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

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.”