India’s startup ecosystem has changed significantly over the years, with growing access to capital, technology, mentors, incubators and a larger market for new businesses. But for investors, building a startup is about much more than having a good idea. The problem being solved, the size of the market, the founding team and the ability to execute all play an important role in determining whether a startup can become a scalable business.

Mihir Joshi, Managing Director at Gujarat Venture Finance Limited (GVFL), has spent years working closely with entrepreneurs and businesses across different sectors. For him, venture capital is also a continuous learning journey, offering exposure to new ideas, technologies and entrepreneurs.

In a conversation with Indian Startup Times, Mihir shared his perspective on what makes a startup investable, the fundraising mistakes founders should avoid, how investors look at product-market fit, the role of AI in today’s startup ecosystem and how venture capital can support companies beyond providing capital.

What Makes a Startup Investable?

For Mihir, the first step in evaluating a startup is understanding the problem it is trying to solve.

Investors look at whether the company is addressing a genuine pain point, how large the potential market is and whether the solution brings something different to the table. This could come through a new technology, a different approach or a model that can disrupt the way an existing problem is solved.

The founder’s understanding of the domain is equally important. Investors need to understand how well the founding team knows the problem and whether the proposed solution is difficult enough to create a meaningful entry barrier.

But ultimately, execution remains critical.

According to Mihir, capital is available to many businesses, which means having access to funding alone does not create an advantage. The ability to execute the idea and turn it into a scalable business becomes an important differentiator.

Aggressive Valuation Can Create Problems Later

One fundraising mistake Mihir commonly sees among founders is asking for an aggressive valuation.

Founders naturally want to minimise dilution, but setting a valuation too far ahead of the company’s actual progress can create challenges in future funding rounds.

Mihir explained that equity investors look at the future value of a business while also considering the risks involved. If a company raises too little money at a very high valuation, it may not have enough capital to reach the milestones required for the next round.

This can eventually make fundraising more difficult, particularly if existing investors are not available to support the company when additional capital is required.

For founders, therefore, fundraising is not only about achieving a higher valuation. The amount raised, valuation and milestones need to be aligned with the company’s growth plans.

Product-Market Fit Is More Than Just Sales

Product-market fit is often treated as a major milestone for startups, but Mihir believes there are several factors that need to be considered when assessing it.

One important question is whether customers are actually willing to pay for the product at the price being offered.

Investors also look at the market and distribution channel. But beyond these factors, Mihir highlighted the importance of sales velocity.

The key question is how quickly a company can generate additional sales and how much effort is required to do so. If sales become increasingly repeatable without requiring proportionately greater effort, it can indicate that the business is developing stronger market fit and scalability.

For Mihir, understanding product-market fit therefore involves looking at customer willingness to pay, market and channel fit, sales velocity and the repeatability of the business model.

The Founder Comes Before the Pitch Deck

At GVFL, the founding team is one of the first things Mihir looks at while evaluating a startup.

He looks at the founder’s domain knowledge, skill set and ability to take a company from zero to one. Commitment, hunger and ambition are also important parts of the assessment.

A pitch deck or a promising idea alone is not enough.

During the due diligence process, investors get an opportunity to see what the founders have actually built and what they have achieved with the time and resources available to them.

For Mihir, the journey of the founder before approaching an investor can reveal a great deal about the team’s ability to execute.

The focus is therefore not only on what the founder plans to build, but also on what has already been done.

Founders Do Not Need an Elaborate Introduction

There is also no single formula for approaching a venture capital investor.

Mihir explained that GVFL has come across investment opportunities through different routes, including short emails, pitch decks, financial models and conversations at events.

Founders do not necessarily need an elaborate introduction or lengthy explanation if they can communicate the core of their business clearly.

With experience across different industries and business models, investors can often understand the larger opportunity from a concise explanation and then explore the details during the due diligence process.

Emerging Opportunities Across Robotics, Defence, Space and EVs

GVFL follows a sector-agnostic approach, according to Mihir, although investor interest in different sectors tends to move in cycles.

He pointed to developments in areas such as computing power, internet access and artificial intelligence as important enablers for new businesses.

Robotics, defence and space are among the areas creating new opportunities, while the electric vehicle ecosystem is expanding beyond vehicles themselves.

Within EVs, opportunities can exist across areas such as cells, batteries, motors, controllers and related business models.

Mihir also highlighted AI infrastructure, MedTech and Biotech as areas where technology is opening up new possibilities.

AI Should Be an Enabler, Not the Entire Investment Thesis

Artificial intelligence has become one of the biggest themes in the startup ecosystem, but Mihir believes investors need to look beyond the AI label.

If a startup is simply building a use case on top of an existing AI framework, it may not necessarily have a strong enough barrier to entry. If the underlying technology is easily accessible to others, similar products can potentially be built by competing teams.

For investors, the larger question is how AI is contributing to the company’s long-term advantage.

Mihir sees AI as an important enabler, but not necessarily as the entire investment opportunity.

He also pointed out that investors typically have to think about a five-to-seven-year exit horizon, while AI itself is developing extremely quickly. This makes it difficult to predict how a particular AI application may look several years from now.

The focus, therefore, needs to remain on the broader company, its market and its ability to create value over time.

Entrepreneurship Is Rewarding, But It Is Not Easy

The startup ecosystem today offers entrepreneurs significantly more support than it did in the past.

There are incubators, grants, angel investors, startup-focused programmes and more visible role models for aspiring founders.

However, Mihir believes entrepreneurs also need to understand the realities of building a company.

The journey can take five to ten years and can involve challenges related to money, technology, product development and competition. There can be long periods of uncertainty and considerable personal commitment involved.

While entrepreneurship can be highly rewarding, it requires founders to remain committed through difficult phases rather than focusing only on the eventual success stories.

The Role of a VC Goes Beyond Capital

For Mihir, venture capital is ultimately a partnership between the investor and the company.

Early-stage businesses often need more than funding. They need systems, processes and technology frameworks that can make their operations repeatable and allow them to scale.

This is one area where a venture capital investor can contribute beyond writing a cheque.

Investors can also provide connections and increase a startup’s discoverability within the ecosystem. Once a credible investor backs a company, it can attract interest from other investors and industry participants as well.

In this way, the investor can become part of the company’s broader growth journey rather than simply being a source of capital.

India’s Startup Ecosystem Has Most of the Building Blocks

Looking at the larger Indian startup ecosystem, Mihir believes that many of the elements required to build and scale startups are now available.

India has a large market and a wide range of problems that entrepreneurs can attempt to solve. At the same time, access to technology and markets has improved.

The ecosystem now includes incubators, accelerators, mentors, angel investors and venture funds that can support companies at different stages.

Mihir also pointed to a broader change in the way startups are perceived. Customers, vendors and suppliers are increasingly willing to work with younger companies, while talent is also more open to joining smaller businesses.

According to Mihir, access to the startup ecosystem is becoming less dependent on a founder’s background, creating more opportunities for people from different parts of the country and different professional backgrounds.

The Road Ahead

Mihir’s perspective highlights a startup ecosystem that is becoming more mature, but where the fundamentals of building a business remain unchanged.

A strong idea may start the journey, but solving a real problem, understanding the market, having the right founding team and executing consistently remain critical.

For investors, the focus extends beyond short-term trends to whether a company can build a repeatable model, create meaningful entry barriers and generate long-term value.

As India’s startup ecosystem continues to evolve, the opportunities are expanding across sectors and technologies. For founders, however, the challenge remains the same: turning an idea into a business that can execute, scale and sustain itself over the long term.