India’s startup ecosystem has evolved significantly over the past decade, moving from a relatively small pool of investors and businesses inspired by global models to a more mature market with ambitious founders building original companies. As the ecosystem expands, identifying businesses with the potential to become long-term market leaders requires investors to look beyond growth numbers and assess the strength of their business models, leadership and competitive advantages.

Joy Bhakat, Co-founder & Head of Investments at Steadview Capital Management, has observed this evolution through Steadview’s investments across public and private markets. With investments in companies such as Zomato, Policybazaar, Nykaa, Lenskart, Urban Company and Aequs, the firm has developed an approach centred on identifying emerging market leaders and partnering with founders over the long term.

For Joy, successful investing is not simply about finding fast-growing companies. It is about understanding markets deeply, identifying exceptional founders and recognising businesses that can strengthen their competitive position as they scale.

India’s Startup Ecosystem Has Become More Mature

Reflecting on how investment opportunities have changed, Joy points to three developments that have shaped Steadview’s approach.

First, the firm’s presence and reputation in India have grown over the years, helping it build relationships with promising founders. Second, its experience across multiple investment cycles has made it easier to identify patterns associated with successful businesses. Its portfolio experience across companies such as Zomato, Policybazaar, Nykaa, Lenskart, Urban Company and Aequs has provided valuable insights into how businesses develop and scale.

The third change is the quality and ambition of founders entering the ecosystem. According to Joy, today’s founders are more experienced, ambitious and nuanced, while the market itself has deepened, creating more opportunities for investors to partner with businesses.

He also highlights a shift in the nature of entrepreneurship. Earlier, many startups were Indian adaptations of successful global business models. Today, more founders are building original businesses designed specifically for the Indian market.

Identifying the Potential to Become a Market Leader

Steadview’s investment approach places considerable emphasis on identifying emerging market leaders. Joy believes that profit pools are often distributed disproportionately towards the leading companies in an industry, making market leadership an important factor in long-term investment returns.

The process begins with understanding the market in depth. Steadview tries to meet companies operating across a particular sector to develop a comprehensive view of the competitive landscape and avoid overlooking promising businesses.

Once the market is understood, the focus shifts towards the founder. Joy believes that the quality of the founder and the team often determines whether a company can navigate difficult periods and emerge stronger.

The firm spends significant time understanding founders’ journeys, ambitions, vision and perspectives on how their respective markets may evolve. It also prefers to engage with companies well before an investment becomes actionable. Meeting founders 12 to 24 months in advance gives the team time to observe execution, understand how the business develops and build a long-term relationship.

Joy also looks for founders willing to take on the most challenging parts of their businesses. He points to Lenskart’s backward integration, Aequs’ manufacturing ecosystem and Urban Company’s focus on controlling service quality through fulfilment as examples of companies building capabilities that strengthen their market positions.

Why Founder Quality Remains Central to Investment Decisions

While product-market fit is widely discussed in the startup ecosystem, Joy believes founder-market fit deserves equal attention.

Different businesses require different founder capabilities, and the qualities needed to build a successful B2B company may differ from those required in a consumer business. However, certain characteristics consistently stand out in the founders Steadview chooses to back.

These include extreme ambition, a clear vision, deep understanding of the category, resilience and the ability to build an exceptional team.

Joy also highlights the importance of understanding the specific challenges associated with each business model. In B2B businesses, long qualification periods, criticality and switching costs can play an important role. Aequs, for instance, operates in an environment where qualification periods can extend over a year.

In consumer businesses, the challenge may be different. He cites Nykaa’s approach to educating consumers about beauty products and introducing new brands as an important part of its success in a category where vertical e-commerce businesses had faced challenges.

For Joy, understanding these differences is essential to evaluating whether a founder and business are suited to the market they are operating in.

Competitive Advantages Must Strengthen as Businesses Scale

A sustainable competitive advantage is not necessarily something a startup possesses from the beginning. Joy believes that, particularly at an early stage, investors should focus on whether a company is becoming a stronger and more durable business over time.

This could be reflected in a stronger brand, deeper relationships with buyers and sellers, or other capabilities that make the business more difficult to compete with.

He emphasises that competitive advantages are not static. Companies must continue adapting their moats as markets evolve and new competitive threats emerge. Founders who understand the need to survive, adapt and strengthen their businesses are better positioned to build lasting companies.

Steadview also evaluates businesses by considering what they could earn in a steady state five to ten years into the future, rather than focusing only on near-term valuation multiples.

This long-term perspective helps the firm assess whether a company’s current position can translate into sustainable value creation.

Balancing Growth, Business Fundamentals and Valuation

For Joy, growth and business fundamentals should not be treated as opposing priorities. Steadview looks for companies operating in large markets with significant profit pools and the potential to generate attractive returns on capital.

The firm evaluates product-market fit and unit-level profitability, while also examining whether these economics can translate into sustainable profitability at the company level as the business expands.

The metrics used to assess a company change with its stage of development. Early on, customer love and product-market fit may be important indicators. As the business scales, investors begin examining a broader set of operating and financial measures.

Valuation is another important part of the process. Joy believes investors must develop a strong view of what the world and the business could look like five to ten years ahead. The objective is to identify companies whose current valuations do not fully reflect their future potential.

However, liking a business does not automatically make it an attractive investment. Steadview is willing to walk away from companies when the valuation does not justify the opportunity.

The firm also tests whether a business can sustain its growth without depending continuously on additional capital, ideally by observing its performance in an individual geography or store before committing to a larger expansion strategy.

Building Sustainable Businesses Beyond Fundraising

As startups raise capital and expand into new markets, Joy believes founders should focus on improving the underlying quality of their businesses.

The specific indicators vary by business model, but they can include lower customer acquisition cost payback periods, stronger retention, expanding gross margins and greater backward integration.

In his view, capital is well utilised when it helps strengthen these fundamentals and makes the business more competitive as it grows.

He also draws attention to the importance of understanding market cycles. The funding environment of 2021-22 demonstrated how quickly investor sentiment and capital availability can change. Businesses therefore need cost structures that allow them to survive periods when external funding becomes difficult to access.

Ideally, a company should develop at least one stable and profitable core business that can support the development of newer business verticals.

For Joy, sustainable growth is not simply about expanding quickly. It is about building a business that becomes stronger, more efficient and less dependent on external capital over time.

Preparing Startups for the Public Markets

Steadview’s experience across public and private markets gives it a particular perspective on the transition from a privately funded startup to a listed company.

Joy believes that IPO readiness begins well before the actual listing. A company should start operating with the discipline and predictability expected of a public business at least a couple of years before going public.

One of the key differences founders must understand is how public and private market investors evaluate businesses. Private markets may reward aggressive expansion, while public markets place considerable importance on predictability and consistent execution.

Joy identifies three important elements in this transition.

First, companies should demonstrate a credible path to long-term growth. This may involve showing that a secondary growth engine is beginning to develop alongside the existing business.

Second, predictability becomes increasingly important. Public market investors need confidence that the company can deliver on its expectations consistently. Joy describes this shift as moving from unfettered aggression to predictable aggression.

Third, companies should begin building relationships with prospective public market investors well before their IPO. He notes that some companies in Steadview’s portfolio have started interacting with public market investors 18 to 24 months before their planned listings.

Steadview believes its experience of seeing around 20 portfolio companies go public, alongside evaluating numerous pre-IPO and IPO opportunities, allows it to guide founders through this process. The firm also draws on its relationships across the public market ecosystem to support companies preparing to list.

Managing Risk Through Diversification and Discipline

Steadview approaches portfolio construction across multiple sectors rather than concentrating exclusively on one industry. Its investments span consumer businesses, manufacturing, technology, financial services and deep tech.

Joy believes this approach provides strategic flexibility. It allows the firm to avoid sectors that may be overheated or where valuations have become difficult to justify, while also reducing exposure to market cycles that can disproportionately affect individual industries.

He points to 2023 as an example, when a broad correction across technology and new-age businesses created an opportunity for Steadview to begin investing in precision manufacturing.

At the individual company level, the firm also maintains a margin of safety between its entry valuation and its assessment of what the business could be worth five years later.

This combination of diversification and valuation discipline helps the firm navigate changing market conditions without losing sight of its long-term investment objectives.

Looking Beyond Market Hype in AI and Emerging Technologies

Rapid developments in artificial intelligence, advanced manufacturing and consumer technology are creating new investment opportunities. However, Joy believes investors must distinguish between long-term business potential and short-lived market enthusiasm.

Steadview draws on three elements to maintain discipline during periods of market excitement.

Its experience as a long-term public market investor encourages a focus on sustainable returns rather than short-term trends. Its global presence, including a team in San Francisco, provides an opportunity to observe developments in Silicon Valley and assess whether businesses have the potential to compete internationally.

The firm’s focus on growth-stage companies also plays an important role. Since it typically invests in businesses that have moved beyond product-market fit, there are operating metrics available to evaluate their progress and future potential.

Ultimately, Joy believes investment managers must maintain discipline in their processes and develop their own conviction rather than simply following market enthusiasm.

India’s Next Generation of Globally Competitive Companies

Looking ahead, Joy expects the next decade to be particularly exciting for India’s startup ecosystem. The country has already demonstrated its entrepreneurial potential, and the ecosystem is now more mature than it was in its earlier years.

He believes the next generation of large businesses can emerge across multiple sectors rather than being concentrated in a few industries.

Steadview sees particular opportunities in technology, AI-enabled services, manufacturing and consumer brands. These sectors, according to Joy, have the potential to use India’s domestic market scale as a foundation for global competitiveness.

For investors, this creates an opportunity to partner with founders who are building businesses for long-term growth and leadership.

Backing Businesses Built to Compound Over Time

Joy Bhakat’s investment philosophy reflects Steadview Capital Management’s focus on identifying companies that can become market leaders and create value over an extended period.

From evaluating founder-market fit and competitive advantages to assessing valuations, financial fundamentals and IPO readiness, the firm’s approach looks beyond immediate growth to understand what a business can become over the next decade.

As India’s startup ecosystem matures and new opportunities emerge across technology, manufacturing and consumer markets, the ability to identify durable businesses will remain central to long-term investing.

For Joy, the objective is not simply to back companies growing quickly, but to partner with founders who can build stronger businesses, adapt to changing markets and create lasting competitive advantages.

-By: Aakriti Jaiswal