This year, ICONIQ led Anthropic’s $5bn Series F, ElevenLabs $180M Series C, Legora’s $80M Series B and TinyFish’s $47M Series A..

They are a media shy Wealth Mgt firm with $90bn+ of AUM who put their money where their pen is (quite literally)

Earlier this yr, they published their “State of AI 2025” report - now they’ve topped it up with several updates in a 73 page analysis of their portfolio companies.

Sharing a few takeaways ⤵️ (1) “AI” has changed what “best in class” means for Software

(a) OPEX leverage: ARR per FTE has increased 65% from ~$200K Pre-AI (2020) to $331K now; touching $390K for co’s with $500M+ ARR

(b) The goalpost “Rule of 40%” is now the “Rule of 60%” - BUT, there is ONE nuance: FCF margins are taking a hit - but growth rates are MUCH higher (even for “AI adjacent” SaaS co’s)

(c) NDRs (net dollar retention) also takes a hit - gold standard was ~135% in 2020; it is now down to ~115%. Elevated churn (experimental ARR, hype etc), competition & pricing pressure is hurting.

The change doesn’t impact Seed investors (like me) - but is VERY relevant for Growth & Public market investors.

Btw, ICONIQ’s Enterprise Five - ARR, NDR, Rule of 60%, Net Magic Number & ARR per FTE provides an excellent scorecard for Growth investors!

Doug Leone has been a Partner at Sequoia for 32 years now - he doesn’t do a lot of interviews - but his track record is incredible - ServiceNow ($187bn), Nubank ($73bn), Medallia (acq. $6.4bn) and he continues to serve as a board member to many companies.

Doug did a rare interview on the Training Data podcast where he answered some key Qs about investing in AI today; sharing a few notes from the same: (1) Where will value accrue in the AI stack? Applications!

“Values always accrues up at the application layer - near the customer, money & the business user.”

(2) Can you sit out of AI as an investor? Nope
”You are at the front end of a cycle, which doesn’t mean you have to invest in everything but you have to invest.”

(3) What to do about round prices in AI today?

“You see a small company with very good momentum in a front end of the market; you lean in and you hold your nose on price.”

(Arguably, Sequoia did this with Google back in the day; a $100M post money valuation for a Series A)

GFF is an annual circus show for Financial Services professionals, founders & entertainers. Hence, I chose to wear my customary Papa Pump outfit (IYKYK, comment below).

I spent most of my two days in meetings (managed to get 17 done!) and a bit of time at the exhibition booths; sharing a few notes from these meetings: (1) AI first collections agencies are emerging 🗣️

- Lazy VCs wrote this space off when Credgenics raised a $50M Series B from WestBridge in August 2023
- Collections is evergreen - stress emerges in each pocket at different times (e.g. unsecured PL, MFI etc)
- Due to competition now, Collections has moved from Software + Service to Outcome i.e. pricing based on ROR uplift delivered; this is a great pricing model for AI services
- The prev. gen of Collections companies were either offline agencies or human call centers or a hybrid of both
- The modern Collections agencies are building AI enabled Credit Engines i.e. a full funnel process to manage cases from pre-due to NPA; Voice AI to call || agents to email, WhatsApp etc || route optimization to direct field force etc

At a private event, the CEO of a leading Indian bank highlighted that over the next 3 yrs, they will spend ~10% of their IT budget on AI.

For context: The IT budget (headcount, Tech, outsourcing etc) at this size of bank would be ~₹2,500 to ₹3,000 crore per year

Single bank spend on AI is therefore ~₹250 crore per year (there are approx. 25 odd banks of this size or larger).

Now, there are 2 ways to interpret this ~₹6,000 crore ($750M) per year AI spending ⤵️ This depends on whether you are an optimistic or critic:

(1) Optimistic view: In 3 yrs, the actual spend would be X2 or X3 higher i.e. > ₹15,000 crore because some of the AI deployments will eat into the labor budget (check the example in this Thread below)

Indian banks are lighthouse customers (for SEA banks & rest of Indian Enterprise); therefore it would catalyze X5 further spending on AI - HUGE (~₹50,000 crore p.a.) opportunity within India itself - great for startups!

(2) Critical view: ~₹6,000 crore in AI spending is not sufficient to catalyze a new set of FinTech Infra vendors (centered around AI); maybe all of the incremental spend will go to incumbent service & Tech vendors

But, for the critics, I have 2 interesting examples from BFSI:

From 0 to $15M ARR in 90 days of launch - Emergent Labs is India’s fastest growing AI startup🤯

Emergent was founded a year ago by Dunzo’s former CTO Mukund Jha - they now have 57 team members (75% of headcount) in India

The velocity of product shipping & pace of ARR addition is insane; last month they were at $10M ARR - they’ve grown 50% MoM!

Sharing a few mind blowing facts about this company⤵️ The metrics are off the charts 📈
(a) 1.5 million+ unique apps created
(b) 1 million+ sign-ups to date
(c) 25,000+ paying customers
(d) 180+ countries represented in user base

Above was reported this month by the company during interviews with TBPN & with their early investor Together Fund (anchored by Freshwork's founder Girish)

Emergent is a great example of “Globally competitive product, built with love from India”

Reliance & Meta are together investing ₹855 crores to build AI Infra in India

RIL is also partnering with Google to build an AI data center in Jamnagar

At RIL’s 48th AGM, Mukesh bhai stated: “Jio promised and delivered digital everywhere and for every Indian. Similarly, Reliance Intelligence promises to deliver AI everywhere for every Indian”

“Reliance Intelligence” is RIL’s next bold bet after Jio ⤵️ Remember: RIL has partnered with both Meta & Google in the past for Jio

Jio raised ~₹150,000 crore from strategic & PE investors in early 2020 which included:

(1) Meta, who invested ₹43,574 crore (~$5.7bn) for 9.99% (announced April 22, 2020)

(2) Alphabet, who invested ₹33,737 crore (~$4.5bn) for 7.73% (announced July 15, 2020)

Btw, these two investments were strategic in nature e.g.

JioPhone Next was built with Pragati OS - a collaboration with Alphabet in Oct ‘21

Meta owned WhatsApp launched a deep e-commerce integration with JioMart in Oct ‘22

Jio is expected to IPO in the ~$110bn valuation range i.e. an acceptable 13% $ IRR for Meta & Alphabet

Meta & Alphabet may sell down some stake in the IPO (liquidity always helps drive re-investment decisions)

Btw, I had written about Jio’s upcoming IPO almost a year ago (nothing much has changed in the analysis) - bookmark for future reading:

x.com/Rahul_J_Mathur…

I read Ruchir Sharma’s new book “What Went Wrong With Capitalism?” earlier this week

Ruchir spent 25 years at Morgan Stanley & headed up their Emerging Markets investments ($20bn+ in AUM across funds)

He’s also a great writer on macroeconomics & history; there are 3 great points which he has made in this book ⤵️ First, I think it is important to set the premise of this book:

Ruchir highlights how constant intervention (bailouts, interest rate drops, welfare programs) from the Govt & Central Bank has altered the normal functioning of key economies:

(1) Recessions are less frequent but more severe

(2) Wealth is more concentrated (Top 1% of US controls 40% of wealth)

(3) Economies are becoming financialized (10% of income flows to Finance)

(4) Debt fueled economy: 80% of US lending happens in the shadow bank economy

(5) Big companies dominate: Low interest rates & high regulatory compliance requirements perpetuate oligopolies & monopolies

The funniest acronym used in the book was NINJA - a loan customer who has No Income (NI), No Job (NJ) and no Assets (A) - which is apparently Ruchir’s characterization of sub-prime lending in USA.

The 3 points most relevant to the common man are:

KFC’s sales per store in India is down 5.7% to ₹98,000 per day as compared to ₹1.04 lakh last year

The pressure isn’t just on KFC—McDonald’s, Pizza Hut and Domino’s are feeling the heat too.

“Maintaining last year’s sales numbers has become a big challenge” said Rajeev Varman, CEO of Burger King India

Yet, individual KFC franchise store operators struggling - KFC India has still managed to post ₹1,500 crore in profit (v/s ₹1,425 crore last year: First, let us understand why this dichotomy has arisen: Store owners are struggling but the franchisor (KFC India) is making healthy profits.

(i) KFC India is primarily run by 2 franchises : Devyani International (DIL) Sapphire Foods India Private Limited
(ii) DIL runs 70% of KFC India outlets with around 700 stores. On paper they posted 6.6% YOY increase in revenue to ₹2,178.7 crores from KFC - but this was driven by new store opening
(iii) DIL’s avg sales per KFC outlet has fallen. The profit margins has fallen to 15.1% from 18.3% - primarily due to higher advertisement spending & discounts.

KFC rolled out the “Epic Savers Deal” — 9 fried chicken pieces (7 boneless strips + 2 leg pieces, the most popular cuts) for just ₹299.

And, they launched a “Wednesday Special” - for ₹100 extra , customers could upgrade to a bucket with 6 additional wings

“It’s one of our boldest & most compelling value propositions to date” - Aparna Bhawal, chief marketing officer, KFC India

And, they spent a BUNCH on advertising - roping in The Great Khali plus Mrunal Thakur and comedian Danish Sait!

Therefore, total Sales rose - store margins took a hit; but here lies the nuance of the franchisee business:

Karnataka has become the 3rd state to pass a bill to protect Gig Workers

Soon, every transaction you make on Swiggy, Rapido or Ola will result in ~1% to 5% of the total bill being deposited into a “welfare account”

India is projected to have 2.3 crore Gig Workers by 2030

Here’s what you need to know about this bill 👇 Firstly, do Gig Workers need a separate labor protection law?

(1) These riders are called delivery partners - they are NOT employees and collect their payments as “commissions” from the company for completing an order; therefore, the traditional employee laws do NOT apply

(2) These riders work for 12 hours/day - due to (1) they don’t get PF, ESI & other social security benefits given by government/employers as they are not classified as employees.

(3) There is some gray area: An Instamart delivery person completing 10-12 orders can earn ‘minimum guaranteed income’ of around ₹1000. But, it comes with lot of terms and conditions.

(4) Since their income is highly variable - so skipping a Sunday, taking a medical leave for family or relaxing on a public holiday leads to loss of income (unlike all of us who get a stable monthly salary)

(5) Their job is high risk - road accidents, dog attacks & injuries from carry objects - while they don’t have Govt provided insurance - most platforms today have a Personal Accident cover for their delivery partners

Therefore, I do think passing these Gig Worker Laws is akin to the Factories Act (1881) - a new class of labor needs a new set of protections

According to MIT, 95% of organizations are getting zero return from GenAI pilots

MIT conducted 50 interviews, surveyed 150+ leaders & studied 300+ AI projects to highlight the “GenAI Divide” i.e. despite $40bn+ in spending on AI projects, only 5% of companies are able to extract real value.

Sharing 5 key takeaways for startup founders from this report ⤵️ Which functions are getting the largest AI budget allocation?

Per MIT, 50% of GenAI project budgets are going towards the “front-office” i.e. Sales & Marketing which includes:

(a) Outbound emails & calls
(b) Lead scoring & lifecycle follow-ups
(c) Competitor & sentiment analysis

Why? Outcomes in S&M impact top-line, output is measurable & deployments are visible (to customers & management)

The best anecdote (highlighted below) says:

"If I buy a tool to help my team work faster, how do I quantify that impact? How do I justify it to my CEO when it won't directly move revenue or decrease measurable costs? I could argue it helps our scientists get their tools faster, but that's several degrees removed from bottom-line impact."

As you’d expect - front office is a LOT of show - AI is unlocking real gains in the back office (more on this later)

Let’s start by seeing what Product Principles a startup needs to follow in order to succeed:

India’s ₹70,000 paints industry has shrunk for the first time

Market leader Asian Paints has several problems at hand: Revenue remains flat, a legal suit from Birla Opus and the merger of JSW Paints & AzkoNobel (Dulux)

Analysts had dismissed Birla Opus saying it would get ~2% market share; the company is at > 8% market share in less than 2 years of launch.

Asian Paints has started to show some signs of recovery - Q1 FY26 PAT was ~₹1,000 crore i.e. over 50% higher than Q4 FY25

But, the story is yet to fully unfold⤵️ Asian Paints grew to dominate the industry with a 50%+ market share because it did a few things right:

(1) Installed Tinting Machines at distributor's shops

Asian Paints discovered early that installation of tinting machines helps increase throughput per dealer by 3x; they were the 1st to install these machines at distribution points

(2) Repeatedly won over hearts & minds with Marketing

From Gattu (1954) with cartoonist RK Lakshman to “Don’t lose your temper, use tractor distemper” to the legendary 2002 TVC :Har Ghar Kuch Kehta Hai” - Asian Paints dominated share of mind

(3) Enforced Working Capital discipline across its distribution network via the Regular payment performance discount (RPPD)

Asian Paints gave discounts for early re-payments by distributors; 3.5% rebate for 30 day payment & 5% rebate for 3 day payment. In a low margin industry (< 5%), this was a huge incentive!

Birla Opus took on Asian Paints by using the company’s playbook against itself:

2007: HYD - Google’s 1st office in India
2010: HYD - Facebook’s 1st office in India
2015: BLR - Twitter’s 1st office in India

OpenAI’s 1st India hire is a Public Policy head and their 1st India office opening in New Delhi signals one thing:

Any global entity serious about AI in India will have to approach Public Policy / Govt relations in a formal manner.

Sam Altman has led on this front: (a) He came to India in Feb ‘25 to discuss “OpenAI for Countries” with the Govt of India.
(b) In May ‘25 - OpenAI enabled local data residency for Indian ChatGPT users.
(c) Last week, OpenAI launched India focused pricing with ChatGPT Go

Unlike social media & ride hailing, AI has an upfront & clear public policy implication - no surprises here for the Govt; they're taking global & sovereign AI very seriously (e.g. the ₹10,300 crore IndiaAI Mission budget)

Today, OpenAI announced its 1st office in India will open in New Delhi;

Sure, you can argue that Google, FB & Twitter launched Indian offices in engineering hubs whereas Delhi is our capital city.

Indians paid ₹72,000 crore in toll charges last year - this is 2.5x the amount pre-COVID in 2019

When I checked my FASTag online - my family spends ~₹3,000 per month on the Worli sealink alone; other Mumbai residents might relate to this

Therefore, it shouldn't surprise you that 5 Lakh FASTag annual passes were sold in 4 days of launch by the NHAI - some frequent travelers have projected ~₹10,000+ per annum in savings from the pass.

But, there is one catch ⤵️ T&Cs apply - the Annual Pass does NOT work on ALL highways:

The Annual Pass ONLY works on National Highways (NH) and National Expressways (NE) operated by NHAI (National Highway Authority of India)

🚫Let us look at some popular exclusions:

(1) NICE (Bangalore - Mysore) Road is NOT included since it is operated by a private group

(2) Bandra-Worli sea link is NOT included since it is operated by Govt of Maharashtra

(3) Atal Setu bridge is also NOT included - same reason as above

🟢And, now at some popular inclusions:

(1) NH 44 (North–South corridor, e.g., Srinagar to Kanyakumari)

(2) Mumbai–Nashik Expressway

(3) Ahmedabad–Vadodara Expressway

So, when does this make sense?

After more than a decade, India is getting a new bank - AU Bank - this is a HUGE moment for our banking sector.

It comes at a time when legacy banks are switching focus to premium customers - ICICI Bank has raised its minimum balance requirement to ₹15,000 and HDFC has raised it to ₹25,000

For the 1st time, a Small Finance Bank (SFB) is set to become a Universal Bank

Sanjay Agarwal, the founder of Jaipur based AU SFB has been on a 29 year journey from a loan distributor to NBFC to SFB to (soon) Universal Bank

Here’s how they created history ⤵️ Firstly, let us get this out of the way: SFB means Small Finance Bank, but AU SFB is NOT small!

AU SFB has a MCap of ₹55,000 crore - which puts it ahead of several legacy banks e.g. Federal Bank (₹48,000 crore MCap) and Bank of India (₹50,000 MCap)

It is valued almost 9X its closest SFB peer - Ujjivan SFB (around ₹9000cr MCap)

Sanjay Agarwal, founder of AU SFB rightly said: ”Coming from a humble background in Jaipur, if someone had told me that we would build the largest small finance bank in India, I would have found it hard to believe. Yet here we are—because I dared to dream and followed my passion.”

Sanjay’s journey is inspiring:

YouTube has 49 crore active users in India who consume an average of 29 hours of content per month.

If you’re not watching YouTube - you’re probably scrolling Reels (32 crore Indians are active there) or binge watching Netflix (300 crore hours of Indian content were consumed last year!)

The last time I visited a cinema was ~2.5 years ago; as a child - I would be going twice per week & wait in a long line at the counter to buy a good seat for a Sunday show

Here’s how OTT is silently killing India’s ₹12,000 crore cinema industry ⤵️ (1) Start with revenue - Box Office collections are flat

In 10 years, collections have grown at 3.5% CAGR - slower than inflation.

The best data source is the annual Box Office report from Ormax Media

You can see how pre-2018 (i.e. pre OTT going mainstream) - Cinema had a steady growth rate.

Then came the COVID slump

Now, has come the realization: Why go to the cinema when the same movie is coming on OTT in less than 60 days?

We’ve officially opened our 1st office in GIFT City 🥳

Last week, our team drove for 4 hours from Udaipur to GIFT City - in many ways, it reminded me of Dubai in the early 2000s (when I used to visit my father)

It was incredible to see the pace of construction and how crowded some of the other offices were on a Saturday afternoon!

Sharing a few insights on GIFT City ⤵️
Let us start with some facts & figures:

(1) $5.7bn of AUM has been raised by funds (AIFs) operating out of GITY City

(2) ~700 entities have set up office

(3) Famous investment firms like Abu Dhabi Investment Authority (ADIA), Bandhan Asset Management Company (AMC), Unifi Capital, 360 WAM etc have set-up offices

Btw, 360ONE WAM and Alchemy Capital are located on the same floor as our office in GIFT City

Mahindra Group has announced a ~₹500 crore one-time ESOP grant to 14,000+ factory & shopfloor workers.

This is the 1st time in India where a Diwali bonus is being paid in stock!

And, this is the 2nd time where a conglomerate has allocated such a generous ESOP grant to blue collar workers - JSW Group was the 1st to do so in August 2021 with a ₹1,000 crore allocation!

ESOPs were earlier restricted to management & white collar roles - but this is now changing; here’s what you need to know ⤵️ First, let us understand how ESOPs work:

(1) ESOP stands for Employee Stock Ownership Plan

(2) ESOPs are a way for a company to incentivize you to stick around for the long term - they typically are granted over a 4 year “vesting period”

(3) To create long term alignment - there is typically a “cliff” (i.e. if you leave within one year, you get no ESOPs) and there is a “vesting schedule” i.e. every month or quarter - you get some credited some ESOPs

(4) Every ESOP has an “exercise price” i.e. the amount you pay to convert your ESOPs into shares of the company

(5) The difference between the exercise price & actual share price is the upside or financial incentive for the employee

In the context of Mahindra Group’s 2025 Diwali ESOP - any worker with more than 1 year of tenure (”cliff”) is eligible.

JSW’s ESOP plan has a 4 year vesting schedule - 25% per year at the end of each year where the “exercise price” of the ESOP is ₹1 - the current share price of JSW Energy is ~₹535

To put it simply - ESOPs are stock based compensation for employees - and this has worked out spectacularly for white collar employees in India:

The price of Coconut oil has doubled in 2025 to ₹500 per litre

Coconut oil is now the costliest edible oil in India - despite India being the 3rd largest producer of coconuts in the world!

Thieves are forming organized gangs to steal coconuts from trees in Kerala - something has seriously gone wrong with the global commodity market.

Why has the cost of Coconut oil shot up so much?⤵️ The reason for this price shock lies on the Supply side:

(1) The world’s top producers and exporters of Coconut oil are Indonesia & Philippines

(2) They were affected by El Niño from July 2023–June 2024 which disrupted coconut flowering and fruit growth.

(3) Since coconuts trees take about a year to give fruit, the cascaded impact is now showing up w.e.f October 2024

And, the response by these nations has triggered the price shock:

The Philippines has mandated coconut oil blending in diesel (India does Ethanol blending in petrol) —starting at 3% from Oct 24, rising to 4% in 2025 and 5% by 2026.

Indonesia is planning to restrict the export of raw Coconuts to ensure the availability to local oil makers & to stabilize the price in its domestic market.

Now, let’s come back to India:

Shoppers Stop generates ₹4600 crore of revenue from 300 stores across India

The company is largely ignored by media today - but when it was launched in 1991, it was the first family owned retail company which was run by professional management!

How has the company survived all these years? ⤵️ First, let us go to the origin story of Shoppers Stop:

In 1991, the company introduced the concept of departmental stores in India with their first unit going live in Andheri, Mumbai; it had:

(i) 50,000 sq ft of shopping space
(ii) Central AC
(iii) Massive car parking space
(iv) Clean washrooms

They introduced the concept of Self Service where people could walk in , browse for hours and enjoy the process of selecting clothes with or without assistance.

What worked for them?

“Don't expect quick commerce to slow down - a conservative estimate is that this will be a ₹3 Lakh crore market by 2030”

These words were spoken by Vipul Parekh, Co-Founder of bigbasket

This is the same bigbasket which was initially dismissed quick commerce; recently they have been forced to do a complete U-turn ⤵️ First, let us look at bigbasket’s journey with QC:

In 2023, while QC really started to take off in India, bigbasket stuck to its orignal scheduled delivery model.

But, they launched BBNow (12 minute delivery)

In Feb 2024, bigbasket responded by launching “Supersaver” across 40 cities which provided delivery within 2 hours.

Hari Menon, the other co-founder of bigbasket said: “We have moved the delivery service from being van-based to bike-based”

At this point in Feb ‘24, scheduled deliveries were still 65% of the annual business.

But, this was set to change:

Maggi is available at 52 Lakh retail outlets across India - we mix everything from veggies to cheese to eggs to make our "2 Minute Noodles"

It is served at weddings, in Manali, at dhabas outside offices & even on 15-min food delivery apps.

Therefore, Maggi’s owner Nestlé launched a franchise business called ‘Retail One Kiosk’ - the 1000th kiosk was opened this month ⤵️ First, let us cover what products Nestlé sells in India:

(1) Snack food : Maggi noodles & soups
(2) Condiments: Maggi magic cube, Maggi ketchup
(3) Chocolates: KitKat, Munch, Milkybar
(4) Coffee: Nescafé Classic, Gold & Sunrise
(5) Beverages: Milo, Nestea
(6) Milk based products: Milkmaid, Everyday

Nestlé ignited India’s coffee craze by launching instant coffee powder in 1963. Btw, my grandmother refuses to have any coffee apart from Nescafé - it has some die hard fans!

Nestlé has a huge portfolio in India - many of these products are consumed by millions daily.

Which brings us to: