the emerging service-as-a-software paradigm that could unlock massive TAMs previously dominated by IT services. | |
| Seed Strategy, P2P Framework, and Thinking in Lines Over Dots | 5 | 4 | 3 | 2 | Ahluwalia asserts that seed stage is the only battleground left for VCs. Bajaj playfully pushes back on the host's framing, explaining Z47's P2P framework and philosophy of thinking in lines rather than dots. | |
| Anti-Portfolio Retrospective and Making 30-Minute Founder Decisions | 4 | 4 | 1 | 1 | Ahluwalia asks about anti-portfolio lessons. Bajaj shares that their biggest misses occurred whenever they doubted a strong founder because of skepticism about the underlying market. | |
| Z47 Culture: Conviction Investing, Relentless Inputs, and The Zen 10 | 4 | 3 | 1 | 1 | Ahluwalia closes by asking about partner longevity at Z47. Bajaj attributes team cohesion to relentless input metrics, conviction investing, and core values like the Zen 10. |
Statements from this episode (35)
Bajaj: Almost everything in VC can be copied except reputation
“If you look at venture capital, if you look at most businesses, almost everything can be copied in no time. Reputation cannot. Reputation is a moat. Reputation compounds with time.”
Bajaj: Repeat founders give time to VCs only when they learn something
“My bet is that if you feel that you will learn something, you'll give your time. So that's the bar. The founder has to feel that they will learn something, right?”
Bajaj: Z47 discusses people rather than deals in Monday partner meetings
“And by the way, in our Monday meetings, we discuss people, not deals.”
Bajaj: Founders frequently lower their valuations to include Z47 in rounds
“Generally, we are not the highest price payers... Often what happens is our peer group is paying much more. And then we will tell the founder, we are not in at that price and believe it or not, the price actually comes down. It doesn't come to our price or it …”
Bajaj: The first decade of Indian venture capital was a write-off
“Most of us VCs got started in 2006. I would say first decade was a write-off.”
Bajaj: Z47's subsequent fund will outperform its $250M fund
“So we have one fund, Razorpay, Ola, five-star, off business. Two hundred and fifty million. So that's a, you know, a very strong multiple, but our next one will be even higher multiple than that.”
Bajaj: Demonetisation was the best development for Indian tech VCs
“Everybody said demon was a very bad economic decision. It was a bad, best decision for people like us because it brought everything online. Payments exploded.”
Bajaj: Z47 measured investment team productivity on meeting volume until 2016
“Until 2000, 15, 16 they used to get measured on coverage. And you know, we had some review meetings where people would say, how many companies have you met and this, that. So it created what we call a met culture meeting. The quality of the meeting may have be…”
Bajaj: Maximizing deal coverage works in thin markets but fails in mature ones
“When the markets are thin, coverage is a good measure. So, including me, we used to go to IITs, we used to go to conferences, we used to speak at conferences, you know, honestly conferences, you get mobbed later, you are, you know, taking, giving out your card…”
Bajaj: In 2016, only one Indian startup over $500M had an experienced founder
“So actually the number was in 2016, the number of companies worth more than five hundred million, worth 13, and one was from an experienced founder.”
Bajaj: About half of Indian startups valued over $500M have experienced founders
“When you looked at fast forward to today, about 50%. So they are, I think the 500 plus are 150 or whatever similar to the unicorn number because the 500 to one billion is not that many. And more about half are experienced founders.”
Bajaj: Experienced founders avoid market risk and focus more on distribution than product
“What experienced founders do differently? They generally don't take market risk, right? They will go after deep markets business. It's much easier to build businesses in deep markets. Okay. Having built a company once, they will typically be very profit driven…”
Anil Goteti returned investor capital after US-India SaaS venture stalled
“So when Anil Gotti was starting his second company, he wanted to do U.S. India SaaS, even though the founder market fit was questionable. And we told him, And he said, no, e-commerce, whatever. And was not looking in the direction of getting the product market…”
Bajaj: Public market investors, not VCs, consistently generated returns in India
“Because investors know India and they have generally mixed to negative views because venture capital has had liquidity issues. Private equity has had high valuation issues. Actually the people who have consistently made money have made money in the public mark…”
Bajaj: 2024 tech IPO wave proved venture liquidity in India
“24 of many IPOs happened. You know, we had Ola Electric go public. We had Five Star go public in 22. Many LPs saw a lot of liquidity, Swiggy, First Cry. All of these things are great for the market, right? So that changed the narrative that this time India is …”
Bajaj: India is definitively benefiting from institutional LP flight from China
“And then by the end of 24, I think it became clear to people or many people took the call that they don't have the patience to stay or think about more investing in China or stay invested in China so that now India is seeing a benefit. Definitely it's seeing a…”
Bajaj: Top five Indian VC firms easily beat public market equivalents
“So far, actually, interestingly, on IRR and multiple, we very easily beat it. All of us, the top five, you said, you know, the five firms or whatever, everybody beats it.”
Bajaj: India's tech investing cycle will run for another 15 to 20 years
“And Joe China may eight to 18, Joe us may nine to five to 2010. Well, India has started in 23, 22, and it'll run through because India, we're slowly. So it'll run for another 15 to 20 years.”
Bajaj: A deluge of profitable Indian tech IPOs will follow the market correction
“And therefore, I think once this market correction gets over six months, nine months, 12 months, so many companies have filed, you will see a deluge of IPOs, but in a good way.”
Bajaj: Global LP allocations to India will never reach 30 percent
“India has always been in the single digits at best, maybe 10, 15%. I think, I don't think India will go to 30% because I think people have learned a tough lesson in China.”
Bajaj: Multi-business tech founders should be embraced like traditional conglomerates
“When you look at Tata, Ambani, Birla, Adani, all of these guys, they are in multiple businesses. That's considered a feature. When a tech entrepreneur wants to do multiple businesses, it's considered a bug.”
Bajaj: Krutrim effectively combines OpenAI, Nvidia, and AWS into one startup
“Krutrim is one of them. So ambitious. You know, it is effectively open AI plus Nvidia plus your Microsoft or AWS all in one, right?”
Bajaj: Founders must achieve profitability in one business before starting another
“Bhavish made his business profitable before he went and did something else. You can't be loss making in one business and start loss making another business, right?”
Bajaj: Indian entrepreneurs are lagging behind the market in AI and deep tech
“I have always felt that the entrepreneurs are ahead of the market in India. This time I feel entrepreneurs are behind the market, right?”
Bajaj: 90% of global semiconductor chip design goes through India
“If you look at semiconductors, 90%, I don't know if you know this statistic, 90% of chip design goes through India, including the Chinese trips.”
Bajaj: Ola founder Bhavish Aggarwal is the most resilient entrepreneur globally
“I mean, that's an easy one. Just Bhavish given all that he has gone through his Ola pretty much shut down during COVID. He fought Uber. I mean, there are so many different examples, but it has to be him.”
Bajaj: India has never built SaaS companies reaching million-dollar ACVs
“They don't want to operate in this five, 10, 20,050 thousand ACV. They have aspirations to do hundreds of thousands or millions in ACV. India has never done that.”
Bajaj: Multi-billion-dollar startup potential becomes clear within 18 to 24 months
“You don't know at the start you, but you typically, my experience has been. 18 to 36 months, mostly 18 to 24 months, one starts getting an idea. Is this a multi-billion dollar outcome or is this a capped out?”
Bajaj: The TAM of services is 10 times that of software
“The time of services is 10 X the time of software.”
Bajaj: Hundreds of billions in value will be created in Service-as-a-Software
“I hope again, Indian founders wake up to it because the market cap that was created by Infosys and TCS. Is waiting, and I think TCS must be again, two hundred billion and whatever. That's waiting to be created in this service as a software. And we have an edge…”
Bajaj: Z47 never joins competitive rounds, strictly choosing to preempt or pass
“We are never market participants. We are never participants in market rounds. Very, actually never. We are always, so we have this concept of P to P. Okay. There should be only two answers to a deal situation. Preempt or PWC, which is pass with conviction. The…”
Bajaj: Z47 rejected an early Flipkart meeting due to market size doubts
“Flipkart in particular, believe it or not, Axel had called me and they said, you know, we are doing this book site. And because you are an e-commerce founder, we want to be involved. I was like, I don't have internet users. So I didn't take the meeting.”
Bajaj: Z47 passed on Swiggy due to a portfolio conflict
“Swiggy where, you know, he emailed us proactively, but we already had a competing investment.”
Bajaj: Rejecting great founders over market doubts causes our biggest misses
“Every time we have violated that principle, it's our anti-portfolio. Every time we have followed that principle, it's a great hit in our portfolio. So Ola, we didn't believe in the market. We believed in the founder. So we have a line internally when somebody …”
Bajaj: First 30–40 minutes reliably determine whether to back a founder
“It takes me about 30 to 40 minutes of my first meeting to figure out if this is a, it may not be fully yes, but that I'm getting excited, right? Then you have to do a lot more work and it has, there are, I would say, 20 to 30% of the time, I'll end up in a sit…”