In the last publication, I covered the business models used by the tech startups of today. Let us take a step back and understand how to view the journey of the Tech incumbents - Wipro, Infosys, TCS and HCL (colloquially referred to as WITCH).

India’s IT story began with the inherently sustainable “built to order” model, in which the WITCH companies designed, developed and maintain IT systems for large, global clients. The US dominates with 55% of India's software exports, while Europe grabs 30% - that's ₹10+ lakh crore flowing from just these two regions. The sector hit $282.6 billion revenue in FY25 and is gunning for $300 billion by FY26. Beautiful part? This entire ecosystem employs 5.8 million people and contributes 7% to India's GDP.

The Revenue Models Behind India's IT Billions

There are 3 core revenue models designed around the “built to order” philosophy -

Time & Materials (T&M): The Original Cash Cow

Most clients still get billed on T&M contracts where companies charge based on actual hours worked. Think ₹2,000-4,000 per hour for senior developers, with rates varying by technology stack. TCS prefers this model because they can charge for overtime while keeping most work offshore at 70/30 ratios. The beautiful part? They bill in dollars but pay salaries in rupees - that's pure arbitrage magic.

Fixed-Price: The Margin Game

Infosys leads with 53% of revenue from fixed-price contracts, up from 52% last year. HCL and Wipro push 60%+ of revenue through fixed contracts. Here's the genius - clients pay a lump sum (say $1.5 million for 5,000 hours) regardless of actual effort. If they finish in 3,000 hours using automation? Pure profit. If it takes 7,000 hours? They absorb the loss but learn for next time.

Outcome-Based: The Future Model

All four are aggressively shifting toward outcome-based pricing where they get paid for business results, not effort. Infosys saw 3.6% price realization boost from their Project Maximus value-based selling. TCS CEO confirms they're doing both - "some based on outcome, some customers want T&M initially, then move to fixed-price".

Maximizing Operating Gross Margin in IT Services

IT services companies sustain robust gross margins of approximately 42.2%, driven by efficient management of their core operational expenses.

Manpower Expenses (51.8%)

The largest cost component, manpower expenses - including salaries, benefits and training, account for just over half of revenue. Strategic workforce planning, utilization optimization, and selective outsourcing can help contain this category without compromising service quality.

Travel & Communication (1.5%)

Travel and communication related to project delivery represent a modest share of revenue. Leveraging virtual collaboration tools and centralized travel procurement can further reduce costs while maintaining client engagement and responsiveness.

Equipment & Facilities (~2%)

This category covers hardware, software infrastructure, and office overhead. Cloud adoption, right-sizing of physical space, and preventive maintenance programs help cap these expenses at around 2% of revenue.

Other Costs (2.5%)

Encompassing licensing, compliance, and miscellaneous administrative expenses, this bucket typically runs at 2.5% of revenue. Continuous vendor negotiations and process automation are effective levers for trimming these costs.

By keeping total operational expenses to 57.8% of revenue, IT services firms preserve a strong operating gross margin of 42.2%, to support corporate functions and enable reinvestment in innovation, talent development, and market expansion.

Winning New Business in IT Services

IT services companies attract enterprise clients through a blend of credibility, partnerships and targeted outreach. They publish thought leadership—white papers, case studies and webinars—to demonstrate domain expertise. Alliances with hyperscalers (AWS, Azure, Google Cloud) and ISVs (SAP, Oracle) unlock co-sell channels and referrals. Account teams employ account-based marketing and executive briefings to tailor value propositions. High-visibility at industry conferences and VIP roundtables builds brand trust, while successful project deliveries generate referrals and upsell opportunities. Agile presales teams win RFPs with bespoke demos and ROI analyses. SEO-driven content, LinkedIn campaigns and global sales offices ensure inbound leads and regional engagement for sustained growth.

Variable marketing spend to acquire enterprise IT‐services clients typically sits at 2–4% of revenue. This budget powers digital campaigns—paid search, display ads and retargeting—to drive inbound interest. Account‐based marketing further personalizes outreach through custom microsites, direct mail and executive‐level touches. Since high‐touch channels dominate deal sourcing, events and ABM often absorb 60–70% of the variable marketing budget. By allocating spend this way, IT services firms build targeted pipelines while preserving healthy margins.

Fixed marketing expenses in IT services typically cover trade shows and industry events—booth rentals, sponsorships and travel—ensuring face-to-face engagement. Thought-leadership production—white papers, case-study videos and webinars—establishes domain authority and fuels lead nurturing. Alliance co-marketing with hyperscalers and ISVs leverages joint campaigns and partner events to unlock shared opportunities. By investing in these stable channels, firms maintain brand visibility, strengthen credibility among enterprise buyers and create a consistent platform for pipeline generation, while anchoring variable marketing efforts.

Navigating Working Capital in IT Services

Dealing with enterprise clients adds a layer of working capital complexity for IT services firms—more intricate than SaaS but simpler than merchandise businesses. With an average 85-day cash conversion cycle, revenue sits in accounts receivable longer, while expenses fall due every 30 days. To bridge this gap, firms must maintain at least two months of operating expenses in reserve to keep the business running smoothly. Continuous cash-flow monitoring and proactive receivables management are essential to ensure the lights stay on.

Strategic CAPEX Priorities in IT Services

IT services leaders consistently allocate 1.2–2.0% of revenue to capital expenditures that drive innovation, scalability and security.

First, data-center and cloud infrastructure—including on-prem servers, colocation racks and private-cloud builds—accounts for roughly 0.5–1.0%. Edge-compute expansions and multi-region capacity also feature prominently, enabling high-performance AI workloads and compliance with data-sovereignty mandates.

Next, digital studios and innovation labs absorb 0.2–0.4% of revenue. These client-facing hubs—equipped with VR/AR environments, AI/ML Centers of Excellence and 5G testbeds—accelerate proofs-of-concept and foster co-development of intellectual property with marquee accounts.

Network, telecom and endpoint hardware upgrades, at 0.2–0.3%, cover SD-WAN rollouts, private 5G networks and conferencing equipment. Many firms treat these as right-to-use assets under lease accounting.

Meanwhile, office fit-outs and real-estate enhancements consume 0.1–0.2%, funding hybrid-work hubs, secure workspaces and sustainability improvements such as green certifications and modern HVAC systems.

Finally, security, compliance and back-office platforms, at 0.1–0.2%, ensure robust cyber-risk defenses through next-gen firewalls, SIEM/XDR appliances and GRC suite licenses.

By balancing these strategic investments, IT services companies maintain a modern, secure delivery platform while preserving gross margins—ensuring they remain poised for the next wave of digital transformation.

The Road Ahead for IT Services Company Leaders

By mastering a “built to order” ethos and blending Time & Materials, Fixed-Price and Outcome-Based models, IT Services Companies’ leaders have crafted a high-leverage revenue engine. Disciplined cost controls—capping manpower at ~52%, travel and equipment below 4%—support a 42%+ gross margin. Layered on this are targeted marketing investments (2–4% of revenue) and two-month working capital cushions, ensuring operational resilience. Strategic CAPEX of 1.6% of revenue in cloud, innovation labs, networks and security keeps delivery platforms modern and scalable.

We've already introduced business models in a previous publication, and here's something that caught my attention: over 70% of startups in India are either tech or tech-enabled. That's massive! It means most entrepreneurs are building their companies with technology at the core—whether it's pure software or using tech to solve traditional problems. This is exactly why I decided to kick off my Business Models series with the Technology sector. I want us to dive deep into how these tech companies actually make money, scale, and create value. Let's start where the action is and break down the models that are shaping India's startup landscape.

Same Industry, Different Game: How Tech Companies Actually Make Money

Here's what's fascinating about tech business models - the economics are completely different based on three key factors: what you're selling, who you're targeting (B2B vs B2C), and who pays you (users vs advertisers vs taking a cut of transactions).

B2B companies solve complex problems and charge premium prices, think thousands per month with fat margins. B2C apps work with smaller amounts but need millions of users to hit the same revenue. Ad-supported models need massive eyeballs to match what a few hundred business subscribers generate.

Then there's the marketplace magic - companies like Airbnb, Swiggy, and Zomato earn 3-30% commission on every transaction flowing through their platform.

The beautiful part is that each model has completely different growth strategies, cost structures, and scaling patterns. Throughout this series, we'll break down the real numbers behind each approach and what makes them tick.

Three Ways B2B SaaS Companies Charge: It's All About Who and How Much

Something I've noticed while studying B2B SaaS companies is that they've basically figured out three main ways to bill their customers, and each one completely changes the business dynamics.

Per client billing is the simplest - one flat fee regardless of users. Basecamp charges $299/month for unlimited everything, CartHook does upto $599/month whether you have 5 or 50 employees. Clean and predictable, but you're leaving money on the table with bigger clients.

Per user billing is where most SaaS companies live today. Salesforce charges $25-330 per user monthly, Slack does $8.75-15 per active user. Got 10 sales reps? Pay for 10 licenses. Add 5 more? Your bill grows accordingly. This model is brilliant because revenue scales directly with customer adoption.

Per function billing gets sophisticated. HubSpot lets you buy Marketing Hub ($20/month), Sales Hub ($25/month), or Service Hub ($20/month) separately. Zoho does the same - pick CRM at ₹800/user/month, Books at ₹749/month, or Expense management at ₹250/user/month independently.

The Truth About SaaS Economics: Why Variable Costs Are Almost Zero

Here's something that blew my mind when I first understood it - tech companies like Unicommerce charging ₹3 per order item have almost zero true variable costs per transaction.

Most "variable costs" in SaaS - hosting, support, infrastructure - are actually semi-fixed costs that get cheaper as you scale. You don't need double the servers for double the transactions. Support gets more efficient. Software maintenance spreads across everyone.

The real variable costs are miniscule!

For Unicommerce's ₹3 pricing:

1. Payment processing: ₹0.12 per transaction (~4% per transaction)

2. Third-party APIs: ₹0.10-0.30 for per use/instance of SMS, emails and logistics integrations

3. Infrastructure: Minimal compute/storage costs

Total genuine variable costs: ₹0.25-0.50 per order

This means Unicommerce keeps ₹2.50-2.75 out of every ₹3 (85-90% gross margin) before fixed costs. With ₹104 crore revenue processing 770+ million orders annually, they're essentially printing money.

Here's the secret sauce: the marginal cost of processing order #1 billion equals processing order #1,000. Once you've built the platform, adding transactions doesn't proportionally increase costs.

This is exactly why tech companies grow so fast and achieve massive valuations - unit economics improve with every single transaction. It's not magic, it's just math.

Gross-Margin-Fueled Blitzscaling!

Tech companies’ obscene gross margins let them experiment with percentage-of-revenue marketing like referrals, resellers, digital sales partners, and more. Unicommerce’s playbook mixes smart partnerships, direct sales, and ecosystem magic, each with fixed and variable costs.

1. Partner-Driven Sales (Variable)

Service, Referral, and DSA partners onboard clients via 270+ integrations. Unicommerce pays 5–10% commission per deal, a variable cost tied directly to revenue.

2. Direct Sales Teams (Fixed + Variable)

To win brands like Mamaearth or SUGAR Cosmetics, Unicommerce invests in sales reps (₹50,000–100,000/month salary) plus 5–10% commission per closed deal—a blend of fixed salaries and variable commissions.

3. Content & Thought Leadership (Fixed)

Webinars, whitepapers, and industry reports cost ₹5–10 lakh annually. This fixed investment builds long-term brand authority and organic lead flow.

4. Product-Led Growth (Variable)

Plug-and-play marketplace and logistics integrations drive customer acquisition with minimal incremental cost per transaction—a low-variable channel.

5. Strategic Acquisitions (Fixed)

Acquiring Shipway for ₹68.4 crore instantly adds clients and ups cross-sell, a major fixed outlay that reduces future CAC.

By blending variable commissions (40–50% partner referrals, 15–20% integrations) with fixed investments (30–35% sales teams, 5–10% content), Unicommerce efficiently wins customers in a crowded market.

Salaries Drive the Engine of Tech Growth

Technology companies pour most of their budget into salaries and semi-variable tech costs. We have already covered the tech costs before, let’s focus on the people side. There are three salary buckets:

1. Product Development (R&D)

2. Customer Success (G&A)

3. Sales & Marketing

Unicommerce, with ₹104 cr revenue in FY24, allocates roughly:

1. R&D: 18%

2. Customer Success: 22%

3. Sales & Marketing: 50%

Their focus is on sales and partnerships drives rapid client acquisition, supported by solid product and success teams.

Company HubSpot Shopify Freshworks R&D 29.6% 15.4% 23.1% Sales & Marketing 46.4% 15.7% 54.8% G&A (incl. Customer Success) 11.4% 4.6% 25.4% Primary Focus Increase Sales R&D and Sales Increase Sales

By watching how these companies allocate salaries, you can see exactly where they’re placing their bets: building new features, keeping customers happy, or aggressively expanding the customer base.

To sum up

Here’s the nutshell of a SaaS business model - why these companies scale like rockets:

1. Gross margins of 85–90%+

   Once the software is built, serving customer #1,000 costs almost the same as #10. That insane margin power lets SaaS companies reinvest heavily without bleeding cash.

2. Variable marketing spend sits around 18–20% of revenue

   In the early days, you’ll see Shopify at 6–10%, Unicommerce at ~20%, HubSpot at ~19%, and Freshworks at ~22% funneling into performance ads, partner commissions, and referral rewards. As you mature, you can drive that down to 7–10% by leaning more on organic and partner channels.

3. Huge investments in salaries

   You’ve got three salary buckets—R&D (Shopify: 15.4%, HubSpot: 29.6%, Freshworks: 23.1%, Unicommerce: 18%), Sales & Marketing (Shopify: 15.7%, HubSpot: 46.4%, Freshworks: 54.8%, Unicommerce: 50%), and G&A/Customer Success (Shopify: 4.6%, HubSpot: 11.4%, Freshworks: 25.4%, Unicommerce: 22%). High headcount keeps innovation humming, customers happy, and pipelines packed.

The magic sauce? Combine high margins, smart marketing spends that shrink over time, and targeted salary investments. That’s how SaaS companies grow fast, stay profitable, and build lasting moats.

Disclaimer:
The information provided in this article was accurate at the time of publishing and is based on sources and opinions believed to be reliable. However, neither the author nor Main Street Analyst guarantees its completeness or accuracy at any future date. Nothing contained herein should be construed as investment advice or a recommendation to buy, sell, or hold any financial instrument. This article is intended solely for educational and informational purposes. Readers are advised to consult with a registered investment adviser and conduct their own independent research before making any investment decisions. The author and Main Street Analyst expressly disclaim all liability for any direct or indirect damages arising from use of this material, in accordance with applicable SEBI regulations.

Are you ready to turn your business dream into something real—and sustainable?

If you’ve ever wondered what it takes to not just launch a business, but grow it, you’re in the right place. In this post, I’ll walk you through the key building blocks of a business model that investors typically look at, dive into the unit economics that make (or break!) your growth, share examples of different business models that inspire, and shed light on what resources you’ll really need to scale up successfully.

The key components of a business model

1. Revenue Model

2. Direct Costs Incurred to Generate Revenue

3. Distribution and Marketing Costs

4. Collection Costs (if any)

5. Fixed Operating Costs

6. Corporate Overhead and Other Expenses

Revenue Model

Let’s talk about what really powers your business: the revenue model. I like to get as clear and practical as possible here, because if you don’t know exactly how those rupees (or dollars!) flow in, it’s easy to build castles in the air.

First, start with the basics:

• What’s your unit of revenue? Is it a product sold, a monthly subscription, a one-time service? Define it in real-life terms.

• How many units are you actually selling? This gives you direct insight into your sales traction.

• What’s the price per unit? Sometimes simple arithmetic is the most revealing: units multiplied by price equals revenue.

• How many customers or users do you have? There’s no revenue without people paying for what you’re offering.

But don’t stop at today’s numbers. The real magic is analyzing what could be:

• Could you raise your prices? If your value to customers is increasing, your price can follow.

• Are you growing and retaining your customer base? Tracking this over time (with a cohort analysis) shows not just how many new folks you’re bringing in, but how well you’re keeping them around. That’s a sign of genuine staying power.

• Can you upsell or cross-sell? Maybe a customer who buys product A will also need product B—or they’ll pay for premium features. Every extra sale per customer lifts your average revenue and helps you grow faster without having to win new customers every single time.

In short, a great revenue model isn’t just about counting the cash—it’s about knowing where your growth can come from, how to pull those levers as the business evolves, and always keeping your eyes open for smarter ways to serve (and earn from) the people who matter most.

Behind The Price Tag: Understanding Direct Costs (Cost of Goods Sold)

Let’s zoom in on a piece of the financial puzzle that too often gets glossed over, direct costs, or Cost of Goods Sold (COGS). Here’s the truth: these are the expenses that only show up when you make a sale. Think raw materials, packaging, production labor - whatever you absolutely must spend to deliver your product or service to a customer.

Now, why does this matter so much? For starters, these costs move in step with your sales, they’re the best window into your business’s actual margins. But here’s where things get interesting (and sometimes tricky):

• How do your direct costs change as you grow? Sometimes, you can negotiate better rates or streamline production as volume goes up, all thanks to economies of scale! But in other cases, costs might rise, especially if you need to upgrade materials or meet new demands.

• What about raw material price swings? Many industries see prices for ingredients or parts fluctuate seasonally, or even spike suddenly. Understanding this cyclicality is critical as you don’t want surprises eating into your profits.

So, always keep an eye on your direct costs, both today and as you scale. By staying alert to these shifts, you’ll make smarter pricing and sourcing decisions, and protect the profitable core of your business as you grow.

The Backbone Expenses: Understanding Fixed Costs - Your Capacity to Generate Revenue

Let’s talk about the costs that don’t get as much attention but quietly keep your business running day after day - fixed costs. These are your “stay-in-business” expenses: the rent for your workspace, salaries for operational staff, equipment leases, utilities, and yes, all those monthly cloud and server bills that keep your systems humming.

What makes fixed costs unique is that they’re usually high to start but don’t go up just because you sell more. If you’ve rented a warehouse or set up a cloud server, you pay that bill whether you process 10 orders or 10,000. This is both a challenge and an opportunity: a challenge because you need to cover these costs before you ever make a profit, but an opportunity because, as your revenue grows, your fixed-cost base can support much higher sales without spiraling out of control.

In other words, scaling up means you can spread these fixed costs over many more units, making each sale more profitable as you grow. So, treat your fixed costs like the backbone of your business: keep them lean, build in flexibility where you can, and choose wisely up front. That way, when growth comes, you’re ready to support it without doubling your monthly bills.

The Hidden Layer: Navigating Corporate Overhead

Let’s peel back the curtain on a category every founder faces, but few love to talk about—corporate overhead. Think of this as the “everything else” bucket: legal fees, executive salaries, insurance premiums, even the coffee and pens in the office.

Here’s the thing—these expenses aren’t tied to how many products you sell or the size of your monthly revenue. They’re fixed costs, quietly ticking along in the background whether your business is booming or just getting by. That means as you grow, these overheads eat up less of each rupee earned—but you’ve still got to cover them, month in and month out.

While it’s tempting to ignore these inert expenses, the smartest operators stay on top of them. Get lean where you can, automate the admin, negotiate your insurance, and make sure every overhead cost is truly earning its keep. Think of corporate overhead as the silent foundation—necessary, but never the star of the show. Keep this layer under control, and your business will run smoother, your margins will stay healthy, and you’ll always know exactly where your growth is truly coming from.

Bringing It All Together: Building for Growth, Not Just Survival

If you’ve made it this far, it is likely that you are not just dreaming of a business. You are building something that is designed to last. The truth is, anyone can sketch a business idea on a napkin. But the entrepreneurs who thrive are the ones obsessed with the details: the unit economics, the real world costs, the levers for growth, and the discipline of knowing what it actually takes to scale.

A great business model isn’t a one-time checklist. It’s a living map - a way to spot early warning signs, chase new opportunities, and steer your ship through uncertainty. Don’t let complexity scare you off. Instead, use this framework to simplify, to sharpen your thinking, and to communicate with clarity - whether you’re talking to investors, teammates, or even yourself on the tough days.

Stay curious, stay vigilant, and don’t be afraid to question every assumption. The more you understand your own numbers, the more confidently you’ll drive toward your business goals, and the more likely you are to unlock growth that’s both rapid and resilient.

Remember, you don’t have to do it alone - every great company is built with a team, a community, and a willingness to learn along the way. So keep digging, keep iterating, and let’s build something sustainable, scalable, and extraordinary - together.

As an investment banker specializing in startup fundraises, I have a front-row seat to what investors expect, how they analyze company performance, and why their growth targets are so relentless. My vantage point means I see first-hand both the reasoning behind aggressive benchmarks and how those expectations shape startups at every stage.

Where do Early Stage investors actually get the cash they invest?

Private markets can seem mysterious, but the capital flow is pretty straightforward. The institutional investors in private markets are either Family Offices or Venture Capitalists & Private Equity firms (VC/PEs).

When you peel back the layers on who’s actually writing the checks in the Indian startup ecosystem, it’s a mix of familiar heavyweights and strategic capital. The usual suspects are:

1. Family Offices (FOs): You can think of them as industrialists, old-money business houses, and even startup legends themselves (Binny Bansal of Flipkart, Ritesh Agarwal of OYO, Tata & Sons, and so on). They are often first in line, deploying their personal or family wealth with both network and operator insight.

2. Venture Capitalists (VCs) build their funds by tapping into Family Offices, large corporates, and ultra-high-net-worth individuals (UHNI), leveraging these relationships to pool serious capital before turning up at a founder’s table.

3. Private Equity funds play at a bigger scale, raising their war chests from the same set of FOs and UHNIs, but also adding pension funds and sovereign wealth money into the mix.

Essentially, everyone’s chasing access to capital that isn’t just patient, but wants growth, control, and a seat at the next unicorn’s cap table.

Venture Capitalists are the most spoken about investors at the early stages of a company, so they will be the focus of this piece.

The value VCs bring to the table

A good VC isn’t just a source of capital, they’re a strategic advantage. They are your credibility badge in a crowded field; when a top-tier fund backs you, doors open that would’ve stayed firmly shut, whether it’s landing marquee customers, hiring senior talent, or raising your next round.

The best VCs push you on all fronts: they’ll sharpen your go-to-market, challenge your growth assumptions, spot blind spots before they become disasters, and make high-impact intros that can change the trajectory of your business overnight. They hold you to high standards - on reporting, compliance, team structure - so you scale with discipline, not chaos. And because they’ve got both local smarts and (at times) a global playbook, they help you avoid “rookie” mistakes while giving you an edge at the world stage.

So, if you’re chasing serious growth, the right VC brings way more than money - they bring network, know-how, and the kind of tough love that sets real winners apart.

The risk taken by VCs when they place a bet on any startup

Sure, VCs invest other people’s money - but the idea that they’re “riskless” is dead wrong.

First, there’s skin in the game. General Partners typically commit 1-5% of their own personal wealth to the fund, and their compensation (carried interest) depends entirely on outsize performance. No performance, no upside (sometimes not even basic salary) if things go wrong enough. In the worst scenarios, clawbacks mean they might even have to pay back distributed profits if the fund tanks.

But the bigger sword of Damocles is reputation. Mess up? Underperform, back some bad actors, or lose your investors’ trust, and doors slam shut. You won’t get into the best deals. Raising the next fund becomes “mission impossible.” Founders will run the other way because the world of startups is surprisingly small and memories are long. For VCs, reputation is currency.

Why do VCs have aggressive expectations?

As there is a lot at stake for VCs when they raise funds from any LP (Limited Partner), they are also aggressive with the expected milestones that the investee companies should achieve. The real reason they “push” so hard is… math.

In a 20-startup portfolio, maybe 2 will be huge wins, a couple might get acquired for a modest return, and the rest will limp along or fail. Those two outliers have to make up for everything else and deliver a 20-30% annualized return, or the model breaks. That means every company must, in theory, have a “10x” or better potential, or else the fund’s economics simply won’t work.

That’s why the bar is so high. You’ll have to hit revenue numbers in months, not years; you’ll be pushed to dominate a market quickly, raise follow-on capital, or hit product and customer goals on a tight clock. Miss consecutive milestones? Your next check may be delayed. VCs are under their own pressure from their LPs, which means the pressure flows straight through to you.

Add in board oversight, preferred shares, information rights, and you get the full picture: VCs have to be aggressive, or the portfolio won’t return.

Building Conviction: How Do VCs Actually Decide?

VC conviction isn’t gut feel, at least not for good ones. It starts with team (if the founder isn’t obsessed, smart, and coachable, nothing else matters), followed by total addressable market size (realistically, is there a billion-dollar outcome possible?), and then hardcore diligence: customer calls, financials, technology validation, even third-party references. The process is structured - funnel in a few hundred pitches, narrow to a handful of deep dives, and actually invest in one or two.

VC Principals have run every shortlisted startup to their Investment Committees (IC), who are the final boss (if you may), when it comes to deploying funds. ICs love a strong memo - one that clearly spells out

1. the Business Model,

2. the upside,

3. the major risks involved,

4. honest comparisons with winners and losers, and

5. identifies the gaps in the founder’s plan.

Most VC funds run on a 7-10 year clock, so they’re laser-focused on startups that can hit escape velocity fast and don’t need heavy upfront investment to get there. If your business can scale with capital-light models—think SaaS, tech-enabled platforms, anything with high gross margins and rapid repeatability—you’re right in the VC sweet spot. On the flip side, capital-intensive plays (factories, infra-heavy, deeptech with long R&D cycles) usually get skipped by generalist funds, unless you find a specialist with a longer horizon and risk appetite. Bottom line: VCs are optimizing for speed, scalability, and capital efficiency because their fund returns—and careers—depend on seeing those outcomes inside a tight 7-10 year window.

So, is a VC the right partner for you?

Absolutely nothing wrong with building a solid, profitable business growing at 10-15% a year and aiming for a big exit or an IPO after years of disciplined, consistent growth. But let’s be clear: the VC game just isn’t set up for these kinds of ventures. VCs need hyper-growth, want a say in every major decision, and often push corporate governance standards that don’t fit all business models. Sometimes, partnering with a VC can actually slow you down—or worse, derail what makes your company unique.

If this sounds like you, you’re much better off finding a strategic investor with patient capital instead of chasing VC funding:

1. You’re planning on steady, moderate growth, not chasing breakneck expansion.

2. Your sector or business model is capital-intensive - factories, heavy infra, manufacturing, etc.

3. You care more about staying in control and staying true to your mission than engineering a big-bang exit for investors.

4. You play in a niche or small market - there’s upside, but it’s not a billion-dollar race.

5. You have little-to-no interest in blitzscaling or burning through cash just for the sake of top-line growth.

In these situations, patient, strategic capital will do more for your business than VC money ever could. Build the company you want, on your terms.

Closing Thoughts

VCs play a crucial role in spotting and backing game-changing startups - but let’s not kid ourselves: not every business is built for the VC playbook, and chasing that kind of capital when your model isn’t a fit can be frustrating at best, demoralizing at worst. Before hitting the fundraising circuit, you’ve got to get brutally honest with yourself about your business model, your peer set, the actual market you’re targeting, and what your cost structure looks like. Scrutinize the fundamentals: is what you’re building genuinely VC-backable, or are you trying to force a square peg into a round hole? Sometimes, the best move is choosing the right funding for the business you actually have, not the one the VC ecosystem wants you to build.

Welcome to Main Street Analyst, your go-to destination for all things business.

I’ve seen so many first-time founders run into roadblocks while trying to raise money for their businesses, and have seen up close how confusing and discouraging the world of fundraising can be. There are always questions:

1. which route is right,

2. what are investors actually looking for,

3. why does the process seem so much harder than people make it look?

But the answers aren’t always obvious.

That’s exactly why I started Main Street Analyst - to offer practical, honest support to anyone navigating the fundraising maze and taking their first steps into entrepreneurship.

I picked the name Main Street Analyst because real lessons in building a business happen on the “Main Street,” among real people, in the heart of the real economy. It’s not about boardrooms or buzzwords; it’s about tackling genuine problems and making a real difference where it counts. Investors are not looking for flashy ideas or clever pitch decks. They are looking for real world solutions, for businesses that solve tangible problems for everyday people. Focusing on what actually works in the real world is what makes a venture worth backing, and that’s the approach I bring here.

To kick things off, I’ll be sharing how investors and investment bankers (like myself) look at businesses and try to make sense of them. It’s about getting to the core of what drives value and growth - seeing what matters through the eyes of someone who’s sizing up a company. This perspective will help you understand what investors and experts are really looking for when they’re assessing a business.

If you’re thinking about starting your own venture or are already at the starting line, this newsletter is for you. Here’s what you can expect to find:

• Finance for Founders:

  Straightforward, no-nonsense guides to business finances, cash flow, and making better decisions from the get-go.

• Case Studies:

  Real stories from startups and founders - their successes, their setbacks, and the lessons you can use to skip the typical mistakes.

• Opinions and Industry Trends:

  My perspective on what’s shaping the startup world, plus ideas to help you spot what’s coming next.

If you want clear advice, practical examples, and a bit of inspiration as you build your first venture, you’re in the right place.

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I hope I can help you build something brilliant!