What stage does Kae Capital invest at?

Kae Capital invests at pre-seed to pre-Series A stage.

What is Kae Capital's cheque size?

$1.5M to $2M initial investment.

Articles – Page 4 – Kae Capital

The Transformative Power of GenAI in Media & Entertainment

Posted on April 5, 2024March 18, 2026 by Natasha Malpani Oswal

In the second part of this series, we delve into the unique blend of opportunities and challenges that the rise of GenAI in media & entertainment has brought about, along with evolving consumer preferences.

Current Landscape

The decline in traditional media globally contrasts sharply with the digital transformation successes seen in India. Digital platforms like Disney+ Hotstar’s utilization of cricket broadcasting rights to amass a large subscriber base exemplifies the potential for innovative monetization strategies despite the high costs associated with content and rights acquisition. In 2022, their strategy led to a 30% increase in subscribers during the IPL season alone, demonstrating the power of targeted content delivery.

The industry’s pivot towards premium content across sectors, despite existing monetization challenges, is also notable. While homegrown vernacular social media platforms have struggled to find monetisation models, the road for more niche communities and content is just being paved.

The audio segment, along with the comic book and gaming industry, points towards a thriving ecosystem ripe for innovation, with new-age platforms like Pratilipi, Dashtoons and Mugafi paving the way for new intellectual property (IP) development.

The GenAI Disruption

GenAI is setting the stage for a revolution in content creation and distribution. The technology’s capacity to generate personalized, engaging content at scale offers unprecedented opportunities for M&E companies. This cutting-edge technology is already reshaping how content is produced, from pre-production and development to distribution and marketing.

Tools like Midjourney and Stable Diffusion are paving the way for new forms of art. Audio platforms like PocketFM are using GenAI to scale up hits. Sora, Descript and RunwayML are expanding from generative video editing to creation. In India, startups like Rephrase.ai and HippoVideo in India are harnessing GenAI to create hyper-personalized video content, indicating the technology’s transformative potential across text, image, video and audio.

Tyler Perry has already halted his $800m Hollywood studio expansion plans in the face of this seismic shift to new models of production.

Predictions and Future Trends

These are my bets for some of the next-generation startup models we’ll see emerge in this sector:

1) Everyone is now a creator:

Given the rise of LLMs, everyone is now a creator. Supply is no longer the constraint across formats- moderating quality, generating demand and rethinking search are the real moats to building at scale. We will see the rise of entirely new AI-first platforms focused on highly personalized content and digital goods, with Gumroad leading the way.

2) Rethinking search and monetisation:

Regardless of the format you choose- audio, video, comic books, or animation- if you’re building a content marketplace in 2024, the game-changers will unlock or create a new category of consumer behavior when it comes to discovery or monetization. Wobot Intelligence, an Indian startup, is pioneering AI-driven solutions that transform content marketplaces.

3) Hacking for hits:

If you’re building a content platform, you will still have to show your path to either generating a ‘hit’ or building on existing IP. Every generational media business- whether it’s Disney, Netflix or T-series- is built on one IP that ‘works’ to begin with, and you can only hack or buy distribution up to a certain point. You have to hack both supply and demand until you get that elusive ‘hit’

4) Gaming gets more immersive:

Gaming will be reimagined and will become the largest category in this sector. We will see entirely new fantasy sports, virtual worlds, and never-ending games as GenAI changes the way we build games and makes them increasingly immersive. Real-time AI integration, as seen with Epic Games’ Unreal Engine, allows creators to build dynamic, responsive worlds, pushing the boundaries of user interaction.Kae is investing in a company which helps users create 3D assets from text using Gen AI, which could have interesting applications in gaming. A16z has already set up a new arm that focuses on investing in the disruption of gaming.

5) Social media gets less social:

The next generation of social media networks will go deeply vertical and niche, focusing on AI friendships like or being highly private. There is no middle ground. The rise of platforms that pioneer personal AI interactions like Replika, Anima, and CharacterAI are already showing that we’re finding solace in AI.

Conclusion

While the rise of GenAI does pose several challenges when applied in this industry such as lack of originality, deep fakes, intense competition for creators and IP minefields, the evolving landscape of India’s M&E sector offers a golden opportunity for founders to innovate and thrive.

Embracing GenAI, understanding nuanced consumer behaviors, and pioneering new models in content creation and distribution will be key to navigating this sector successfully.

If you’re building in this brave new world, do reach out (natasha@kae-capital.com). I’d love to brainstorm with you on staying close to the user and going deep on understanding their pain points, building for retention and quality, and hacking growth.

Audio OTTs’ Day in the sun – Our investment in Eight Network

Posted on March 20, 2024March 18, 2026 by Krishna Vinjamuri

Audio may be the first entertainment format in human history. Radio broadcasts have entertained audiences at scale for over a century. The advent of the internet helped digital audio platforms to flourish; changing the way people consumed audio content. With Apple launching iTunes in 2001, the popularity of digital music exploded. Since then, new audio formats such as podcasts, audiobooks, storytelling, non-fiction, short-form content etc. have evolved. We are super excited about the opportunity and invested in Eight Network early last year.

The opportunity

While video formats are dominant, audio has tremendous growth potential as it has independent use cases. With the high penetration of smartphones and headphones, there’s a substantial opportunity in the background entertainment space. This helped non-music audio content (growing at a CAGR of 33%) to claim a sizable share in the media & entertainment space, complementing the on-the-go lifestyle of young consumers.

There is a large audience for audio formats in the world. Spotify has over 550 Mn monthly active users (average) in Q3 of 2023; a 26% growth YoY. It is estimated that 170 Mn+ users are listening to audio on a monthly basis in India. While most of them consume music content, the share of non-music content has been going up rapidly. As per the Redseer report, the share of non-music has gone up from 3% in 2019 to 5% in 2023.

Major Indian players

On the music front, the largest players in India have been Gaana, Saavn and Spotify. Some of these have explored podcasts in some shape or form. However, the core offering for these platforms still remains music.

The second wave of companies in the OTT space include PocketFM, KukuFM, Headfone and Eight Network. They vary from each other in the genre and target audience. Pocket FM’s core product offering has been long-format audiobooks and stories. Kuku has focused on the Bharat audience, offering non-fiction content that includes motivation & education in many vernacular languages.

Eight Network

The latest of these, Eight Network, has focused more on the immersive content around audio shows, live and podcasts. While short-form content seems to have worked for video, long-form episodic content has worked well for audio platforms to improve retention and engagement.

Eight, targeting the young urban demographic, has experienced remarkable customer love, largely because this group has been significantly underserved. Though relatively earlier in the journey than its peers, Eight is currently the highest-rated audio app in India, highlighting its success in meeting the quality its segment desires. The founders Mohit Paliwal, Mohit Goswami and Yugal Tamang are all second-time entrepreneurs and are passionate about the space. They spent some time on Social Radio before they found their PMF in immersive audio shows.

Urbanizing youth segment

Eight focuses on urbanized young consumers. Millions of young content consumers are either semi or completely urbanised and are exposed to high-quality video content on OTTs like Netflix, Prime and Hotstar, e.g. consumers of Paatal Lok, Sacred Games etc. They have a high expectation of the quality of content. This is a broader trend and not limited to affluent youth.

This user also has periods when he/she can’t look at the screen – such as while commuting, performing certain household or work chores etc. So audio serves as the best means to keep company.

Right to win

Eight is the first and only Audio OTT platform to serve this base of users by offering immersive content in the tone best suited for young audiences. Most of their content is in Hinglish, which sounds very similar to how young Indians converse.

Eight has curated 100s of hours of such premium immersive content. They have a strong tech and community enabled playbook in place and are on the path to host the largest inventory of high-quality audio for young urban consumers. This scalable content strategy offers natural moats for the business at scale. 90% of the audience on Eight is between the 18-34 age bracket and is from the top 15 cities, signifying strong PMF for this segment.

Role of technology and community

Digital platforms have leveraged tech well by supporting creators with tools that help them make high-quality content easier. They have also built creator communities and enabled collaboration between them. AI is being rapidly adopted to make the content creation process faster and easier.

The Eight team recently unveiled the beta version of their creator web tool, Eight Studio, specifically designed to empower podcasters and audio creators. This platform enables creators to collaborate, craft, and directly publish their shows on the Eight App. A standout feature of Eight Studio is its integration of Generative AI technology, which aids creators in developing content ideas, making it an ideal tool for refining concepts at their inception.

What sets Eight as a platform apart is its strong emphasis on community engagement. Already, Live Community at Eight has facilitated the creation of breakthrough content IPs for the company. By launching Eight Studio, the team aims to democratize content creation, offering aspiring creators a platform to expand their reach and cultivate their own audience.

International play

TikTok, in short-form video, has been super successful in the US. Almost all the above audio non-music OTT platforms have gone international (primarily US). They have both repurposed the content as well as created new content tailored for the US audience.

Monetization

The digital audio streaming market is estimated at $40 Bn in 2023 by Redseer. Deloitte puts this a bit lower at $30 Bn in 2024. While this is ~25% of the video streaming opportunity, the market is pretty big to create multiple winners – more so if there are global plays.

Advertising: According to Statista, the Digital Audio Advertising market is projected to reach $11.13 Bn in 2024. While this seems to be a large opportunity, given the struggles of Indian content platforms to monetize effectively, the new-age audio OTTs have largely stayed away from this – both in India and overseas
Subscription – Indian audio OTTs have preferred to go with the freemium model with some content behind a paywall. To keep the retention high even among the unpaid subs, some of them have released new episodes over a period of time

The Indian players seem to have scaled well. Pocket FM has seen multiple content assets such as ‘Insta Millionaire’ and ‘Saving Nora’ that have yielded revenues of $12-15 Mn each. Kuku has over 3 million active paying subscribers.

The explosion of content formats and genres in India and globally has made this an exciting space. Given the revenue scale that some of the players have reached within a span of 5-6 years, large outcomes are possible. It is one of the few spaces where content – from India to the world – is likely to see success.

Investment in GobbleCube

Posted on March 19, 2024March 18, 2026 by Veenu Choudhary

Why GobbleCube?

In the evolving retail e-commerce sector, the global market, valued at $5.3 trillion in 2022, is expected to see significant expansion, with a CAGR of 11.2% through 2030. This growth is driven mainly by the increased use of smartphones and the convenience of shopping from home. Factors such as a wide range of choices, lower prices than in-store, and increased internet usage are enhancing consumer demand globally. The Asia Pacific region contributed a 42% revenue share in 2022. It’s more than just numbers, it’s about our evolving lifestyles and how tech is reshaping our shopping carts.

With the advent of AI, online shopping is anticipated to see an uptick. Innovations such as AI shopping assistants, chatbots, personalized experiences, and tailored recommendations are set to redefine customer service. Additionally, features like real-time interactions and virtual product trials aim to significantly enhance customer engagement and boost conversion rates.

E-commerce penetration is growing rapidly, becoming a key focus for major brands, outpacing traditional retail with a CAGR twice as fast. This growth in e-commerce has led brands to diversify across multiple platforms, adding complexity to their operations. They face challenges in managing revenue and consolidating data across platforms like Amazon, Walmart, Flipkart and various quick commerce sites. The traditional methods of spreadsheets and manual data analysis are proving inadequate for scaling in this fast-evolving landscape.

At Kae, we recognize the genuine need for solutions in complex workflows, seeing great potential in AI for simplification. The GobbleCube team is aptly poised to address this substantial challenge. GobbleCube is the go-to platform for consumer packaged goods (CPG) brands looking for seamless revenue management. Offering real-time analytics, it is essential for enhancing brand visibility, availability, and market presence, factors directly influencing sales.

GobbleCube automates data and decision-making processes across the entire e-commerce value chain to boost share of voice (SOV), minimize out-of-stock (OOS), and prevent revenue leakages, leveraging AI and automation to present brands with actionable insights. This enables brands to focus on executing actions that drive growth and profitability, while it abstracts the entire end-to-end process.

GobbleCube team has a strong founder market fit, with co-founders originally part of Blinkit’s leadership, instrumental in developing India’s major quick-commerce platform. At Blinkit, Manas built out Data as a Practice, Sri led Category and Merchandising and Nitesh was heading Consumer Engineering. During those 7+years, they collaborated with 500+ brands and gained a first-hand understanding of the everyday challenges faced by brands as they expand their presence on online platforms.

We had been in touch with the co-founders for several months even before this round. They have a deep understanding of the business and customer empathy- essential for product development. GobbleCube aligns with our investment thesis in vertical SaaS companies that address specific industry challenges and automate existing manual processes. It assimilates, models, triangulates, and analyzes vast amounts of data to quickly surface those crucial high-priority issues using contextual intelligence. This enables sales teams to get into action immediately by asking the right questions to the right stakeholders. Already implemented by various mid to large global brands, GobbleCube is demonstrating its market relevance and potential.

We at Kae are very excited to partner with them in this journey. This presents a large opportunity, and we believe they are the best team to build this business.

E-commerce enablers: Manufacturing and distribution

Posted on February 9, 2024March 18, 2026 by Urvashi Nanda

The Indian e-commerce landscape has witnessed multiple changes over the last decade. While back in the early 2010s, most Indian consumers were only getting acclimated to the idea of e-retail, today the skepticism has given way to widespread adoption. It was in 2020, when the pandemic marked a true inflection point for e-retail adoption, where we saw a surge in online usage. From online food delivery to quick commerce, a new form of commerce was set afoot, and today, we cannot imagine a world without being able to purchase anything digitally.

There are over 230M Indian online shoppers spread across diverse segments. A large part of Indian shoppers come from Tier 2+ cities and GenZ has become a key micro-segment. Multiple factors such as rising internet penetration due to access to cheap data, high smartphone penetration and increasing per capita GDP have all been drivers of this e-commerce surge.

While the story above looks good and e-commerce penetration in India has been on an uptick, it remains relatively low when compared to other countries. Online spending in India is 5-6% of total retail, while it’s 25% in USA and 35% in China. This shows the massive headroom for growth. To fuel this growth, a new age of startups has cropped up known as e-commerce enablers. They are a form of service providers that mitigate the inefficiencies in the current e-commerce landscape and improve the potential that can be achieved. India will need models that help businesses scale, and cater to the varying needs of its diverse shopper base – with different price sensitivities, language requirements, quality expectations and delivery timelines.

If we look at the entire value chain from the procurement of raw materials until the product reaches the consumer, multiple checkpoints and stakeholders are involved. Below is a brief visual of the value chain.

In this blog, we dive deeper into 2 parts of the value chain – manufacturing and distribution

Manufacturing

Manufacturing is the first step in the supply chain.

The need: Gone are the days when large segments of the population were making do with brands that were available at the nearest store. The segmentation was mostly done on price points and it was a distribution-led era. Today, Indian consumers comprise more granular segments, each with its own preferences. Over the last few years, there has been and will continue to be a proliferation of brands to cater to such segments that are primarily online first. These brands will be at a relatively smaller scale and will need more agile and responsive manufacturing facilities; that can offer good quality products at low (minimum order quantity) MOQs, at low cost and quick turnaround time (TAT). In addition, global commerce has become more decentralized and countries look at different hubs to source and manufacture critical components.

Where we are: While the Indian manufacturing industry has been growing quickly and is amidst rapid transformation, there are still multiple points of friction that persist. The manufacturing sector contributes ~5% to the GDP and India’s export contribution to global trade is only 1.6%. While the government has been pushing to revitalize the sector with initiatives for what is known as modern manufacturing, the infrastructure around it remains mired in the industrial age. However, with multiple tailwinds, India has an opportunity to emerge as a global manufacturing hub; not only are multiple Indian companies looking at manufacturing in their homeland but also international companies are shifting their manufacturing bases here. Electronics manufacturing could expand by 21% to touch $604B by 2032.

The gaps: Many manufacturers still rely on old technology and traditional production methods that lead to inefficient production processes. Most new-age D2C brands require agile manufacturing, with small batches to meet constantly changing consumer preferences and in order to keep up with a highly competitive landscape. Production methods are capex intensive, and to cover costs, manufacturers operate with high volumes, while brands have to struggle to deal with high inventory and long working capital cycles. Outdated machinery and high dependence on manual labour lead to delayed production timelines and inconsistent quality. Limited use of modern technology inhibits the manufacturers from adequate resource planning, monitoring machinery utilisation or inventory planning. This results in longer lead time and therefore lost sales / high inventory for their customers (brands). These are only a few of the multiple bottlenecks that prevent the manufacturing sector from operating productively.

Emerging whitespaces: Today, primary innovation has been on different modes of mechanization and automation. A convergence of digital, biological, and physical innovations, is transforming the entire value chain. It integrates digital technologies like IIoT, AI, cloud computing, advanced industrial robotics and 3D printing with various sectors, enhancing on-ground manufacturing, quality management, supply chain, maintenance, and customer service. These changes in the manufacturing sector have also been tagged under the next revolution of Industry 5.0.

We have identified various segments within the manufacturing value chain that have seen innovation over the last few years and will continue to do so:

Capacity utilisation: Technologies that increase the efficiency of the factory operations and maximise resources at hand such as digital assembly mechanisation, AI-powered process controls, remote production optimisation, energy consumption prediction and collaborative robotics.
Capacity maintenance: Real-time asset monitoring and predictive maintenance to ensure timely maintenance and repair for the long-term durability of factory equipment and machinery.
Quality Management: IOT-led quality management to bring about standardisation within quicker timelines.
Capacity modernisation: New form of manufacturing such as on-demand manufacturing, with lower MOQs and precision machinery to ensure capacity efficiency.
Automated designing and product development: Predictive analytics for product demand, AI-enabled designing, cobot-led product development for sampling and resource planning
Automated fulfilment support: Predictive planning for warehousing and logistics, delivery vendor network management.

We have had the opportunity to speak to different startups across this space such as startups building nano factories with production bots to industrial software providers using AI and IOT devices. We have understood that there is a large scope to optimize manufacturing functions, enabling the factories to build for India and the world. However, few challenges remain around being able to build large outcomes, as key stakeholders in the manufacturing industry are often reluctant to adopt new technologies. We are hopeful that the multiple tailwinds such as high computational connectivity, government-led initiatives, and the influx of AI-ML technologies make it the correct time to build and solve for the inefficiencies in the sector. While it may be a challenging sector to enter, identifying a relevant problem and building with a clear GTM will allow for a compelling new-age startup.

Distribution

The need: Over the past decade, e-commerce has grown from a niche market to a global powerhouse, reshaping traditional distribution strategies and blurring the lines between online and offline retail. As businesses learn to navigate this e-commerce revolution, they must adapt and embrace the changing dynamics of distribution. While multiple start-ups have been set up across various segments of the logistics industry from aggregator to last-mile delivery, in this blog, we focus on the transition between offline and online distribution.

Where are we: The India logistics and distribution market is huge and has undergone significant transformation over the years. Boom of e-commerce, government reforms, changing consumer preferences and evolving tech infrastructure have been propellers of this change. India’s logistics sector would expand at a CAGR of 10%+, from $200 billion in early 2020 to at least $320 billion in 2025. While till a few years back, most distribution channels were offline, it was during the pandemic the different channels of facilitating e-retail took shape. However, today, most businesses are recognizing that customers not only shop online but also want the experience of “touch and feel”. Many online first brands are exploring the offline route. The likes of BigBasket, Lenskart, Nykaa, and MamaEarth have redirected their efforts towards offline channels in a significant departure from their established digital dominance.

The gaps: Offline presence is not merely about brick-and-mortar stores, but also about personalised experiences to their customers. However, strategically establishing their offline presence either via owned stores or shop-in-shop experiences, online-first brands are trying to navigate this new territory. Offline distribution is expensive and brands struggle with successfully identifying the correct distributor, their sales channels, and retailer outlets. Large brands such HUL or P&G have the scale to work with individual distributors and can dictate their final outcome regarding which retailers they want to sell at. However, smaller brands with less than INR 100 crore in revenue have lesser negotiating power and the end-to-end operating costs to get distribution can be as high as 35-50% of their revenue. Getting efficacy from their sales force to get the retailers to stock products and manage the sales force churn are other major issues. Further, there is a demand generation problem, as fighting for visibility in a new environment where there are no targeted advertisements as in the digital world, becomes tough.

Retailers on the other hand have low bargaining power and are left at the hands of the distributors in deciding what products to keep in stores and the amount of inventory to stock. Additionally, the Indian retailer landscape has also evolved – from small brick-and-mortar stores to modern shopping malls, brands can choose multiple avenues to reach their customers. Innovative formats like hypermarkets, luxury boutiques, and shop-in-shop have also gained popularity, further enriching the offline shopping experience.

Emerging whitespaces: Here we have identified a few spaces we feel have the potential to solve for:

Access to new brands for retailers: Allows brands to discover new retailers and even allows access to niche retailers in new geographies. These platforms which work with multiple brands can often club the distribution channels for different brands and help brands select the right retailers thereby reducing costs and achieving higher margins. However, churn of brands may be a potential challenge.
Listing on demand platforms (ONDC): Brands can take advantage of listing through ONDC distributors, especially for products with high AOV and high frequency .
Additional services: Other services for brands such as payment reconciliation, surplus product disposal, store set-up for modern trade, and improvement of footfall conversion to name a few
Hyperlocal delivery: As a form of replacement for local retailers. Many players have entered this space, especially focusing on grocery.

We have spoken to multiple startups in the aforementioned segments. There have been platforms that look at facilitating brands setting up shop-in-shop outlets and upselling their products, as well as startups that help create SKU bundles and sell the entire basket of products to retailers. While some might focus on a particular segment such as electronics or only T2+ cities, some are more widespread and look at an array of product types or geographies. While building out an early-stage startup in this space, it is key to not only help brands expand their offline presence, reduce inventory held and thereby bring down their distribution costs, but also help with additional services such as vendor management, GNR generation, payment reconciliation etc. Further, the team needs to have strong ops experience and a clear GTM strategy to be able to execute correctly.

Our view

We at Kae, are bullish about the e-commerce enabler system and feel there is vast potential that lies beneath it to tap. With the advent of online marketplaces, mobile shopping apps, and secure payment gateways, consumers have been provided with unprecedented access to a vast array of products and services from the comfort of their homes or on the go. The change has been nothing short of remarkable and has given a host of opportunities for other new-age exciting startups to be created.

We will follow this up with more blogs that trace the development of other enablers along the product value chain. If you’re building in this space, feel free to reach out to me at urvashi@kae-capital.com

Founder-Investor Fit

Posted on December 12, 2023March 18, 2026 by Gaurav Chaturvedi

A startup’s early days are focused on only one thing, getting to ‘Product-Market fit’. Savvy investors talk about looking for ‘Founder-Market fit’, which they believe is key to getting ‘Product market fit’. Along with these two, I have been thinking about the concept of ‘Founder-Investor Fit’, which is not talked about much in the ecosystem. During the last few years, we have had multiple discussions with founders (both in our portfolio and outside) about how having (or not having) the right fit between investors and the company (or the founders) has been so positive (or catastrophic) for the company.

One of the triggers for this post was a blow-up that happened a few months back. A very well-known and respected investor got into legal tangles with a portfolio company. This portfolio company was founded by a college dropout, considered a maverick, second-time founder. Now, I do not know the founder too well to be able to comment on him or judge the situation, but I know the investors well, and they have been great partners to us and various founders over the years. I have to say, I do not know much about the issues here, and so, in no way trying to pass any judgment. In one of the media articles, it was mentioned that the relationship between the investor and founder broke down once the founder was trying to raise more debt without aligning the investor and also that the investor was not getting the financial reports on time. The moment I read it, my first thought was that this was never going to work for this investor. I know personally that they are not a fan of raising debt until needed and also are sticklers for financial reporting being done in the right way (we also agree with both, I must add). Beyond any other issues, this was clearly a case of not having a ‘Founder-Investor fit’.

So how should you think of ‘Founder-Investor fit’? Same as how you would think of fitment for an employee – you check for skills and cultural fitment. It is the same as a founder would do it for the next hire.

Let us first start with the ‘skill fitment‘.

In the case of investors, skill fitment will essentially mean that this investor usually invests at your stage and also has experience in your space. A very smart founder/operator, while discussing with me, had compared startup building to a relay race where investors and management keep giving reins to the ‘right’ next set of people. I find this to be quite a useful analogy. The ecosystem has seen many cases where things have not worked out ideally if the founders have not partnered with the ‘right investors’ for that ‘specific stage of the business’.

Similarly, investors with experience in your category will be more likely to have better insights and networks for the business. However, I believe that the right ‘stage fit’ is much more critical compared to ‘space fit’, as there have been a lot of companies where investors with no experience in the category have proven to be the most helpful.

What about ‘cultural fitment’?

We see that founders give a lot more thought to the ‘Skill Fitment’ while deciding their investor partners, but barely any thought goes into checking the ‘Cultural Fitment’ (or its equivalent). This is more critical in our view and here is how we would advise the founders to think about this:

1) Shared goals success metric: For a long-term successful partnership, be it a CXO, any other employee or even an investor, medium-term to long-term goals and the definition of ‘success’ should be the same for all parties. For example at Kae, our stated mission is to help entrepreneurs build enduring companies. If for an entrepreneur, success is to build and sell a company quickly, while this could be very rewarding financially (we get a lot of proposals with ‘you will get 5x in two years’ for your investment and the likes), is not in alignment with our definition of success. We prefer founders to go for building enduring businesses that outrun our time with the company multiple times, instead of building for a quick exit. Similarly, if a founder is looking to build a small/medium-scale but highly profitable and low-risk business, it would not be matching the goal of a large venture fund where the fund’s success is predicated on an outlier, multibillion-dollar outcome.

2) Alignment on success metric: Along with goals, how you measure success is another crucial consideration. When we work with early-stage portfolio companies, we ask them to identify ‘ICP’ and the right ‘success metric’. This is the same exercise that a founder should do, the right success metric for the short, medium, and long term has to be aligned with for good relationship between founders and investors. Just think about this, if a founder is chasing profit (say EBITDA) and the investor is only looking for topline (Or vice versa)- the board room will have two different languages being spoken in the review meetings. A right success metric aligns everyone to one clear north star and short-term milestones.

One of my portfolio companies recently did an alignment exercise in a board meeting, I found it very useful and recommend it to other founders regularly. Similarly, while evaluating a company some time back, the founder spent one full in-person meeting with me only asking me what success looks like to me for her business! I wish a lot more founders do it this way (Maybe not the full meeting, but you get the point)

3) Same core values: After alignment on goals/success metrics, it is very important to see if the founder, employees of the organisation, and investors align on key ‘core values’. A lot of investors are not very vocal about their core values (especially in India) but if you spend enough time with different people in the fund (and also ask), you can get a decent idea of what are the core pillars of their culture. It is then critical to see if there is a broad alignment between the company’s core values (which are mostly driven by the founders’ value system) and the investor’s core values. In our (Kae’s) case, we have ‘respect for all’ and ‘accountability to each other’ as two of our core values- we generally match very well with founders who also embrace these. There are a lot of investors who are very understated/ low-key (as it is part of their culture), if they end up investing in a very high profile, media-loving, flashy founder (or company), there is a good chance of not having a great relationship and outcome.

4) Discussing ‘Non-negotiables’: This is probably the most important alignment to seek and it flows from the values of the investors and founders. It is so critical that if needed, both sides should be upfront and explicit about it. For a lot of investors (including us) integrity is non-negotiable. Similarly, compliance and doing things by the book are the topmost priorities at every stage for a lot of funds. This requires an explicit check, that those non-negotiables are clear to both parties from the start and forever. By the way, this is very much binary- For example, there is nothing like being 90% compliant or integrity in 80% situations. This should be on top of the mind for all the relevant stakeholders at all times.

5) At the end of the day, It is all very personal: While investment funds are tight-knit teams and are aligned around their core values, goals, and procedures, the founder-investor relationship also has a lot of personal nuance to it. Different individuals at any fund usually have different preferences/expectations from the founders and a different way of engaging/working together, which is usually shaped by their individual values/persona and also their investing experience. A good match of personal values (and expectations) and the way of working together is very critical. This is what people usually bucket into great ‘chemistry/vibes’.

Even with all the points written above, it is still not easy for founders to figure out the right founder-investor fit. One of the key reasons is that we VCs are not known to be very transparent and articulate about our way of working and especially our core values. In such a scenario, the existing investors usually become the guide for the founders as they might know the other investors better. Beyond relying on the existing investors, founders should also talk to as many people as they can about the prospective new investors. We usually recommend our portfolio founders to do reference calls with other founders (and help them connect with too), who have gone through tough times in partnership with a particular investor. As they say, your value system and character are most clearly revealed when the going gets tough.

The idea of ‘Founder-Investor fit’ is very important for the investors as well and a lot of times it plays up in the evaluation process. The cost of getting it wrong however is much lower for investors compared to the founders. We were recently discussing the importance of checking for cultural alignment in a new hire with a portfolio company. I always use this statement by the legendary Vinod Khosla about investors with new founders- ‘Think of investors as an employee, whom you can’t fire’. When the founders think so much about cultural alignment with a potential hire, it is very obvious that this should be given more importance in the case of an investor.

I fully understand and empathize with the founders as finding a ‘right fit’ investor is not equivalent to choosing a culturally fit employee, especially as in a capital-scarce market, the relationship can be very asymmetric. However, it is still a very critical aspect of organization building and can be and could prove to be one of the most important factors in the success or failure of a venture.

Planning your startup journey

Posted on November 6, 2023March 18, 2026 by Krishna Vinjamuri

What do cricket and marathons have in common? The sportsmen need to pace themselves and develop strategies for smaller periods of time to be able to win eventually. For example: In cricket, if it is a one-day game, the batsmen plan in 5 over stretches – say 20 runs without losing a wicket or playing out a bowler, etc. In case a few early wickets fall, they rework the plan accordingly. Now, will this be the same game plan for test cricket and 20-20? No, the plans change according to the game that they are playing. Maybe a session-by-session plan for a test match and a 2-3 over plan for 20-20. But they all plan for interim goals. Short-term planning is easier, more concrete and helps keep things simple instead of a grand strategy for achieving the final objective.

Breaking the journey into smaller slots with near-term goals

Break up your start-up journey into interim stations. Set up near-term targets along the way and align the team towards them. Fundraises offer a natural breakpoint to plan for. Fundraises should always give you a runway of a minimum of 18 months. It gives you a clear 12 months to execute without worrying about the next round. Let’s use these as stages (stations) in this article.

What do short-term goals look like?

Each stage should have de-risked or proven something towards building a large sustainable business. To reiterate – this derisking is not just the scale of the business – but multi-directional in nature, enabling the business to become large and sustainable. It could be the proven value proposition for each stakeholder, bench strength of the second-tier team, identified channel to scale, unit economics, margin expansion etc. Let’s break this down and look at a framework:

Note: It is difficult to have a common plan across different business models – such as marketplaces, brands, SaaS, consumer products, and social networks. So we have kept this a bit broad.

Stage	What to achieve with the runway from the funding round
Start	Pre-Product Market fit (Pre-PMF), large Total Addressable Market (TAM), strong founders, small team.
Seed	PM fit achieved, monetization experiments (in some business models), small stable team. Very low spend on marketing; Do not scale before PM fit is reached (maybe use the superhuman survey to evaluate this)
Series A	Deepening value proposition for customers. Clear monetization with positive gross margins. Scalable Go-to-market (GTM) strategy identified. Directionally, Customer Acquisition Cost (CAC) is trending in the right direction. Cohorts are looking encouraging. Potential moats identified. Gaps in CXO are mostly filled. Systems designed and are being set up to ensure high customer satisfaction. Scaling 4X – 10X
Series B	Falling CAC. Stronger customer satisfaction leading to improved retention, cohorts indicate CAC to Customer Lifetime Value (CLTV) about to be achieved. Moats are beginning to appear – Switching costs becoming higher for customers and entry is not so easy for newer companies. Full panel CXO; Tier II teams being built. Margins expand for marketplaces or D2C (Direct to consumer) brands. Positive Contribution Margin 1 (CM1). Growing at 3-4X YoY
Series C	Continue scaling fast. Contribution Margin 2 (CM2, post marketing) positive and trending towards profitability. Full teams. TAM expansion projects. Strong moats, growing at 2.5- 3X YoY
Series D	Money for growth only. Profitable, growing at 2X YoY. TAM expanded
Series E	New lines to unlock value found. Growth slows

The above is just a framework and WILL change based on business models. For example: if you are in commerce – monetization is visible on day one. If you are a content platform, the preference will be on PMF, which is showcased in engagement and retention. Founders should be thoughtful about how they plan the interim goals and what they are derisking at every stage.

As an example of one such journey – here is a startup that I invested in the content space and how they went about it:

Pre-Seed:

Before the seed round, the company had strong engagement with its core audience [Time spent per day per Daily Active User (DAU)] which showcased a good value proposition. But they had lower than expected long-term customer retention (D30 – % of users who used the app on the 30th day after opening the app for the first time ever). The low retention indicated that the offering was nice to have for some time, but the value proposition couldn’t be sustained over a long period of time. As the customer churn is high, this creates a leaky bucket problem, which is not sustainable.

Seed Stage:

The goal for the seed round is to achieve PMF (Product Market Fit). They first identified the audience segment that resonates with their offering (Ideal Customer Profile or ICP, you can read our pieces on this: Part 1 and Part 2). Once they identified the ICP, they worked on the product and content strategy around this segment to ensure that the value proposition stays strong over a longer period of time (Product Market Fit).
They hired a small core team for roles in product and technology and to manage the creator community. They had focused on product improvements such as better onboarding experience, notifications to entice the listener back etc. They also understood that their ICP prefers a particular category of content and that episodic content worked better in longer-term retention.
Over the next 12 months, they spent less than $150K on marketing. They spent time on getting the right set of content onto the platform so that the ICP could have depth in this category.
Marketing spends were minimal to keep a minimum threshold of daily traffic on the platform – while they worked on the experiments towards PM fit. Over the next 12 months, the total spend was less than $150K while the long-term retention improved by more than 60%. They didn’t try monetization in the seed stage as the offering was not meaningful yet.

Summary: Identify your ICP and get to PM fit. Don’t try to scale too much (large team hiring, high spending on marketing) before achieving PM fit. We’ve written about the path to PM fit through the use of a Minimum Viable Product here.

Series A:

The company raised the next round about 18 months later. The goal for this stage was multifold.

Strengthen the team: The company added to the content, tech, and product teams to make them stronger.
Deepen the value proposition and improve retention: The company started expanding into a new genre of content for its ICPs that is closer to the first genre. They started creating audio shows (in a scalable way leveraging creators) to improve content quality and make it more predictable. Retention improved by about another 50% during this round.
Identify scalable GTM channel: They identified Google and Facebook as scalable ways to acquire customers, in addition to the organic (SEO, sharing) methods.
Try monetization models: Some monetization experiments were performed with premium content.
Start building moats: They have been able to successfully leverage technology to bring together teams of creators who are in different parts of the country with varying skills to be able to create high-quality content in a decentralised manner. This network of content creators and leveraging tech to rapidly create more content has helped them create diversified content (multiple genres + depth in each genre) at a low cost. This is a big moat for any content company.

Series B:

The company raised Series B funding 16 months later

Lowering the CAC (customer acquisition cost): The company continued to work on its CAC by leveraging the organic channels. With more Word-of-mouth (WOM) marketing, the CAC reduced over a period of time by 30%.
Stronger moats leading to higher switching costs: The company was able to scale the content quickly using its managed decentralized model of content creation by leveraging technology. The product also started offering multiple genres and a personalized content recommendation engine which helped in improving customer experience.
Tier II teams were built across all key functions.
Monetisation continues with CAC to CLTV improving.

The company is currently at this stage. Here is how I see the next few rounds panning out

Series C:

With this capital, the company can focus on the following:

Teams – Full CXO teams are built
CAC < CLTV proved with this capital
The contribution margin post marketing becomes positive and will start covering some of the fixed costs.
TAM expansion experiments into newer markets
Stronger moats
Growth continues at 3-4x YoY

Series D:

Capital raised for growth only.
To become profitable before the next round
Still growing at 2.5x-3x YoY
TAM expanded with a new source of revenue clearly established

Series E:

New lines to unlock value found
Growth slows a bit to 2x per year

I hope this article helps you provide a framework towards planning your own journey. For more information, you can reach out to me here: krishna@kae-capital.com

The Indian SMB Story

Posted on October 27, 2023March 18, 2026 by Kae Team

The SMB (small and medium business) story is not a new one in India. Contributing to over 30% of the Indian GDP, the MSME sector is the bedrock of aspirational India. Incumbents like Tally, IndiaMART, and Zoho solved for various key organisation activities (like accounting/bookkeeping, vendor/buyer discovery and CRM respectively), paving the way for a wave of mobile-first technology tools.

We saw the first wave between 2014-18 which saw the emergence of mobile accounting/bookkeeping solutions like Khatabook, OkCredit, storefront solutions like Dukaan and miscellaneous business op solutions (which include ERPs/CRMs). The same period saw the emergence of B2B marketplaces like Udaan which solved for procurement and eventually the emergence of managed service marketplaces like Zetwerk and OfBusiness. The emergence of commerce necessitated the emergence of financing solutions (anchor-led and non-anchor-led) such as Mintifi, Rupifi, etc.

The perennial question remains, where do sustainable profit pools lie? Please note the key term sustainable profit pools – which implies profit pools backed by non-commoditized offerings and protected margin profiles. Is it in financial services? Is it in software + financial services? Is it in commerce (which includes credit by extension)? Where is the gap in the market? What use cases are yet to be solved? With models like Zetwerk and Mintifi turning operationally profitable, we are seeing signs that rapid scale and profitability can be achieved in tandem by tapping into SMB spending.

After having spoken to a few hundred founders solving for the Indian SMB space, we wanted to get a pulse from the SMBs themselves. We spoke to SMBs with the aim of understanding their day-to-day activities, motivations, which services they consider critical and which ones they don’t. We brainstormed with them to understand what they would build in-house and what they would prefer to outsource, what is critical and what isn’t.

Understanding the general workflows in manufacturing and services –

A sample manufacturing workflow (and key bottlenecks/ key points of disruption which can be solved using technology have been mentioned in brackets) can be as follows:

Procuring Financing at various stages is also critical to the entire workflow.

Services workflows are more varied – they differ significantly from logistics service providers to restaurants/hospitality service providers to construction services. However, the core workflows can be abstracted out as follows – discovery (finding customers), financing, procurement and project management.

Beyond the above-mentioned key activities, there are several compliance-related pain points/activities which are industry-specific. For example, pollution control is critical for textile printing businesses.

“Pollution is a big headache – factories are across the state. Water pollution is an issue for textiles across the board. Water needs to be treated well, current solutions are not satisfactory.”
– Small business (Textile printing)

“Our main problem is dealing with so many policies, every state has a different required label with different MRPs, different warnings to be put- logistically it’s a lot of extra effort for the company”
– Large business (Alcohol)

Software solutions seem to be attracting attention as well, however, we are uncertain of the underlying profit pools.

“ If a software comes up that allows us to manage our projects more efficiently, we’d be willing to pay for it. Labour shouldn’t be occupied in things like accounting.”
– Residential Business construction, small business (Construction)

Automation solutions are in demand for large SMBs (think INR 100 Cr+)

“Limitation of lower levels of automation is that the Indian scale of industrial manufacturing of companies like ours is 5x lower than abroad.”
– Large company (Industrials)

Sharing a market map which highlights all the core use cases and some of the models solving for the same –

Our attempts to neatly map unsolved use cases onto parts of the workflow yielded interesting insights:

SMBs can be broken down by size and sector. In our study, we broke down our sample by size of business (< INR 5 Cr, 5- 20 Cr, 20 Cr – 100 Cr, 100 Cr+) and by sectors of businesses [manufacturing – which includes electricals, industrials, chemicals, construction, etc.; services – logistics, hospitality, etc.]

However, the goals of the promoter are what stood out as a key insight. Most businesses’ intent to adopt technology (and pay for solutions) seems to be a function of their desire to grow. For example, we spoke to a business which was < INR 5 Cr and grew to over INR 20 Cr year-on-year. The promoters were excited about growing the business to an INR 100 Cr+ size and were thinking actively about their expansion strategy. They were open to adopting technology-enabled solutions which would not be efficiently solvable in-house, i.e. their existing supplier/vendor base was not enough or they did not have the necessary personnel/know-how to pull it off.

While they have a sense of where they want to reach from a scale standpoint, there are several unanswered questions on how to get there. Often, promoters do not have a clear idea of the challenges they will face going forward as they scale their business and seem to be broadly open to new technology solutions and financing options.

Larger businesses (INR 150 Cr+) with growth-centric founders tend to be more keen on building everything in-house (including technology).

“We tried using Salesforce, but it was not specific to our sector and the licensing fees were very high. Now we have created an in-house integrated ERP (CRM +ERP) which we’re building for commercial sale and use as well.”
– Mid-sized company (Industrials)

Discussions with promoters on technology adoption irrespective of size boil down to a build v/s buy debate.

Small businesses (<5Cr) have the highest friction to technology adoption and don’t tend to do so unless there is a compliance need OR their anchor customers/vendors make them adopt the tech. Small businesses (<5Cr) which are more than a generation old tend to remain in status quo with little incentive for the promoter to adopt tech solutions or want to grow.

Importance	INR 1 – 35 Cr	INR 35 – 100 Cr	INR 100 Cr +
Procurement/Inputs	Low-Mid	Mid	Mid
Project/Workflow Management	Low	Mid	Mid
Automation Solutions	Low	Mid	High
ERP/CRM SaaS Solutions	Low-Mid	Mid	Mid – High (would prefer company company-specific solution)
Payment Recon/B2B Payments and collection (Fintech SaaS	Mid/High	Mid/High	Mid
Financing + Fintech SaaS	Mid	Mid	Mid
Compliance	High	High	High
Others	Industry dependent	Industry dependent	Industry dependent

Despite the challenges, we feel the Indian SMB story is a promising one

If you feel you are building in the space, please do reach out to us!

Customer Feedback Loops

Posted on September 29, 2023March 18, 2026 by Kae Team

During the early days of company building, getting continuous feedback from the customers about the product and iterating on the received feedback is critical. This is what defines the product and business roadmap and pushes a start-up to that elusive ‘product market fit’. In this piece, we will talk about how to create effective customer feedback loops for the product teams.

Feedback from the customers is not even half as useful if the learnings and actionables don’t percolate to the product team. Additionally, it is also important to loop back to customers on their feedback/ issues after working on it. A ‘closed-loop process’ would be something like below and if done well, would turn into a virtuous cycle or a flywheel propelling the product forward.

Collecting the feedback

Any customer feedback loop has to start first with a tight feedback collection process. Most of the time customers give feedback to frontline teams like Customer success or customer support. In the early days of the company, there might not be specific teams for customer success/support and this might have been done by the sales/product teams directly. In both cases, collecting user feedback is a critical part of the frontline teams. Most of the time, user feedback can be bucketed into three channels:

a) Inbound feature request: This channel is the most obvious one and most companies should have a mechanism/structure around it in place from the early d Customer feedback can be a feature request, bug or something else. The channels for this feedback can be multiple, like Customer communication platforms (eg. intercom), email, helpdesk tickets, phone calls etc.

b) Proactive outreach: This is a mechanism that we strongly suggest founders to put in place from the early days. Best frontline teams do not wait for customers to give feedback but proactively reach out to them. The most efficient way to go about it is to do proactive outreach on the basis of product/feature usage. There are product analytics and customer health tools like Mixpanel, Gainsight, Totango which can be helpful for this. Our portfolio company Hiver, for example, keeps track of product usage through Gainsight PX and reaches out to customers where the product usage dips or is not in line with their benchmarks. The channel for communication here is usually Phone/Email Outreach.

c) Churned customers: Product feedback from a churned customer (or a customer who has stopped using the product) is a very important piece of information. Product teams in some of the more successful companies give a lot of weightage to the feedback from churned customers as it helps them shape the product roadmap and stop future customer churn.

Funnelling the feedback to product teams

The second and arguably more important step after the collection of feedback is to funnel it to the product team. This is a critical step as this is where the interfacing of the front line and product team happens along with the sharing of feedback. Value derivation of the customer feedback (as issue resolution or feature roadmap for the product) correlates directly with how seamless/organised the feedback funnelling to product teams is. At the core of funnelling to product teams is:

a) Sharing the feedback with theproduct team: Most of the time, frontline teams like support and CS get a lot of actionable feedback which requires some action from product/development teams. A good practice is to use internal collaboration tools where feedback can be put in front of the product teams directly. Our portfolio companies for example use specific channels on tools like Slack (customer feedback/ feature request) for this. This is the fastest and most efficient way to get the attention of relevant folks and loop them in on the actionable.

b) Involving product teams with customers: In quite a few cases, Support/CS teams need help from product teams to deeply understand a customer feedback/request. It is best to involve the product team directly to speak with the customers in such cases. Product teams proactively engaging with the customers helps in a more aligned product roadmap and also helps in resolving customer issues and queries faster. We have seen that the best companies have both processes and culture to actively get the product teams in the Our portfolio company Hiver, for example, has quantitative targets for the frontline teams to arrange customer calls with product teams. Another portfolio company, TranZact, for example, has similar targets for everyone in the company to ensure that they speak with at least one customer directly every month.

c) Organizing and actioning on the feedback: This is a part which, if not organized well, can break things the most. Goes without saying that unless the teams organize the feedback well and take action on them, it will not result in effective growth. It is important for the frontline teams, product teams and the leadership to have a clear process on how to organize and action the collated feedback. Best practices that we have seen include using tools which ensure that the feedback is recorded well. It is also important to have a clear process on how to segregate the feedback, rank it for importance and make sure that it is on record for action. We have seen Trello boards used quite well for something like this.

Looping back to customers

It wouldn’t be a feedback loop if you don’t go back to the source, the customers. What needs to happen is that you tell the customers about taking their feedback to the product team and keep them updated on how it is being worked upon.

This, while intuitively not the most important thing for a lot of back-end teams, is arguably the one that kicks the virtuous cycle in motion. It ensures that the customers are happy and tuned in to give more feedback, which shapes the organization’s product roadmap and growth path. Key things to keep in mind here are:

a) Frontline teams to be kept in the loop on actionable: The CS teams need clarity and have to be on the same page about what is being done about the customer request/feedback. This ensures that while they are empowered to close the loop with the customer, they don’t end up overcommitting/setting up unreasonable expectations with the customers. It is a good idea to keep the CS teams looped in the relevant Trello boards/Jira tickets (both are good products) so that they are on top of any updates on the product side.

b) Closing the loop back with the customers: CS teams should be closing the loop with the customers proactively and keep them posted on how the company is actingon their feedback.

In the cases, where the requested feature is put in the roadmap, to close the loop with customers, we have seen companies also giving the customer a peep at the internal product roadmaps. This helps reassure the customers and promotes transparency.

After the issue with the customer feedback is closed, it is even more important to close the loop. Best companies do it very proactively. In case a customer is fine even without using the feature that they had asked for, it is good to just inform them ‘Hey we worked on what you asked for and this feature is out, please go and check it out’. Customer education initiatives like webinars on new features or in-product nudges/guides are also very helpful for closing the loop properly.

A tight and continuous customer feedback loop is the foundation for the ‘Zero to One’ journey of a company. If a product is not getting feedback or not acting on the customer feedback, it is always going to be stagnant. A well laid-out customer feedback loop ensures that the organization collects proper feedback and that the product team doesn’t miss out on the feedback and actions on it. It also ensures that the customers feel that they are being heard.

Minimum Viable Product (MVP)

Posted on August 29, 2023March 18, 2026 by Kae Team

A Minimum Viable Product (MVP) is one with just enough basic features to be shared with early adopters for their feedback. In the early days of a startup, getting proper guidance is essential in order to get the product right. With an MVP, you can ship a product with your core ideas, in order to refine it further based on early adopters’ feedback. It is much more cost-effective than building out the entire product and then making tweaks, and helps validate your ideas regarding your product. In this blog, we will discuss the strategy of launching an initial version of the product and getting customer feedback. Often, founders are conceiving and perfecting the product internally without testing what customers want. This blog will help you break that cycle and get customer feedback at the earliest.

We will break this phase into four steps:

Validate
Build
Launch
Measure

Step 1: Validate

It is important to first talk to potential customers even before building any version of your product. This initial set of customers you speak with can come from your own personal and professional network. The goal is to not spend months or years doing research but to identify a common pain point soon.

Speak to 20-30 customers and ask them questions like:

“What are the problems you are facing?”,
“How are you addressing them?”,
“Why is this solution still not working for you?”

Try to connect the dots on common problems that you are hearing. The key is to only listen and understand the problems that customers are facing without talking to them about your potential solution. Try to build a deep understanding of the problems your user is facing. We are only attacking the problem in this step.

Typical Team Composition: Given this is still early in the journey, your team should ideally comprise only the founders. You should drive all these conversations since that sets the foundation for the next step, building your product.

Step 2: Build

After you have spoken to initial customers and identified a common pain point, it is time to get to the drawing board. The goal here is to get the first version of the product out of the door to test out the initial hypothesis. While as a founder, you are always striving for excellence and want to over-architect the product, you will need to stay disciplined here. The aim is to not create the perfect product, but the minimum viable product to validate your hypothesis.

This is just the first version of the product and it is bound to undergo several changes subsequently. Also, we are not suggesting that you ship any product, but ship a product from which you can learn. Formulate your hypothesis from Step 1 and build a product in the shortest time from which you can learn the maximum. Do not try to build to solve all the problems that you heard from your users but the top ones that matter to the user. Solve the most pressing issues where you can make a difference.

Typical Team Composition: Your team has now grown beyond the founders. Ideally, you should have hired a couple of developers (Full stack engineers preferably to help build the first version of the product quickly).

Step 3: Launch

Now that you have built the first version of the product, you need to cross the hurdle of launching and getting it live in front of potential customers. Refer to our blogs on ICP for more details on whom to target first. (Part 1) (Part 2)

This is the phase where you learn how the customer is interacting with the product:

“Do they see value in it?”,
“Are they happy with the design?”,
“Are they responding in the way we intended?”

This will help you derive valuable feedback. Your main takeaway here should be to get the product out of the door.

Typical Team Composition: At this stage, you may want to add a sales/ customer outreach representative. If it’s B2B sales, you are likely driving most of it and a mid-junior level resource is probably supporting you. For B2C sales, you need to spend inordinate amounts of your time on performance marketing. Again, you could use a consultant or an in-house resource to support you.

Step 4: Measure

Once you have launched the product and seen customers using the product, you should now speak to the users and unearth what truly matters to them. You will be surprised by the feedback you get from the customers. Features you thought would delay the product launch may not even matter to the user. On the other hand, features you had planned to delay rolling out may be what they are seeking right away. Do not skip this step, since it helps in aligning the team internally on what to prioritise.

Collect all feedback by asking the same questions. You need to be extremely methodical in your user interviews. Ask open-ended questions so that you get more answers from the user. Ensure the questions you ask will help you in building the next version of the product. We will dive deeper into this topic in a separate piece.

Typical Team Composition: You are now expanding your team by adding people on the engineering side and sales/marketing functions. Do not hire ahead of the curve till you hit PMF since you are still in discovery mode.

Conclusion

Your chosen methodology may require tweaks or multiple consultations with your early adopters, however, this framework will help you set a foundation for getting the most answers accurately. Conducting this activity early on ensures that once your product is out for public consumption, it fulfils the needs of a majority of your customers and reduces the scope for major red flags coming up, which is always a great sign in the early days.

Additionally, be prepared to pivot, if you receive sufficient feedback to do so. It is a very normal part of this process and is much better to sooner than later.

In case you are a tech-driven business and are building something that excites you, feel free to reach out to our Investment Team here.

Understanding Ideal Customer Profile (ICP) Part 2: Refining the ICP

Posted on July 31, 2023March 18, 2026 by Kae Team

In the first part of this two-part series, we defined the ‘Ideal Customer Profile’ (ICP) and how you can go about defining it. In case you missed that, you can check it out here. In the second part, we shall look at refining your ICP to be able to use it for optimising your target audience.

After you have iterated and zeroed in on an initial ICP, it is time to work on other key aspects of the go-to-market (GTM) strategy. We suggest doing the following:

1) Positioning statement: A good way to start on the GTM is to come up with a clear and concise positioning statement. This positioning statement should be able to articulate your value proposition for an ideal customer. A typical format for this would be like below

For (Target Customer) that (Needs/Cares about), (Company/Product/Service) is a (Category/Solution) that (Benefit). Unlike competitors,(Company/Product/Service) is (Unique Differentiator)

Examples of positioning statements:

- Avis: For business people who rent cars, Avis is the company that will provide the best service because the employees own the company.
- Amazon: For consumers who want to purchase a wide range of products online with quick delivery, Amazon provides a one-stop online shopping site. Amazon sets itself apart from other online retailers with its customer obsession, passion for innovation, and commitment to operational excellence.

Another very good way to think about this is to have an analogy positioning. This is when you tether your values with another successful/iconic brand and make the value proposition very easy to understand.

For eg. Superhuman: Tesla for e-mails

2) Building user/buyer personas and creating personalized messaging:While B2C messaging is often personalised, It is very easy to forget sometimes that even B2B customers are humans, and the messaging needs to connect with them on a personal level to make a buying decision. This is where building personas (user/buyer) becomes important. What you want to be able to do is identify more things about your customers beyond the segmentation of ICP. You are looking for subtle but important things like ‘What key value are they really looking for?’, ‘What emotional trigger really makes them take a decision?’, ‘Do they have any cognitive biases?’, etc.

Identifying and enhancing your customer’s human behavioral traits and fleshing them out as personas such as a ‘Sales Stuart’ who is looking for the best price or ‘Developer Dave’ hunting for optimum productivity can help you sharpen the messaging and channels strategy. Continue iterating on these personas as and when you collect more information and data.

Validating and reiterating the ICP

As the business progresses and you add customers, you should continue periodically validating and reiterating the ICP. This can be done by:

Looking through your customer segment mix
Looking through metrics/indicators/evidence of value derivation by different segments
Reiterating the ICP

A few ways to measure the value derivation would be:

Usage/Engagement metrics:How are different segments using/adopting the product
Customer retention/churn data:Segment-wise customer churn or retention data. This directly translates to the Lifetime value of the customer
Customer Satisfaction (CSAT)/Net Promoter Score (NPS) data:Segmented NPS/CSAT data gives a lot of insights into the ICP segments.
Sales data: Insights on segment-wise Sales cycles and conversions also give indications on the ICP.

Another way of visualizing this would be to break up personas through usage patterns – engagement and retention metrics:

*Segments*	*Engagement/Usage Metrics*	*Retention Metrics*	*CSAT/NPS*	*Sales Cycles/Conversion*
Segment 1
Segment 2

The ideal customer group should be doing much better compared to other segments and should have average metrics on most of the above KPIs. If that is not the case, it is time to reiterate the ICP.

Aligning Efforts towards ICP

Once you have clarity on the ICP, it is important that you make maximum efforts towards that segment. The following questions help in that direction:

What percentage of your customer base (by numbers and revenue) is your ICP?
What are some things that you have done/ are going to do to strengthen the value proposition towards your ICP?
How are you planning to align your Sales and Marketing efforts towards the core customer group?

Firing your customer

Firing your customer is perhaps as important as, if not more important than defining your core customer. The following questions will help you understand how focused your organization is. It is important that you let go of the customers who are far away from your ICP segment.

Which customers have you fired in the last months and why?
Which customers (Non-ICP) are you firing in the next 6 months?

Conclusion

Thus, clearly defining your ICP and being regular with this exercise can do wonders for the efficiency of your business by helping you reach the right consumers with the right messaging. The important point to note here is that this exercise is not a one-time effort and does require constant updating to maximise your business’ output.