AI is beginning to show very high-quality results: Peak XV’s Shailendra Singh

NEW DELHI: Cred. Cars24. Grofers. Razorpay. Pine Labs. Truecaller. Yubi. Zomato. Byju’s. Groww. OneCard. Oyo.

The brands are counted among some of the world’s best-known startups, and they have one other thing in common: guidance by Shailendra Singh, who is now the managing partner at Peak XV Partners.

Singh’s ability to read the tea leaves for a budding company’s, or an industry’s, fortunes has led him to a place where he today leads one of the most important venture capital firms in this part of the world. And he has a prediction: “There will be no non-AI applications. All apps will try to use some form of AI or will try to be a more intelligent version of themselves,” he said, predicting the path of developing solutions, using AI as the underlier.

Speaking at a virtual session of the 21st edition of Hindustan Times Leadership Summit on Thursday, Singh talked about his journey, and where he sees the next big opportunities panning out for entrepreneurs.

The company, where XV represents 15, is finding its feet after the rebranding from Sequoia India and Southeast Asia. “At some point, it started to become clear that the needs of the business in each region were different. This is a global decision to rebrand. I think one thing that changed over the last few years is about five, six years ago, around 10% of our business was focused on cross-border investing,” said Singh in conversation with HT’s editor-in-chief R Sukumar.

The approach is clear, with what he referred to as the “twin engines of innovation as well as products and services built in India”. One ready example of rapid innovation is fintech, Singh said, adding that Peak XV sees significant growth with products and services built in India.

“About five or six years ago, this used to be 10% of what we invested in. Over the last two years that became 50% of what we invested in,” he said. Behind these numbers, lies the core reason for the rebrand. The approach often put them in conflict with partners in the US region. If teams there led an investment in a startup, the often-multi-regional ownership structures of these companies meant the India business couldn’t make similar investments in this region.

Singh also spoke on how best to approach the question of viability as an investor. “I have started asking a new question -- is this the right decade to own this company? Because many companies are hitting their stride just after the five-six year mark,” he said, explaining that he believes in the decadal growth and the compounding that it brings.

“All the let-me-grow-very-fast-crash-and-burn strategies have repeatedly over four-five cycles have now proven to cause a lot of pain but not enough gain,” he added.

Singh, first as Sequoia and now as Peak XV, has been investing in AI companies for almost 10 years. The first tryst with this space being Appier, a start-up which applied AI to digital advertising a decade ago. Appier listed on the Tokyo Stock Exchange (“TSE”) in 2021. Things have since evolved.

“Over the years, we have kept making AI investments. we currently have a couple of dozen AI investments,” Singh said, adding, “I think what has changed recently is that now there are very open-source models available, where AI algorithms are measured by how many parameters you might train them on. AI is beginning to show very high-quality results.”

The change, he said, is rapid since generative AI tools are now going mainstream with consumer-focused apps and services -- something Singh referred to as a “tipping-point”.

“Every company needs to have an AI strategy,” said Singh, adding that this was part of his advice to start-ups now. In a way, he linked this back to the time when data began to be considered the new oil – the belief is, leveraging this data as learning tools for AI models, can help get to potentially intelligent decisions, quicker.

Singh said he believes it is still early days for India’s AI start-up ecosystem, but in a fast-evolving landscape, stats will come fast. Quite a change of pace from the internet-era that unfolded over a period of 20 years, or the cloud computing uptake, that unfolded itself over a couple of decades.

“We will see AI play itself out over the next two decades. I think we are super early. The India ecosystem has lots of interesting starts and some of those companies will have to learn, evolve, grow quickly,” he warned. Singh pointed out that this was the fastest evolution of a landscape he’d encountered in the last two decades.