India’s startup ecosystem continues to attract investors looking for emerging businesses with the potential to create long-term value. However, early-stage investing comes with considerable uncertainty, requiring investors to look beyond promising pitches and assess a startup’s fundamentals, founder capabilities, and path to sustainability.
For Biren Parekh, Director at Crisil and an angel investor with investments across 16 startups, the approach to evaluating businesses has become more disciplined with experience. From assessing customer adoption and unit economics to understanding cash burn and a founder’s ability to adapt, Biren believes successful early-stage investing depends on sound judgement, thorough evaluation, and patience.
From Equity Investing to Angel Investing
Biren’s journey into angel investing began during the COVID-19 period, when he became interested in exploring a different asset class. Having invested in equities for a long time, he understood his risk appetite but recognised that startup investing involved a different level of uncertainty.
Unlike listed equities, where investors can monitor prices daily and make decisions based on market movements, early-stage startups often require patience until they reach meaningful milestones. Their progress cannot always be assessed in real-time like listed companies, and the risks may take time to become clear.
Despite these challenges, Biren decided to begin investing in startups. The experience has strengthened his patience and risk appetite while giving him an opportunity to diversify his investments.
Today, with investments in 16 startups, his approach has evolved towards more rigorous evaluation and a stronger focus on sustainable business models.
Why Founder Quality Matters More Than a Pitch
For Biren, the founder is the first filter in an investment decision, but not the only one. A compelling idea may attract attention, yet its success depends significantly on the person leading the business.
He looks for founders who demonstrate integrity, passion, agility, domain understanding, and the ability to execute. Equally important is their willingness to accept feedback and adapt as the market changes.
Biren also examines whether the startup is solving a genuine problem or presenting a clever solution without sufficient customer demand. He evaluates customer adoption, competition, unit economics, business model viability, and the company’s path towards sustainable value.
Transparency plays an important role in this process. Founders who openly discuss risks, competition, and uncertainties can build greater confidence than those who present an overly perfect picture of their business.
For Biren, a strong founder must be able to explain not only the opportunity but also the challenges that could prevent the company from succeeding.
Cash Burn and Profitability Are Becoming Central to His Decisions
One of the biggest changes in Biren’s investment approach has been his increased attention to cash burn and profitability.
Earlier, he was less cautious about the amount of cash a startup was spending. With experience, he has become more selective, preferring businesses that demonstrate a clear direction towards profitability or a reduction in cash burn from quarter to quarter.
This does not mean every early-stage startup must immediately generate profits. Instead, investors need to understand how the company plans to use its capital, what milestones the funding will support, and whether its financial trajectory is sustainable.
Biren believes a polished presentation cannot replace evidence. Founders should be prepared to explain the assumptions behind their financial projections, customer behaviour, use of funds, and the economics of their business.
The objective is to distinguish companies building sustainable value from those that are simply increasing expenditure without a credible plan for the future.
Planys Technologies and the Importance of Independent Judgement
Biren’s investment in Planys Technologies highlights how early-stage investors must make decisions before broader market validation becomes available.
He says his decision was not based on the expectation that a larger investor would eventually invest in the company. Instead, he focused on the significance of the problem, the team’s capabilities, and the potential to build sustainable value.
Planys Technologies recently received backing from investor Ashish Kacholia, which Biren viewed as encouraging validation rather than the reason for his original investment.
For early-stage investors, this distinction matters. Waiting for established investors to validate every opportunity can mean missing promising businesses at an early stage.
Research, judgement, and conviction are therefore essential, particularly when a startup has not yet received widespread market recognition.
When Should a Founder Pivot?
A startup’s original business model does not always work as expected. For Biren, the ability to recognise this and change direction based on evidence is an important quality in a founder.
His investment journey with Eurimart, which later pivoted towards AI and became Adya, reinforced the importance of founder agility.
He believes a pivot is a strength when it is driven by what the market is telling the business rather than by ego or a desire to follow a trend. Founders must be willing to acknowledge when their original assumptions are not working and identify a more viable direction.
The key distinction is between persistence and stubbornness. Persistence means remaining committed to solving a problem, while stubbornness means refusing to reconsider the initial business model.
For Biren, the best founders learn continuously, preserve what is working, and change course when the evidence demands it.
The Red Flags That Can Make an Investor Walk Away
Early-stage investing inevitably involves risks related to markets, timing, technology, and execution. Biren accepts that uncertainty is part of the process, but there are certain warning signs he does not compromise on.
A founder who cannot clearly explain the customer problem, avoids difficult questions, pretending no competition or presents weak evidence of customer adoption raises concerns. Increasing cash burn without a credible path towards sustainability is another significant red flag.
Also, with AI around, if founders doesn’t demonstrate adoption of AI in their business or in building product, again that is complete No-No.
Misalignment among co-founders can also weaken a business, particularly when the company is still building its team and operating model.
Biren would rather miss an investment opportunity than proceed when serious warning signs are being explained away. For him, the strength of the underlying business must match the confidence of the pitch.
Execution Is Where Strategy Meets Reality
Biren’s background in project and programme management influences how he evaluates a founder’s ability to turn an idea into a functioning business.
He looks for clarity around outcomes, milestones, dependencies, risks, and decision-making. A startup does not need a perfect plan, as early-stage businesses must continually learn and adapt. However, it needs a clear execution rhythm and evidence that the team can convert decisions into action.
How founders respond when something goes wrong is equally important. Communicating bad news early, reassessing assumptions, and correcting course can help a business manage challenges before they become more serious.
After investing, Biren sees his role as a sounding board rather than an additional operating executive. He offers founders another perspective, practical guidance, and introductions when needed, while leaving the final decisions to the people running the business.
His objective is to support founders without taking away their ownership or becoming a bottleneck in their decision-making.
AI and Deep Tech Need More Than Market Hype
As AI and deep tech create new investment opportunities, Biren believes investors must distinguish genuine technological advantages from what he describes as “technology theatre”.
The first questions remain fundamental: What problem does the technology solve, and who is willing to pay for it?
Beyond the technology itself, he evaluates differentiation, data advantages, market timing, adoption barriers, geo-political impact, regulatory implications, capital requirements, and the team’s execution capabilities.
Biren also highlights that enterprise AI adoption is not always limited by the model itself. Data quality, governance, and the operating environment can be equally important in determining whether a technology can deliver practical results.
For investors, this means looking beyond the popularity of AI and examining whether a startup has credible technology, a meaningful use case, and a realistic path to adoption.
What India’s Startup Ecosystem Needs Next
While capital remains important, Biren believes India’s early-stage ecosystem needs stronger founder networks and better mentorship alongside funding.
Experienced operators and mentors can help founders avoid costly mistakes, access customers, strengthen commercial thinking, and make better decisions under uncertainty. Honest feedback that goes beyond the pitch deck can be especially valuable for entrepreneurs navigating the early stages of building a business.
He believes capital, mentorship, enterprise access, and founder networks need to work together to create a stronger startup environment.
Ultimately, Biren’s investment philosophy reflects a shift towards greater discipline in early-stage investing. Founder quality remains critical, but it must be supported by a genuine customer problem, credible execution, sound business economics, and a clear direction towards sustainability.
For India’s startup ecosystem, the next challenge is not simply to create more startups, but to build more businesses capable of surviving uncertainty and creating lasting value.
Connect with Biren Parekh
- Website: https://www.birenparekh.com
- LinkedIn: https://in.linkedin.com/in/biren-parekh
- X (Twitter): https://x.com/iesporty
- WhatsApp Channel: https://whatsapp.com/channel/0029VaMvzMSDDmFd9KRZOZ3d
Supercharge Your Project Management Skills
- Amazon India: https://tinyurl.com/56chs8et
- Amazon US: https://tinyurl.com/yxn7pxt2
- Amazon UK: https://tinyurl.com/2p9dmxa8
- Book Consulting: https://topmate.io/biren_parekh/
-By: Aakriti Jaiswal
