Lightspeed’s $500M Bet on India’s Tech Boom w/ Shuvi Shrivastava

SCS (Intro): 

That's Shuvi Shrivastava from Lightspeed India, one of the world's most renowned venture firms with a deep presence in India, breaking down the realities of building and backing billion dollar companies in one of the fastest growing economies on the planet. On this episode of Billion Dollar Moves, we dive into India's unicorn wave.

What went wrong? What's next? Why global VCs, including Lightspeed, are staying committed to the region despite market corrections. How India's next billion dollar companies will look nothing like Silicon Valley's. The overlooked risks and opportunities shaping India's venture future. And with Lightspeed globally raising 7 billion and beyond, making big AI bets like Anthropic, what does this mean for India's growth story?

From fintech and commerce to AI's slower than expected adoption, Shuvie unpacks the bold plays, the blind spots, and why India's best days may still be ahead. Let's get into it. 

SCS: 

So welcome to the show. 

Shuvi Shrivastava: 

Thank you. Thank you so much for having me.

SCS: 

So I always start with the beginning of crucible moments, right? In childhood. What in your childhood has really created an imprint on your life today? 

Shuvi Shrivastava: 

I think the fact that both my parents worked. So I was alone for large parts of the day and to keep me entertained, they did what has now become mainstream, which is put a screen in front of your child.

So they got a computer, they got an internet connection. And I think ‘96, ‘97, I was like six, five, six years old. I started browsing the interwebs very early in life, just realizing that I could ask a question and get an answer to any question. I had was such a light bulb moment for me because at some point your parents give up on your questions and your teachers give up on your questions and your friends don't know any better as a child, but the internet was a place where you could go and get your curiosity met across any dimension.

And I think that's what really sharpened that muscle for me. I think just this belief that any question I have can be answered, will be answered. Yeah, made me who I am today. So you were asking me if I'm an investor or a founder and. So I'm a curious person. That's literally like the only identity I have.

SCS: 

I like that. That curiosity is, and it's a muscle as well, right? That you then build into your everyday decision. Talk to us a little bit about those decisions and how you ended up at Lightspeed. 

Shuvi Shrivastava: 

Very, very serendipitously. I think even two, three years before joining Lightspeed, I didn't even know what venture capital was. Maybe just backing up a little bit. I'm an engineer by education. I graduated and joined a consulting firm. 

And at that point, there wasn't a lot of the new economy. So we were working with like healthcare, pharma, IT. Those were sectors I spent time in. By 2014, ‘15, there was something inflecting in the new economy in India. Flipkart, I think had just become a unicorn. 

There were like a couple of hundred million rounds happening. I was starting to see seniors start companies or join startups or think about it. YC, I think three, four Indian companies had gotten into Y Combinator. That was a big deal. So as this whole wave was taking off, I just realized that the old economy is not moving fast enough and I want to have more impact.

SCS: 

And just because we have a global audience here, when you say new economy and old economy in the India context, give us some sense of what you mean. 

Shuvi Shrivastava: 

Yeah, just think about it as bits and atoms. Anything that's more atoms, more physical goods. You know, pharmaceuticals, healthcare, uh, is one example, consumer goods of any kinda industrials, right?

So all of that, I'm calling the old economy. Those are businesses that were large that were existing for several decades. The new economy is anything that is interfaced through a screen, I guess. So yeah, businesses that were built on smartphone penetration, digitization. 

SCS: 

We were talking a little bit about just where we are in the venture cycle, where India is in its evolution.

Did you say the starting point was really when we started seeing real unicorns achieve that level of skill on the global platform? 

Shuvi Shrivastava: 

I think that was an inflection point because it made it more mainstream to think about starting companies, joining startups, because at some point, nobody wanted to join a small company, right, because that's risky.

And Indians love, you know, low risk jobs as a culture. 

SCS: 

Oh, is that true? 

Shuvi Shrivastava: 

You know, in different pockets, you'll get different answers, but by and large, I mean, I can talk about my parents' generation where getting a government job was like the biggest thing. My dad is going to retire after 35 years at one company.

It's bizarre, right? I didn't stay at any company for more than a year or two in the first decade of my career. So stark contrast to what, you know, how my parents lived their life. My mom only worked for two companies across 30 years. Just given that, again, for your listeners, privatization only happened in India in 1991.

And so, as an economy, we are really, really young. And we don't realize that, right? So, independent in ‘47, then we had a government with more socialist undertones. And then in ‘91 onwards, we said, okay, we're going to open up to private enterprise and liberalize the country. And that's when we started seeing a lot more foreign investment.

A lot of private companies get set up. A real inflection in private sector jobs really started happening only 30 years ago. And so it did, it was a coveted thing because otherwise, and we call India a land of SMBs, right? I think a hundred million odd people are still employed in the SMB sector in some shape or form.

SCS: 

Yeah. The reason why I asked that is of course, the theme of Beyond the Billion coming to India was also built on this concept of women, wealth, and legacy, something that we're bringing across different cities that we're in. Because we believe this is a transformative time. And what I've realized in India, what we've started, you know, hearing from people is the risk appetite may be a little bit skewed because the wealth, a lot of the family office wealth is built on entrepreneurship actually.

So the parents have built significant empires, a lot of the business families, right? And even some of those like Infosys. 

Shuvi Shrivastava: 

Infosys I think came out sometime in the 90s. It's also a fairly young company. 

SCS: 

Exactly. And we think because of how big it's been. 

Shuvi Shrivastava: 

Our biggest banks, HDFC, ICICI, all like, under 30 years old. So even the old economy is fairly new, I guess. 

SCS: 

But from an Asian landscape, India definitely stands out in terms of the amount of capital. The kind of unicorns that we're seeing, and of course, you're in the heat of it. But in the last couple of years, there have been significant issues because of the sky high valuations.

Maybe you can comment a little bit about how did we get there, bridging from the thought of the old economy, new economy, and did we get too high on that? 

Shuvi Shrivastava: 

Yeah, I think it was a global phenomenon, not just restricted to India. I think we saw it across the US, Southeast Asia. And of course, lots of macros were playing into it.

The interest rates in the US and in general equities became a more interesting asset class. Public equities ran up, as did privates. And India was no different. So we also saw a huge influx in 2021 of financing. Companies getting more money than they were ready for, in a sense. So, that happened. And I think the good thing is through the slowdown of ‘22, ‘23, the hard lessons have also been learned three years ago.

I think it's such a different conversation, you know, back then there was a lot of focus on just growth. And today there's a lot more focus on. Quality of growth, sustainability of growth. It's not just about growth at any cost. And I think as an ecosystem, we've learned a lot as investors, as founders, as to what's the right way of building a company.

What are the right cost structures? What's the right growth expectation to have? And I think today we are much healthier, in a much healthier place. 

SCS: 

What does that mean when you think about the shift of more sustainable quality growth? How are you seeing founders built differently these days? 

Shuvi Shrivastava: 

I'll give you a simple example. Small and large decisions a founder will take and they have implicit trade offs, right? And so three years ago, for example, it was so much easier for someone to say, okay, let me start this new product line. We'll see where it goes. It might help us acquire more users without perhaps thinking through as much.

What is the economic viability of this, right? It was almost like, okay, if I can acquire more users, let me just go see what that might be like. Today I'd say allocating any meaningful amount of money to a new business line, new product line just has a lot more rigor and thought behind it versus we will see where it goes.

SCS: 

Yeah. And from a Lightspeed perspective, I know you had a bit of an intermission to be a founder yourself. Yes. Talk to us a little bit about, you know, working with the American lens of Lightspeed in India. Has this evolved? Is this still, even as we saw a couple firms exit, actually, right, India? Like, what are your thoughts here, having been in the system?

Shuvi Shrivastava: 

I mean, there are many differences between this economy and that one is like I was saying, in general, we are a young economy. So there is a lot of work to be done on. So the core businesses and products and services that consumers need. So for example, financial inclusion, we are still quite early on that journey.

Right. You look at, uh, equities penetration in India, you look at, uh, insurance penetration in India, credit as a percent of GDP, like some of these macro indicators will tell you that even though the growth in the last three, four years looks great, there is still so much headroom for growth, right? What I'm trying to say is that you don't necessarily have to disrupt to create a large ventures. 

You can do what is required, but just do it at scale, do it in a way that your audience understands. I think that is an important realization that you don't always need disruption in India. You can ride the unorganized to organized wave that is happening across consumer brands or consumer goods, financial services, um, across every industry, honestly.

That's one. The other is our GDP per capita is at a very different level versus the US right? And we are in the process of making this transition from low income to middle income. And so that has an impact on what kind of eventual outcomes you can expect, right? So you look at an Amazon in the US, how large that is, and the biggest Indian e-commerce company and how large that is, right? There's an order of magnitude difference. 

And so that has an implication of how much capital can you put into companies because beyond a certain point, it's just going to be not as efficient. The kind of growth expectations we can have, the kind of cost structures that our businesses can sustain are just fundamentally different because your ARPUs, the amount of money you'll eventually make from your customer is very, very different.

And I feel like when there's too much capital sometimes, and you know, we are still like the first generation of internet entrepreneurs, investors, in a sense. Mistakes got made, right? Maybe we over invested. Maybe we expected that the rise in GDP per capita would be much faster than what it's turning out to be.

But I think now we're also realizing that how to take the right kind of economic decisions for the company. 

SCS: 

So when you think about Lightspeed, how is this structured Lightspeed India in terms of sort of decision making how much of it is completely independent versus connection to mothership. 

Shuvi Shrivastava:

 Just some background on Lightspeed.

We started investing in 2007 in India. The franchise is about 25 years old. I think about eight, nine odd years after Lightspeed was formed, we started investing in India. Initially from the US fund and then 2015 onwards, we decided to double down on our activity here. We thought that the opportunity set is large and it requires us to do more, have a larger team, have an India dedicated fund.

So 2015 onwards, we've had dedicated funds. We are on our fourth fund currently; $500 million fund that we started investing out of last year for the venture fund. The investment decisions are all local, but we also have a growth fund that we invest out of in India. It's a $5 billion growth fund for that. The investment committee is more global. 

SCS: 

And you sit… in India focused on venture. And tell us a little bit about your thesis here. Has that evolved in terms of the thinking from when Lightspeed just began investing in India? 

Shuvi Shrivastava: 

Yeah, a hundred percent. I'd say as our understanding of the opportunity set has changed. We are now more open to models that we initially didn't fully understand or appreciate.

I'll give you a couple of examples. I mean, in financial services, the first many years of our investing in India, we only wanted to do more technology-led plays. So whether it's banking, SaaS, just infra around payments, we just wanted to do software led business models. Today we realized that in India, the regulators, they believe in licensed entities, the public markets reward those entities better.

We are now open to more balance sheet led models within financial services that we weren't doing before. We recently invested in our first small finance bank, which is again, something that we wouldn't have done by seven years ago. 

SCS: 

Yeah, which is interesting. I had a chat with a founder recently that had an exit, quite a big one.

And long before her exit, she was deemed to be not venture backable. But of course, this definition, the fact that you're acquiring a small bank, how is the mindset of venture capitalists in India today?

Shuvi Shrivastava: 

I think we're just realizing that India is a great consistent compounder story, right? I think the West has seen a lot of models where you grow really, really fast in five years. That's one rocket ship trajectory that you want to back. 

In India, we've seen even our largest, like very, very large companies. And HDFC Bank is one name I took earlier. They continue to grow at 15, 20 percent at like a scale of $200 billion, right? The white space is so massive in India. The headroom for growth is so strong that if you back the right companies, they can keep growing for a very, very long time.

And by the way, it's reflected in the public market multiples you see, right? They are always at a premium versus the US market. We always have been because India has a growth story. The eventual outcomes can be large, but the slope of the curve will look different is the point I'm trying to make. Like in the US you often see like, J curve. 

In India, I feel like the J curve is not always rewarded. The cost of a J curve is not commensurate to the rewards. Right. But if you can build a business the right way and then keep growing consistently. There's a lot of value to be created. 

SCS: 

There was an exodus of a couple of foreign brands other than Sequoia and Peak, which we've had GV on as well. That was more strategic in many different ways. Are you seeing a pullback from foreign investors in India? 

Shuvi Shrivastava: 

We look at the last 15-20 years, there have been several funds that have come and gone, several that have sustained, including ours. A, India is a very different market to invest in versus the US, right? So you need a team on ground, you need ideally a local team who understands the local nuances.

Otherwise it's very hard because venture is a little bit about taking risk and you take informed risk when you have a touch and feel of the market and the customer, the consumer on the ground and so on. So it's very hard to sit in your Bay Area office and invest. 

SCS: 

Not a flyover state. Yeah, you have to be there.

Shuvi Shrivastava: 

Yeah. So that requires investing properly in your India strategy. I think if it's just an experiment, that usually doesn't last, right? So I think that's probably one reason why it's not worked out for everybody. But look at the number of. Funds who've, uh, made great returns.

I mean, our IPO pipeline today is looking so exciting. And Zomato, Policy Bazaar are like some names venture funded, great returns. So I think we are now starting to see real distributions, real exits, real large company creation. And so there's a lot of optimism for the next 10 years. 

SCS: 

Yeah. And what are you excited by, as we think about the next 10 years. Will you resume a founder seat or is the itch getting there or will you still be a funder? What do you think? 

Shuvi Shrivastava: 

I tried to limit my speculation to myself. But there's so many interesting themes in the world right now China plus one and actually even Europe plus one right people don't talk about Europe plus one in the same way, but India can be the supply hub for the world and this is both on b2b as well as b2c businesses.

If you look at the sale of indian suppliers on American marketplaces like Amazon, Etsy, eBay, we've seen a real inflection in the last couple of years, and you talk to the heads of these companies, they expect a lot more to happen going forward. China went through an inflection like that. I think about eight, 10 years ago from basically nothing, it was like $300, $500 billion of cross border B2C volume that was going from China to the USA.

India could potentially take that place right now with everything happening geopolitically. B2B of course, right, exports. We've always been good and now the government's really pushing with production link incentives and I'd say a lot of high skill industries are also coming of age. So whether you think specialized chemicals, aerospace, these are not commodity manufacturing, this is advanced engineering.

And now we have a name and a brand globally that we can leverage and really accelerate our growth over the next many years. 

SCS: 

Yeah. And what is the exit landscape based on what we've seen? America is still definitely the place for a lot of Indian companies to truly, you know, extract the value to it's a later stage for exit planning and liquidity.

Do you think India is robust enough to sustain the kind of returns that venture needs to deliver?

Shuvi Shrivastava: 

Absolutely. I mean, look at our public market returns. I mean, right now, everything seems to be on fire in the public markets. The kind of growth we've seen in the last two, three years. I think even America has kind of slowed down on the public side, but India is just continuing to see a lot of retail investor interest. 

Everyone today is sitting on pretty green portfolios in the public markets. A lot of companies are flipping back to India because of this. Cause we've realized that the public markets, the capital markets in India are a lot deeper than people anticipated. So I'd say the IPO pipeline is very robust, very, very healthy.

SCS: 

And remind me, what sort of check sizes are you writing in your fund? And what are you tasked to? 

Shuvi Shrivastava: 

From the venture side, we'll do anywhere from $1M to $15M or $20M type checks. And from the growth fund, we'll do $30M to $200M. 

SCS: 

What is the kind of traction that you need to see? I mean, one of the things that is the quick criticism for Indian companies is my gosh, they don't even have revenue.

I mean, I've looked at deals where it's come to me and they don't even have revenue and evaluations are sky high. 

Shuvi Shrivastava: 

Yeah, that's not an India thing. It's also in the US. Look at the AI companies in the US. 

SCS: 

Okay. AI, we exclude AI. Yes. Anything with .ai, .io today is a wash. 

Shuvi Shrivastava: 

But no, I'd say, look, I think the first couple of rounds for any company happen on promise. The next round, next few rounds happen on performance. Like it's as simple as that. So very, very early, you want to believe in the team and the founder market fit and the broad idea that the team is pursuing or the market around that idea that the team is pursuing. 

And then of course you want to look at a repeatable BMF and repeatable playbooks to scale. And everything in the middle is a little bit of this, little bit of that. 

SCS: 

What are you betting? I mean, we talk about AI, whereas India today with AI, I mean, in the US I will say there's a lot of noise, a lot, a lot of noise. Every company seems to just want to do a plug on and it's not as foundational as it should be.

What are your thoughts here on India and AI and the startups you're seeing? 

Shuvi Shrivastava: 

My honest answer is I've been surprised by how little activity I'm seeing on the AI front. Of course, there are, there are some companies. I mean, we've backed the foundational model company called Servum. And we’ve backed a few AI infra companies as well, but just in terms of end user applications with consumer and enterprise applications, just not seeing as much in India.

And we keep asking this question, like what's coming in the way, but somehow it's not spurred founder excitement and imagination as much as it has in the US. 

SCS: 

Oh, interesting. Okay. And what other themes other than AI? I mean, this is a significant platform shift, right? We had mobile. 

So in some ways, I mean, tell me if you disagree. I feel like India leapfrogged because you didn't have the legacy systems like banking, you know, it was quicker for you all to just go mobile straight away. What else are you looking forward to that's India specific in terms of trends? 

Shuvi Shrivastava: 

So one, like I said, unorganized to organized, right? So you pick any consumer goods or consumer service. We are seeing, for example, the proliferation of D2C brands, consumer brands, new consumer brands, right? 

And I think quick commerce as a theme has really picked up in India. You would have read about Zepto. We are also investors in this company. And what that also means is that for any new consumer brand launching, it's a great distribution.

Channel to get into a bunch of cities and quickly get discovered by customers. So of course, that is like one quick commerce is a whole theme. Cross-border commerce, both B2B and B2C is a theme. Financial services, I spoke about financial inclusion a little bit, but I think even for the top 20 million people in India, which everyone thinks is overserved, I'd say the problems are not fully solved.

Like, if I have to go apply for a home loan despite, you know, 15 years of credit history, it'll take me about a month really. And potentially a few visits to the bank to actually make it happen. So some of these things, like even for your highest credit for the customers are not fully sold. So there's so much room. 

SCS: 

So you take a quite agnostic view in Lightspeed. As you don't bet on specific verticals. It sounds like, I mean, across these trends, it is tech backed but pretty agnostic. 

Shuvi Shrivastava: 

Yeah, yeah. And I'd say we've expanded like, 10 years ago, we would have been a lot more like software only in our investing.

Now, we just realized that the opportunity is so much bigger than that. 

SCS: 

So question to you, because you mentioned commerce, is that a venture backable opportunity when we think about, you know, like Nike, right? Like big fashion. Women beauty is huge. 

There is this criticism that it is not venture per se, whether it's consumer, even in the US until Kirsten Green did it with Forerunner and really built it as a venture strategy, people would frankly just ignore it and say that this is not. 

Shuvi Shrivastava: 

I just have a very simple view on this, which is, you look at returns, right? If you're getting to your target returns, the number of API calls required to make that dollar is irrelevant. I think as long as you're solving a customer problem and you're doing it in the most efficient way possible, and you're able to use that dollar and make four as a company, I think you're doing a good job.

And then as venture capital investors. for us to get in at the right price. For example, you can't overpay on some of these companies and then build that the right way so that they don't need more capital than the end outcome can support.

SCS: 

Yeah. I think this is a question that often founders are confused by, when we, investors say something's venture backable. Something is not, what is your opinion? Your definition of this is venture backable? This is not?

Shuvi Shrivastava: 

I think venture backable usually implies some level of non linearity in terms of say, demand generation. Can I grow faster than 30 percent year on year? Does that white space exist as the, is there a way for me to fulfill that kind of demand curve?

But honestly, people forget that 30 percent compounded over 8 years is in 8X. And how many venture capital firms return anywhere close to 8X, right? So if you pick right, you get it at the right price. I think there's a lot of money to be made for funders. And a lot of just value creation that can happen for the end customer.

So I feel like we should not be so wedded to what is a traditionally venture backable company versus not. Yeah. Because that's one way of making. Investments and making returns, but all these different companies that are actually like going to yield you very, very good returns. 

SCS: 

A ton of billion dollar moves to be made there in India.

And now we've arrived at Billion Dollar Questions. These are quick, rapid fire. First thing that comes to mind is the right answer. What is something people don't know about you that they'd have to see it to believe it? 

Shuvi Shrivastava: 

That I'm a very good listener. 

SCS: 

People don't believe you're a good listener? 

Shuvi Shrivastava: 

They don't, you don't actually know what it means to be around good listeners until you’ve experience one.

SCS: 

Fair enough. Fill in the blank. Success is? 

Shuvi Shrivastava: 

Sleeping peacefully at night. 

SCS: 

Failure is?

Shuvi Shrivastava: 

Not being proud of the work you do.

SCS: 

Not investment advice, but favorite investing hack or tip you've discovered in your career? 

Shuvi Shrivastava: 

Being a good person, being a kind person. It can like create alpha in ways you can't even imagine.

SCS: 

Love that. First job you got paid for. 

Shuvi Shrivastava: 

I was at NUS doing a research internship on lithium ion batteries. 

SCS: 

What is the quality you look for? In founders you back or leaders you hire? 

Shuvi Shrivastava: 

Resilience. 

SCS: 

Well, I believe you are successful and continue to be as per your definition. What still keeps you up at night? 

Shuvi Shrivastava: 

If I'm successful, I… 

SCS: 

You should be sleeping, right? Is there anything that keeps you up at night? 

Shuvi Shrivastava: 

I worry about the level of ambition and risk taking in the country. I feel like we need to back ourselves a lot more. Like, every time I meet, you know, founders in America, and the time I spend working there, I just feel like, uh Indians need to do a lot more in terms of backing themselves and believing in themselves.

SCS: 

Favorite book and a key tenet you live by from that book? 

Shuvi Shrivastava: 

I mean, I'll give you different answers at different times of the day, but one that I read this year and I've given it to a lot of people is The Prophet by Khalil Gibran. And I think the one thing I carry from it is how joy and suffering are basically two sides of the same coin.

Life is going to be full of ups and downs and there's no denying that, there's no fighting that. Just be grateful for what happens. 

SCS: 

What's some advice for a funder tuning in and a founder tuning in? 

Shuvi Shrivastava: 

Actually for both of them, I will say what I said yesterday, which is play the long game. Commit to something for 10 years and you will make a lot of money. Commit to something for one year and I guarantee you will fail. 

SCS: 

Yeah. And what is your legacy going to be when all is said and done? What would you like it to be? 

Shuvi Shrivastava: 

I want to write many books that help people sleep more peacefully at night. 

SCS: 

To help people be more successful. I'm sure you're already doing that in many different ways and we look forward to those books that you will write.

But in the meantime, keep making billion dollar moves. We did it.