Lightspeed’s $500M bet on India with 1/3rd in AI Companies | Dev Khare

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Mar 28, 2025

Dev Khare, a Partner at Lightspeed Venture Partners with over 13 years of experience, discusses the changing investment landscape in India. He contrasts two funding models: the traditional Silicon Valley approach with high initial burn rates versus the 'compounder' model that promotes gradual growth and profitability. Khare shares insights on the evolution of Indian startups, the rise of AI in enterprise solutions, and the increasing significance of second-time founders. His experiences highlight the unique challenges and opportunities within India's burgeoning tech ecosystem.

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ANECDOTE

OYO's India Adaptation Story

Ritesh Agarwal pivoted from an Airbnb-like model to fixing and aggregating broken hotel supply in India.
He recognized the need for quality, reliability, and pricing improvements before aggregation.

ADVICE

Embrace Organic Acquisition

Startups in India should develop organic or owned consumer acquisition to reduce high marketing costs.
Lower cost or organic acquisition strengthens sustainability and market fit in the Indian context.

INSIGHT

India's Compounder Growth Model

Indian startups often follow a 'compounder' model, growing steadily at 50-70% yearly without large negative cash flows.
This contrasts with Silicon Valley's high-burn, fast-growth approach and fits India's unique market dynamics.

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Is it time for investors to move beyond the valley when analyzing India?

Dev Khare, Partner at Lightspeed agrees.

He shares with us an interesting view on two funding models:

The Silicon valley model begins with raising millions of dollars & going through huge negative cashflow for years. Hopefully building a great product or maybe even creating a new market. And a few years later, comes out with super fast growth & revenue potential of millions & billions of dollars.

Whereas, in the Compounder model companies raise little to no funding in early days. They don’t go to negative cash flow, instead growing slowly. Not at 3x ,but at 50% and keep at it for some 10 years building a large company. Thus becoming profitable in a few years following a slow J curve, and raising rounds only to accelerate growth.

India has built exceptional companies in the software industry following this model.

But, we can all sense that lack of approval for India’s enterprise products, which we can confidently say has been achieved in the consumer markets.

With 13+ years at Lightspeed, Dev has backed companies like PhysicsWallah, Razorpay, PocketFM, ShareChat, Darwinbox, Portkey.ai, Qure.ai, and Accel Data.

Prior to VC, Dev started as a product manager then founded his company Covigo, a developer platform for mobile applications.

This episode promises an interesting discussion on building companies in enterprise.

0:00- Trailer

1:12 - Early days at Lightspeed India

8:11 - Learning curve of an Investor

11:52 - How OYO fixed supply when Airbnb didn’t

16:37 - Is organic acquisition now the norm?

19:02 - India must rediscover its AI edge

20:20 - Compounder v/s silicon valley companies

23:26 - Why Freshworks & Zoho chose mature markets?

27:40 - Can India create SAAS category leaders?

29:18 - Enterprise startups cap at 30%

33:07 - How a $3.2B company found its niche

37:42 - AI services & AI led services

40:37 - Lightspeed’s Investment thesis

45:34 - Why we have 70% second-time founders?

48:18 - Will ITC & Jio acquisitions set a trend?

52:37 - Are software IPOs sparse?

55:34 - India’s enterprise buyer market is small

1:04:47 - Missed investments & Lessons

1:06:28 - Why is India having a lag effect in AI?

1:10:19 - Has India built global enterprise products?

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Hi, I am your host Siddhartha! I have been an entrepreneur from 2012-2017 building two products AddoDoc and Babygogo. After selling my company to SHEROES, I and my partner Nansi decided to start up again. But we felt unequipped in our skillset in 2018 to build a large company. We had known 0-1 journeys from our startups but lacked the experience of building 1-10 journeys.

Hence was born The Neon Show (Earlier 100x Entrepreneur) to learn from founders and investors, the mindset to scale yourself and your company. This quest still keeps us excited even after 5 years and doing 200+ episodes.

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This video is for informational purposes only. The views expressed are those of the individuals quoted and do not constitute professional advice.

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