AI is leveling the playing field; the key differentiator is go-to-market aggression of a startup: Lightspeed's Dev Khare

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Artificial intelligence has leveled the playing field for startups worldwide, but for India, the real opportunity lies in combining AI with human expertise, said Dev Khare, Partner at Lightspeed India.

Unlike in Silicon Valley, where the focus is on eliminating human intervention, India's advantage comes from its deep-rooted expertise in services—something that AI can now enhance rather than replace, he said during the SaaSBoomi event in Chennai on March 26.

"AI has leveled the playing field across the world. Today, any startup, anywhere, can access the same technology. The real differentiator is execution," Khare said.

He was speaking at a panel discussion titled The Next Wave: Where Will the Big SaaS & AI Bets Be? Other VCs on the panel included Battery Ventures' Dharmesh Thakker, Elevation Capital's Krishna Mehra, and Avataar Ventures' Mohan Kumar. The discussion was moderated by Ashwini Asokan, founder of Mad Street Den.

"People in Silicon Valley hate having people in anything—they want to solve everything with software. That’s a blind spot. But for India, AI can be a multiplier for human-driven services, making them more scalable and profitable."

India’s $100 billion BPO industry and massive IT services sector already operate on high-touch, customer-centric models. According to Thakker, General Partner at Battery Ventures', AI can supercharge this by making human-led services faster, more efficient, and more scalable.

Khare said that AI tools deliver better margins for SaaS companies at scale.

“If you look at the high-ACV models out of India, many started off as service companies before productizing over time,” Khare said. “Now, imagine bringing AI into that equation—using AI tools to deliver services with better margins and scale."

Thakker said that AI is shifting the traditional SaaS model, where services were once seen as an "unnecessary evil" to enable software adoption. Now, AI-powered services are emerging as a primary value driver.

"In 2023, when the US economy slowed down, businesses started questioning why they were spending so much on software," he said.

"Churn rates for software hit an all-time high, while services continued growing because they delivered measurable business outcomes. AI is accelerating that trend."

He predicts that in the next few years, AI-powered service companies will achieve 60-70% gross margins—levels traditionally associated with pure SaaS businesses.

While AI has removed technological barriers, Khare emphasised that Indian startups need to focus on execution and aggressive go-to-market strategies.

While AI-powered services present a massive opportunity, Khare urged Indian founders to think bigger—beyond services and into AI-driven industry innovation.

Speaking about early stage AI bets, Mohan Kumar, Managing Partner at Avataar Ventures' said that AI-native thinking and AI first approach from founders plays a big role.

Krishna Mehra, AI Partner at Elevation capital said that founders should build AI products for specific industry.

"I think the mindset has to change. Use AI to develop specific products whether it's clean energy, pharma, education just to improve the quality of life for India and other markets," he said