Startups must move away from vanity metrics: Sanjeev Bikhchandani

Disciplined growth, not growth at all costs: Rapid, unchecked expansion often leads to operational inefficiencies and cash burn. Sustainable startups grow at a pace their operations and balance sheets can support, investing in scalable systems and infrastructure only when the business fundamentals justify it.

Building resilient business models: Founders should design models that can withstand market downturns, which means focussing on collections, not taking debt, expanding in a measured manner and scaling in a manner that allows the company to get to profitability if there is no external capital available

Investor alignment: Investors play a key role in guiding the strategy of a business. They should encourage founders to pursue profitability and operational excellence, not just valuation milestones or topline growth.

Resilience is the hallmark of startups that survive and thrive through economic cycles. Building such models requires multiple considerations. Concentration of revenue among a few customers, significant working capital requirement, high overheads, and poor unit economics often lead to problems in a downturn. Startups must track collections along with revenue, operate with sound unit economics and a lean cost structure, with variable rather than fixed costs, allowing them to adjust quickly to any potential revenue shocks.

Further, prudent cash flow management, including maintaining adequate cash reserves, is critical to ensure that they have the runway to weather unexpected market shocks. Finally, a loyal customer base provides stability. Startups should invest in customer service and deliver enough value ensuring that customers stick around even in tough times.

Resilient startups are always scanning the market for changes in customer preferences, technology, and competition. They are quick to adapt their products, go-to-market strategies, or even business models as needed. During periods of uncertainty, clear and honest communication with investors, employees, and customers builds trust and confidence, which is essential for navigating challenges.

Investors are important stakeholders in shaping a startup’s trajectory. Their priorities can either fuel unsustainable growth or foster long-term business health.

Investors can encourage sustainability by prioritising profitability and operational discipline. By asking tough questions about unit economics, cash flow, and path to profitability, investors signal that sustainable growth is valued. Beyond capital, experienced investors bring perspective, networks, and mentorship. They can help founders avoid common pitfalls, focus on fundamentals, and build robust governance structures.

Long-term business building often requires time. Investors who offer patient capital—are willing to prioritise business practices that generate value in the long term rather than pushing for quick exits—enable founders to make decisions that are right for the business, not just for the next funding round.

Balancing rapid scaling with responsible business-building is a nuanced challenge. Here is how founders can approach it.

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Strategic scaling: Scale should be driven by market demand and operational readiness, not just the availability of capital. Set achievable growth targets and invest in systems and teams that can support expansion without compromising quality.

Operational discipline: Maintain robust controls—monitoring key metrics such as customer acquisition cost, retention rates, and cash burn. Scale only what works and be prepared to slow down if the fundamentals weaken.

Culture and values: Embed a culture of responsibility—prioritising customer value, ethical practices, and the team’s wellbeing. Rapid growth should not come at the expense of customer trust.

Continuous learning: Stay agile and open to feedback. The ability to learn from mistakes and adapt quickly is crucial for balancing growth with sustainability.

Investment philosophy

As an investor, I believe it is important to approach every investment with equal commitment and conviction. I see each partnership as a unique journey with its own set of challenges, learnings, and successes. Every founder or team we back brings a different vision and energy, and our role is to support them in building sustainable, long-term businesses.

Each company teaches us something new—about markets, execution, and resilience—and contributes to our evolution as investors. Ultimately, we derive satisfaction not from individual outcomes, but from consistently supporting entrepreneurs who are striving to build enduring businesses and create real value. This mindset ensures that we remain objective, avoid biases, and stay committed to the core principle of fostering sustainable business growth across the board.

In the venture capital ecosystem, it is common to hear about “anti-portfolios” — the companies investors regret missing out on. However, I don’t dwell on regrets or missed opportunities. The nature of early-stage investing is such that decisions are made based on the information, context, and conviction available at a given time. Passing on a company is rarely about a lack of belief in the founder or idea; more often, it is about the fit with our investment thesis, timing, or portfolio balance.

Rather than focusing on regrets, I prefer to view every decision as a learning experience. Each pass sharpens our judgment and helps refine our approach for the future. The reality is that no investor can back every promising venture, and hindsight is always clearer than foresight.

Zomato’s evolution is a testament to the power of focus and the willingness to make tough decisions for the sake of long-term sustainability. With Info Edge’s backing since its early days in 2007-2012, Zomato navigated multiple funding winters and competitive pressures. This long-term partnership allowed Zomato to build a sustainable business model rather than chase unsustainable growth.

Beyond its core food delivery business, the company expanded into complementary services including quick commerce, and dining out—opening up new markets. Despite facing intense competition, it focussed on building lasting competitive advantages rather than solely competing on discounts, demonstrating a commitment to sustainable growth.

In the lead-up to its IPO, Zomato undertook a comprehensive “clean-up drive”, shutting down all international operations, including those in the US, the UK, Singapore, Lebanon, and South Africa, to concentrate on its core Indian market. This decision was not easy, as international expansion often brings prestige and the promise of rapid growth, but Zomato recognised that profitability and operational efficiency in its largest and most promising market were more important than maintaining a global footprint. By exiting less profitable international markets, it was able to streamline its operations, reduce losses, and move closer to profitability—a key factor in building long-term investor confidence and business durability 

As told to Naini Thaker in an email interview