Silicon Valley investor Vinod Khosla critiques Indian investors’ approach to deep-tech startups
- ByStartupStory | July 8, 2023
According to prominent Silicon Valley investor Vinod Khosla, Indian investors have displayed excessive caution, prioritizing revenue over asset creation, which has hindered the success of large deep-tech startups in the country. Khosla expressed his perspective during an exclusive interview with Moneycontrol’s Chandra R Srikanth at the inaugural Moneycontrol Startup Conclave.
Khosla emphasized that deep-tech investing revolves around building valuable assets. For instance, he highlighted the significance of creating a fusion reactor, where the design itself could be worth $50 billion, even without generating revenue. However, Indian investors tend to focus more on immediate revenue and rely heavily on spreadsheets, neglecting the long-term asset-building approach.
This viewpoint aligns with the observations of Prashanth Prakash, an experienced investor at Accel, who recently emphasized the absence of a substantial deep-tech ecosystem in India. Prakash highlighted the low government budgets for research and development in deep-tech sectors and the limited funding from private equity and venture capital circles.
Khosla remarked, “In the last 20 years, when we have been investing at Khosla Ventures, there is not a single example where I have used an IRR (internal rate of return) calculation to decide whether to invest or not. That’s how different our approach has been and it works well for deep-tech investing. Funding will also happen once people find role models. But I do think there’s huge advantage in India for deep-tech, there’s technical talent here, there’s less academic research here but it is very easy to build global companies with collaboration with western universities.”
Despite the contrarian views of Khosla and Prakash, deep-tech innovations in India have been gaining traction and attracting investments from venture capital and private equity firms. Notably, investments in AI-based avenues surged by nearly 10 percent in 2022. This amounts to $5.03 billion, while overall funding for technology companies has declined by approximately 40 percent compared to the previous year, as reported by Tracxn data.
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