What It Actually Takes to Get VC Funding: Insights from Z47 Founder Avnish Bajaj

Recently, Swati Ganeti, Managing Director, Masters’ Union, hosted Avnish Bajaj, Founder and Investor, Z47. The conversation focused on the practical realities of early-stage investing and offered students, founders, and aspiring investors clear guidance on what really drives outcomes. Unlike typical talks filled with buzzwords or abstract frameworks, this session explored how investors assess founders, evaluate markets, and make strategic decisions that shape long-term success.

Assess the Founder Before the Business

Avnish emphasised that in early-stage investing, the founder is more important than the idea itself. Many entrepreneurs mistakenly assume investors prioritise market size or product innovation. In reality, it is the founder’s ability to navigate uncertainty, adapt to changing conditions, and persist through challenges that determines a venture’s success. He noted that early life experiences often reveal patterns in decision-making, persistence, and leadership that are more predictive than recent achievements or academic credentials.

Avnish highlighted that products and markets constantly change, but a founder’s mindset and adaptability ultimately dictate whether a startup survives or fails. Understanding the founder deeply allows investors to anticipate how they might respond in moments of crisis or rapid growth.

What Z47 Looks for in Founders

1. Ability to make decisions under uncertainty

2. Evidence of persistence and follow-through

3. Conviction in the face of challenges

4. Lived experience directly related to the problem being solved

Use Frameworks as a Guide, Not a Rule

During the session, Avnish stressed that frameworks in venture investing should guide thinking, not dictate it. At Z47, frameworks are used to structure analysis and prompt discussion, but final decisions rely heavily on judgement and the ability to synthesise incomplete information. He explained that the art of investing lies in recognising patterns and combining multiple pieces of data into actionable insights rather than relying solely on formulas.

How Z47 Applies Frameworks

1. Identify the victory scenario if everything goes as planned

2. Determine which assumptions are most likely to fail first

3. Stress-test decisions before committing capital

Focus on Upside, Not Just Risk

Avnish emphasised that failure is an inherent feature of venture capital. In fact, he noted that even top-tier firms experience failure rates between 50 and 90 per cent. The key is not avoiding losses but ensuring that successful bets produce outsized returns. He drew parallels with Warren Buffett’s approach, where a small number of high-impact investments drive the majority of portfolio gains.

Portfolio Management in Practice

1. Accept that high failure rates are normal

2. Identify early signals of breakout success

3. Allocate additional capital decisively to winners

4. Reduce exposure to underperformers before they drain resources

Timing Matters More Than Being First

Avnish shared his experience bringing luxury brands like Gucci and Calvin Klein to India before the market was ready. He explained that even with a strong idea, poor timing can stall growth. For founders, this means evaluating whether the market is genuinely ready rather than relying on being the first entrant to gain an advantage.

Timing can make the difference between a product that flourishes and one that fails, regardless of its inherent quality.

Practical Tips for Market Entry

1. Validate market readiness before committing to a full launch

2. Monitor shifts in consumer behaviour carefully

3. Target premium segments as consumer purchasing power grows

4. Understand that entering at the right time is often more valuable than being first

Enter Markets Before They Get Crowded

The session introduced the concept of “hair on fire” markets, referring to sectors growing so fast that competitors flood in quickly. Avnish warned that entering after a market has heated up dramatically reduces differentiation and early advantage. He encouraged founders to act early but strategically, focusing on low-competition areas to build initial momentum.

Early action in the right areas allows startups to capture market share and develop defensible positions before others crowd in.

How to Approach Emerging Categories

1. Enter trends before they become obvious to the mainstream

2. Avoid late entry into highly competitive spaces

3. Build early advantages in low-competition areas

4. Accept and plan for uncertainty in the early stages

Pick a Narrow Vertical in AI (Artificial Intelligence)

For AI ventures, Avnish emphasised the importance of focusing on a single industry or vertical. Horizontal solutions, while appealing, are harder to differentiate, sell, and defend. Working closely with early customers in a specific vertical allows startups to refine their product in ways that no internal team can replicate. This targeted approach accelerates traction and creates a foundation for broader expansion later.

How to Structure AI Ventures

1. Solve a specific problem in one industry

2. Collaborate with early customers to improve product-market fit

3. Expand to adjacent verticals only after validation

4. Build network effects within the chosen market before broadening scope

Prioritise Where Customers Spend Most

Avnish reminded students that large markets do not automatically yield profitable businesses. Startups should focus on areas where customers spend consistently and heavily. In the pet sector, for instance, essentials like food generate sustainable revenue, whereas accessories and clothing have limited repeat purchase potential. By aligning business focus with customer spending patterns, founders can maximise the chances of building a financially viable venture.

Evaluating Category Potential

1. Identify segments with high and recurring customer spend

2. Focus on recurring, essential purchases over one-off items

3. Avoid niche subcategories that cap growth potential

4. Ensure the category has structural depth to scale over time

Balance Speed and Accuracy by Sector

Speed is often celebrated as a startup advantage, but Avnish cautioned that in sectors such as healthcare, accuracy is more important. Mistakes in regulated or high-stakes areas carry serious consequences, so execution must align with sector-specific risks. This balance helps mitigate costly errors while still enabling growth and innovation.

Guidelines for Execution

1. Prioritise accuracy over speed in high-stakes industries

2. Increase pace once the core product is validated and trust is established

3. Align execution style with sector demands and risk tolerance

Treat AI as a Core Function, Not a Feature

Avnish was clear that AI is now a baseline expectation for modern startups. Treating it as a peripheral feature rather than embedding it into core operations will leave businesses behind. Startups that integrate AI fully into their operations gain both efficiency and a competitive edge.

Embedding AI Effectively

1. Automate core operations, not just peripheral tasks

2. Use AI to improve efficiency and decision-making

3. Build teams structured to operate within AI-driven systems

4. Keep pace with rapidly evolving AI tools
   
   

Ask Better Questions to Uncover Real Insight

Avnish also emphasised the power of listening and asking follow-up questions. Many founders and investors respond too quickly, missing critical signals. Deep conversations reveal gaps, contradictions, and hidden insights that surface only when questions go beyond the obvious. Strong questioning and attentive listening give founders and investors clarity for making better decisions.

Improving Decision-Making

1. Listen fully before responding

2. Identify contradictions or signals in responses

3. Ask questions that go one level deeper than the surface

4. Treat every conversation as an opportunity to uncover hidden truths

Focus on the Few Decisions That Truly Matter

Long-term success is not about getting everything right. Avnish reinforced that it comes down to making a small number of critical decisions correctly. These include backing the right founder, entering the market at the right moment, and supporting opportunities with conviction. 

The session with Swati Ganeti and Avnish Bajaj provided students and aspiring investors with practical, grounded guidance on evaluating founders, assessing markets, and integrating AI in modern businesses. These are not theoretical concepts but actionable principles drawn from real investment experience.