Better Capital: 2024 Annual Letter

Welcome to our 2024 annual letter. Our annual letters are a way for us to capture our thoughts, ideas, and learnings today so we can reflect on them later. These are written for us internally at Better but published openly to keep us honest! You can see all the historical ones here.

2024 was expected to be the year of gritty execution on fundamentals across the portfolio and that is exactly how I would summarize it. We hadn’t factored in any non-linear positive capital market movement so we were not surprised that capital markets remained lukewarm at best, especially for early-stage venture from pre-seed to Series A.

We kicked off the year with BFF Annual — another one that was bigger and buzzier and one day of the year when we bring all the energy across the Better Capital portfolio in one place. Here’s how it went down :)

The Only Metric — Building Needle Moving Companies

Over the past few years, as we were building the foundation of Better Captial, we shared a lot of numbers to share the incremental process of building our firm from ground zero. Last year, we also shared our full fund summary, the stack we use, and more — you can see it here. Having done this for a few years, we are now moving towards tracking what matters in the long run and what we must remain focused on as a firm: building needle-moving companies. Each of our founding team strives for the same. It is extremely hard to create companies that matter — out of many attempts only a few emerge as the power law of venture has demonstrated for decades. So going forward, we will focus on sharing what we believe are “needle-moving companies” in the making.

As we wrap up 2024, here’s a glimpse of needle-moving companies where we were the earliest investors with a high conviction investment. We have many more in the making and those will be added to the list every year. A lot needs to keep going right for even these companies to reach their full potential, so fingers crossed as they continue to execute.

Needless to say, the entire credit for reaching this “needle-moving” status belongs to the founders and their teams who we remain indebted to for their early partnership with Better.

2024 Core Theme: Default Alive → Thrive

As I shared in our last annual letter, 2023 was anchored around the core theme of “Don’t Die → Default Alive” and that set the tone for 2024 where the goal was to ensure we tie any loose ends for survival (not just around capital but around strength of PMF and business model) and create a thriving foundation for every business that is apt for their stage.

I am happy to share that we were incredibly successful on this front in 2024.

• Multiple pre-seed companies crossed the $1M ARR mark while ensuring profitability and infinite runway. And a few crossed even $2M ARR — all with the pre-seed round they raised from Better.
• Multiple seed stage companies crossed the $2M-$3M ARR mark with robust execution on all fronts and entered their respective Series A conversations.
• Multiple companies have now crossed the $10M ARR mark with strong fundamentals in place and a clear line of sight for the next several years.
• Multiple companies that had to re-wire their businesses entirely in 2023 hit it out of the park in 2024 in terms of building on the foundation of the new business — uniquely hard in its own way and it was great to witness this come together brick by brick through the year.

As expected, we did have a few setbacks too — in spite of robust execution and high-quality foundation in place, a set of pre-seed funded companies that had made their dollars do 100x more than most others were forced to explore options for M&A as a last resort. We have a few M&As in process, a couple that fell through at the last minute, and a couple where there were no options on the table. The Seed and Series A market in 2024 remained risk averse, slow and passive — seeking safe bets primarily so it made it harder for some of these companies. The shallowness of India’s venture capital was evident in 2024 and we hope it gets fixed sooner than later.

All in all, it was a strong year for the portfolio and we are going into 2025 stronger than ever.

2024 Summary, Reflection & Learning

Here’s a quick rundown on the year as it unfolded, what went right, what we learned and a mix of a few more things :)

• We were pleasantly surprised by the number of founding teams that adapted to the tough funding environment, deepened their conviction in their businesses, and built strong foundations no longer dependent on follow-on capital. Watching so many teams make this transition was the highlight of the year for us.
• We were spot on with our “SaaS is Dead” proposition over two years ago. AI and AI agents have finally brought this conversation into the mainstream, and if you’ve seen Satya Nadella’s latest video, there’s no doubt why workflow SaaS is on a faster path to obsolescence than many expected. Fortunately, we’ve been advocating this shift for 2–3 years, and most of our portfolio is well-positioned thanks to the changes they implemented over a year ago.
• An early commitment to AI in 2022 — going all-in despite the hype — enabled us to collaborate with our portfolio founders to build deep insights and knowledge based on real usage data. This was instrumental in shaping both our decisions on exiting portfolio companies and our new investments. We ensured extensive cross-sharing of these insights internally, so all portfolio companies benefit from the collective intelligence we’ve developed. At Better Capital, I believe we now have more data, insights, and knowledge about AI products than any other community in India. This advantage is compounding, keeping our portfolio founders at the forefront of innovation. This outcome was no accident — it was the result of a well-coordinated effort to avoid re-inventing the wheel, and I’m incredibly proud of the collaboration I’ve witnessed over the past 12 months.
• IPO-bound thinking gained momentum among scaling and scaled companies in 2024 like never before, and we’re incredibly excited about what this decade holds. Over the next 1–4 years, multiple category leaders are poised to reach IPO-scale top-lines and bottom-lines. Given the relatively young age of our firm, this is happening sooner than I had imagined — but it’s a welcome surprise. This milestone will lay the groundwork for many more in our community, and I’m eager to see where it leads us.
• Our deal flow and ability to win and partner with the best founders grew even stronger in 2024, with multiple instances where founders chose us in highly competitive situations. We are deeply grateful for their trust and remain committed to exceeding their expectations. This trust is something we never take lightly, and we know it demands continuous effort. We are fully prepared to work harder every year to earn it, again and again.
• We faced some inevitable shutdowns this year, and it was one of the hardest years in that regard — especially because some of these companies truly deserved to continue. Others are heading toward M&A due to limited capital visibility. These have been incredibly difficult conversations, but watching how our founders navigated them made it clear we had partnered with the right people, and we would gladly partner with them again. We may have been wrong about the business, but we were right about the people. The experience has brought us many valuable lessons, and we’ll continue to share these learnings as we move forward, especially since there is so little guidance around this in our ecosystem.
• We raised our new fund comfortably sticking to our core invite-only and intro-only model for LP partnerships. We were super glad to see continued support and excitement of all our returning LPs and the new LPs they introduced us to. We have an incredible base of LPs that are true partners to us and I continue to be grateful for their ongoing belief in Better Capital.
• We made significant improvements across multiple operational systems this year — from internal functions to founder support and beyond. For a firm of our size, it feels like we’re in a strong position, with continuous improvement as our core lever moving forward. Ultimately, all of this only matters if founders feel the value. When they endorse the impact they experience from Better Capital, that validation is all we need to keep going. :)

Overall, we are wrapping up this year with a lot of positive momentum and clarity across the portfolio.

Navigating 2025

As we step into 2025, we do so armed with more data and insights than ever before — both as a firm and as a portfolio. One clear, unifying theme across companies, regardless of stage, is the focus on building sustainable, long-term businesses. I believe this will define the year ahead. With that in mind, here are core themes that will drive our work in 2025.

• Distribution will take center stage as AI commoditizes everything. Businesses will need to invest in building differentiated distribution and proprietary channels because capital alone won’t cut it. As switching costs plummet and product differentiation becomes increasingly fleeting in many categories, strong, unique distribution will be the key to staying ahead.
• Outcome-as-a-Service will go mainstream in 2025 as businesses shift from buying software to buying results. While horizontals like customer support will attract significant attention, we see enormous potential in specific vertical workflows like collections, where targeted outcomes can drive transformative value.
• AI Tools will redefine entire categories — from content creation to animation, sales, and beyond. These tools are essentially AI Employees, taking on workflows traditionally managed by individuals or small teams. However, this will be an intensely crowded space, and only those with standout, unique distribution strategies will emerge as winners. Tread carefully.
• Digital content-driven ConsumerTech in India is poised for unprecedented scale — not just in DAUs and MAUs, but in monetization, based on promising trends across categories in 2024. The momentum is undeniable, and we remain deeply excited about this space, actively investing to capitalize on its potential.
• A new generation of marketplaces is taking shape in India — ones that align with the textbook definition of marketplaces, which have historically delivered the largest venture-scale outcomes globally. We believe some of these true marketplaces — not the full-stack operations or lending-driven push businesses — will break out in 2025, reigniting the potential of India’s marketplace ecosystem.
• EdTech in India will begin its AI-driven transformation in 2025, but whether the ecosystem is ready to support these new ventures remains uncertain. With the sector still recovering from a deep downturn and undergoing significant adjustments, the appetite for these innovative plays may take time to build.
• Quick Commerce rails are transforming consumer experiences across categories — from fashion to food and even construction materials. Based on our experience, we believe 2025 will usher in the first wave of companies built entirely on these rails, delivering groundbreaking customer experiences that were previously unimaginable.
• Vertical AI will unlock the true potential that Vertical SaaS was expected to deliver, as companies build powerful AI-driven software tailored to specific industries and workflows — software that operates autonomously. We have actively invested in this belief and will continue to double down in 2025.
• Fintech in India will mature as players carve out niche user bases, mastering acquisition, retention, and the journey from 100K to 1M to 10M users. The true differentiation will lie in targeting the right niche and delivering exceptional customer experiences, rather than just competing on products or services.
• Cross-border B2B companies — built in India to sell to the world — are increasingly relocating their management teams to the US, driven by clear data showing that these businesses cannot thrive while being managed remotely from thousands of miles away. Through our Indiglo initiative, we pioneered this transition and have seen remarkable success with teams that embraced the move, now serving as guiding lights for the next cohort. Simply put, there is no other way to build these companies effectively.
• Physical Intelligence: While it’s unclear when the ChatGPT moment for Physical AI will arrive, we firmly believe Physical Intelligence represents one of the decade’s most significant opportunities as the puzzle pieces align like never before. With a TAM potentially larger than any other, now is the ideal time for experts in this field to start building. We made a couple of early investments in Physical Intelligence in 2024 and are excited to double down in the years ahead.
• India + AI: Lastly, we’re excited about the potential of AI for India. Just as India skipped the desktop era and leapfrogged straight to smartphones, could it now skip traditional software and go directly to AI? What would that look like? How should we think about it? Will consumers lead the way, or will businesses? These are open questions, and we’re dedicating significant time to exploring them.

These are just a few of the ideas that will shape our work in 2025, with many more sure to emerge along the way. If you’re building in these spaces, reach out — we’d love to brainstorm with you.

Staying true to our roots.

“Why are you raising 20 bucks when you can easily raise 200?”
“We’d love to anchor an opportunities fund and partner with you.”
“You’ve done the groundwork, why not go larger?”

These questions came at us constantly from friends, well-wishers, and supporters around the world, urging us to think bigger and go larger.

So, for the past three years, one recurring question has loomed large for us at Better Capital: what’s next? Having built a brand from scratch in an industry where it’s incredibly hard to stand out, the natural path seemed obvious — build a larger team, raise a larger fund, and move up the ladder from pre-seed to Seed or Series A. It’s the trajectory everyone expects.

But to me, it felt anything but natural. The conventional path of raising larger funds and graduating to later-stage investments felt misaligned with everything we’ve worked so hard to build over the past 5+ years.

What we’ve proven, time and again, is the immense power and impact of being the first check on Day 0 — backing bold founders with contrarian ideas when they need it most. This is where we’ve built our reputation and delivered results, and it’s where we believe we can make the greatest difference.

After much deliberation, we made a conscious decision: to double down on what has always been our core — why we started, how we started, and what has consistently worked for us. Better Capital exists to solve a critical challenge at the grassroots of entrepreneurship, and we are determined to go deeper rather than wider, staying true to our strategy and purpose.

In 2024, we put the debate to rest. We chose to stay rooted in our mission: to be the first check for unique founders, to champion brave ideas, and to deepen our impact at the grassroots. Beyond capital, we’re focused on fostering a thriving community of like-minded peers who share the drive to build needle-moving companies.

This clarity feels like a relief — and a renewal. I’m excited about the new ideas we’ll bring to life in 2025, staying true to the roots of entrepreneurship and our unwavering purpose.

Domkundwar Foundation (DF)

Ruchi, my true better half, has been my implicit co-founder in every endeavor I’ve undertaken. As we celebrate two significant milestones this year — 50 trips around the sun and 25 incredible years together — it felt like the perfect time to embark on a long-awaited and deeply meaningful project: giving back to the world that has given us so much.

With the Domkundwar Foundation (DF), Ruchi and I aim to bring to life ideas we’ve nurtured over the years, focusing on Education, Entrepreneurship, and Sustainability. Like Better Capital in its early days, DF begins as a “project” — not formally registered yet, but driven by the same spirit that has fueled my 25-year journey in entrepreneurship.

Our approach will be twofold: leveraging the Better Capital platform for impact-driven for-profit investments in these areas, while using the DF platform for non-profit initiatives. Much like any journey, DF will evolve over time, and I’ll share small updates in our annual letters to give you a glimpse into its progress.

To kick things off, we partnered with 14 Trees this Diwali to plant over 200 trees — one for each portfolio company — symbolizing a unique connection between BC and DF and setting the tone for what’s to come.

Building an IRL Community.

Running a Solo GP fund comes with its unique challenges — balancing a high-quality bar while staying deeply engaged can be taxing. In 2024, we set a bold priority: to go beyond virtual interactions and meet our portfolio and broader founder community where they are. This led to the launch of two new IRL event formats — BFF Roundtables exclusively for our portfolio founders, and FutureFounders, designed for the broader founder ecosystem that engages with us online.

Both formats saw multiple successful events in 2024, fostering meaningful connections, practical insights, and the kind of engagement that only happens face-to-face. These efforts underline our commitment to building not just a fund, but a thriving, collaborative community of founders.

In 2025, we’re doubling down on this mission. You’ll see Better Capital “come to you” even more, as we continue to prioritize IRL interactions that set us apart as a fund deeply invested in our founders’ journeys — beyond capital.

Thank you.

I remain incredibly grateful and thankful to everyone who makes Better Capital what it is today — our founders, their full teams, our LPs, our local and global co-investors, our broader community that engages with us and our companies deeply every day, our service providers who treat us way more special than we are as well as the media that chronicles our stories. Thank you for all your continued support!

Happy Holidays to you and your loved ones, from all of us at Better!