Anand Prasanna, managing partner at Iron Pillar, is not one to sugar-coat the realities of entrepreneurship. In a world where funding headlines often outshine fundamentals, he urges founders to slow down, stay private longer, and build businesses that can breathe on their own. From navigating investor expectations to decoding the AI gold rush, Prasanna offers a clear-eyed view of what it takes to create lasting value in India’s evolving startup landscape.
Iron Pillar managing partner Anand Prasanna. (Abhijit Bhatlekar/Mint)
In this candid conversation, he discusses why many founders aren’t ready for the scrutiny of public markets, how India can become the world’s DeepTech factory, and why resilience — not speed — is the real moat.
Edited excerpts:
Are founders in India ready for the scrutiny that comes with public markets, the quarterly numbers, analyst expectations, governance discipline?
That’s the hard truth, many aren’t. I tell founders two controversial things. First, the best way to build a business is to not take anybody’s money. If you can grow profitably, like Dyson did, stay private. But if you choose capital, understand it comes with a timer. Investors have to return money to their LPs. That’s the business model. Secondly, too many companies are being pushed to IPO prematurely. Public investors want predictability and profit; founders still want growth. That creates tension. If you’re building long-term value, stay private longer, find patient capital, and go public only when you’re truly ready.
The best founders find a cash-flow moat early, one business line that self-funds everything else. It gives them negotiation power with investors and the freedom to focus on long-term value. Capital should be additive, not oxygen.
We can’t escape AI, it’s the word of the year, the decade, maybe the century. Everyone’s in the AI gold rush. What’s your view as an investor, hype or enduring revolution?
Both. There’s genuine transformation, but also exaggerated euphoria. The best way to stay sane is to be early, to catch a trend before it becomes noise. We backed Uniphore, an AI company, long before this current wave.
If AI were a country, then Microsoft, OpenAI, Google, and Nvidia own its roads and railways, the infrastructure layer. The question for VCs is: where do you build? On the roads (models)? In the cities (apps)? Or in the small shops (tools)? Most are crowding into the same neighbourhoods.
Technology never stays still. Just as Broadcom went bust despite being the Internet’s infrastructure darling, today’s AI incumbents could be disrupted by cheaper, leaner models.
Some startups are already training LLMs at one-twentieth the cost of OpenAI. Here’s where India comes in: nearly 20% of the world’s AI talent sits here. If we can solve cost structure and build alternative model pathways, we could emerge as the DeepTech factory for the world. But we need ambition, policy support, and energy infrastructure to match.
Generative AI also raises anxiety, job loss, automation, UBI debates. Is AI friend or foe for an economy like India?
A ‘frenemy’. Think back to 1984, when computers arrived and unions protested job losses. Forty years later, that disruption created millions of new jobs. AI will do the same, if we manage it well. It can unlock enormous productivity. Imagine credit underwriting for small businesses, AI can expand India’s lending base two or three times by reducing friction. Or in welfare delivery, AI can plug leakages, create transparency, and make governance more efficient.
Of course, some roles will vanish. But Indians are inherently entrepreneurial. I recently spoke to a friend in tech, worried about layoffs. He’s now launching a farm-to-fork trading business in his hometown. That adaptability is India’s safety net.
The bigger truth: jobs will change faster than we can legislate. Everyone needs a sidekick, a secondary skill, an alternate income stream. Longevity has increased; retirement age hasn’t. Reinvention is no longer optional.
We’ve seen so many hype cycles, e-commerce, crypto, metaverse, and each was declared the next Internet. How do you know AI isn’t just another?
History is humbling. Every few years, technology sells a new religion. As Charlie Munger said, Show me the incentive, and I’ll show you the outcome. If you’re in the business of selling hype, you must believe in it.
AI too will stabilise after the euphoria fades. Then comes quantum computing, or biophysics, or longevity tech, another hype, another rush. The real investors separate cycles from substance.
There are two ways to play hype. One is the Andreessen model, get in early, back the best founders, and ride the wave. You must be in the top 10 or you’re irrelevant. The other way, our way, is to back the survivors of previous cycles. Companies that have endured, learned, and emerged leaner. We invested in BlueStone when the e-commerce hype had already died. That counter-cyclical patience is where long-term alpha lives.
What’s the hardest part of being a venture fund manager in India right now?
Depth. India’s early-stage ecosystem still lacks a deep follow-on market. In Silicon Valley, if you write the first $100 million cheque, you know the next $900 million will come. In India, that assurance doesn’t exist. That’s why Iron Pillar deliberately operates between venture and growth, investing in companies with $10–25 million in revenue, helping them scale profitably to $100–200 million. We love founders who think long-term, raise less, and grow sustainably.
We evaluate around 400 companies a year, track about 40, and invest in four. It’s our 444 model. We’re fast with feedback, founders usually know within ten days if we’re in or out. And we respond to every email. I try my best to stay within 48 hours, though with global deal flow, it’s not always easy.
You’ve mentioned the Indian consumption story often. What’s your take on this new breed of Instagram entrepreneurs, building content, community, and commerce?
There’s a thin line between virality and vanity. If you’re an Instagram success, you still need a hero product, something that justifies the story. Many brands nail the narrative but crumble on product.
The playbook keeps evolving. But the unit economics are brutal. Digital customer acquisition costs in India are pegged to U.S. pricing, Facebook and Google ad rates, but you’re selling to Indian consumers. That mismatch breaks the model.
Interestingly, offline channels now deliver better contribution margins than online. BlueStone started 100% online, but our investment thesis was clear: go offline, build trust, and IPO. It’s old-school, but it works. The real problem isn’t the entrepreneur, it’s the pipe. Our digital advertising infrastructure is too expensive for Indian economics.
That brings us to a larger question. Most Indian startups still rely on global platforms, Instagram for reach, AWS for storage, Google for ads. Are we really building anything of our own?
That’s the heart of it. Competing head-on with global giants is like a lion charging an elephant, it rarely ends well. The lion wins only when it attacks from the flank, unexpectedly.
We must stop pattern-matching Silicon Valley. Building a Facebook for India is futile. But rethinking problems from first principles, that’s our edge. For instance, instead of importing pollution tech from Europe, why not invent India-specific solutions that solve the problem at one-tenth the cost? The next Indian unicorn will emerge not from imitation, but from sideways innovation.
If you want to beat the elephants, don’t play their game. Create new terrain.
(Shrija Agrawal is a business journalist. The views expressed are personal.)