Global AI Conclave: Startup founders should aim for consistent compounding, says Peak XV’s Shailendra Singh

Shailendra Singh, Managing Director, Peak XV Partners

During the CNBC-TV18 and Moneycontrol Global AI Conclave on December 16, Shailendra Singh, Managing Director of Peak XV Partners, advised startup founders to aim for compounding growth for several years, similar to traditional businesses like HDFC Bank and Asian Paints.

Singh shared an example of a unicorn founder whose company generates $100-300 million in yearly revenue and asked how fast he should grow the company next year. The founder suggested that they could grow by 50-55%, 70% or 40% to show more profits. However, Singh advised him that the growth rate didn't matter as long as the company's growth was compounding over several years.

“What matters is: can you sustain even 20 percent growth for 20 years? Which banks can also do. Well, if you sustain 20 percent for 20 years, that's 38 times and $300 million times 38 is almost $12 billion of revenue. His company can probably do even better than 20 percent because they can grow faster in the early years,” Singh said.

As a result of compounding, startups will become larger businesses worth $50-100 billion in the years to come, per Singh. “That should be our (ecosystem’s) collective goal.”

Chandra R Srikanth, Moneycontrol and Peak XV's Shailendra Singh in Bengaluru on December 16.

Peak XV has about 40 portfolio companies with annual revenue of over $100 million, including Mamaearth, Byju's, Pinelabs, Razorpay, and several others. Singh revealed that some of these portfolio companies are preparing for a public market listing soon, but he did not provide more details.

Peak XV Partners, formerly Sequoia Capital India and Southeast Asia, is one of the most active investors in the country. It has expanded its scope after splitting with Sequoia Capital (in the US) and is now backing companies around the world.

Its most recent Surge cohort was dominated by AI and deep tech startups. Peak XV had picked 13 startups for its Surge 09 cohort and 10 of those are building in the AI and deep tech space, underscoring the importance of AI startups, as reported earlier.

Palo Alto Networks presents the CNBC-TV18 Moneycontrol Global AI Conclave, in collaboration with EY as the Knowledge Partner and Google, Yotta Infrastructure, and Reliance Industries Limited as Associate Partners, with Townhall serving as the Technology Partner.