1Mby1M AI Investor Forum: Manu Rekhi, Managing Director at Inventus Capital Partners (Part 5)

Sramana Mitra: Okay. And what are you seeing in your deal flow? We’ve talked about what you’re investing in, what trends are you picking up from your deal flow, whether it’s Indian deal flow or US deal flow? What are you picking up?

Manu Rekhi: Almost everything has been repackaged as AI. From just a simple wrapper on an LLM to defensible moats, as the underlying models are improving, a lot of these moats that may be relevant today may not be relevant, six months from now. I think there is a difference in trying to sort of tease those out.

By the way, this is no different than some of the work we had to do when everything became blockchain all of a sudden overnight or everything became social or P2P sharing. I think founders are very good at changing or repurposing what they have to what the trends are available in the market. Differentiating between things that have real lives versus something that may not be valid few months from now is what our job is, but it’s not like you will always get that correct. It’s not just the foundational models, whether it is today as OpenAI or Gemini or Anthropic. In the previous world it was other platform providers that also had the same thing, and as they would add more features, it would kill companies that would acquire them.

We have a large group of people besides our core team that get really involved with our startup diligence and recommendations. So, we always have this focus on spending and mentoring founders and really getting to know them beyond just the business plan.

Sramana Mitra: So, I’ve a couple of thoughts based on what you said. One is, we are hearing a lot about human in the loop and AI services. My read is that this is actually a strength for the Indian founders because India has had a long history of building services businesses. If you have to layer on top of your core IP a services arm, that is easily done in India as there’s a lot of experienced management and so on available. So that’s one trend that I have seen.

The other observation I’m picking up is, the workflow moat or specific stuff that are particular to that domain, including certain databases. If you have a marketplace of sorts, you have all kinds of AI stuff happening within that, but the real value of a marketplace where people who can transact on certain things are present, that is a moat, right?

A marketplace where transactions are happening, that is a moat. Workflow is a moat. If there is a certain kind of workflow that is happening that is specific to that domain that is defensible, and those are in some ways, much more defensible businesses than a pure wrapper around OpenAI.

Manu Rekhi: Yes.

Sramana Mitra: So, I think for those of you who are listening and who are starting to think about how you position your companies, keep these nuances in mind so that you build something defensible. Don’t get sucked into the next rev of the LLM itself that the large companies are going to inevitably invest in and make happen. Don’t become a roadkill to LLM upgrade.

Let’s move to some entrepreneur pitches now, Manu?

Manu Rekhi: Sure, Sramana.

This segment is part 5 in the series : 1Mby1M AI Investor Forum: Manu Rekhi, Managing Director at Inventus Capital Partners
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