Nexus' Arjun Gandhi on why Indian founders are targeting the US market

Indian artificial intelligence startups are packing up and moving west. From Bengaluru to San Francisco, founders are relocating operations to chase enterprise clients, abundant venture capital, and a software market over a hundred times larger than India’s. The migration marks a new phase in India’s startup story, one where success increasingly depends on how fast founders can globalise.

Arjun Gandhi, an investor at Nexus Venture Partners, says his firm actively pushes portfolio companies to establish US operations early. 

"The closer you are to your customer, the faster you're able to compete and the better product you're able to build by learning from their needs," Gandhi explains in an interview with YourStory.

Founded in 2006, Nexus was among India's first venture firms to operate globally, with offices spanning Mumbai, Bengaluru, and Menlo Park, California.  

The firm has invested in over 10 companies this year. Nexus has deployed this thesis across its AI portfolio, investing from infrastructure to applications. The firm backs Metaforms, which builds vertical software for marketing agencies; Cognida AI, focused on AI services from India; and Neysa, a GPU cloud company establishing data centers to meet compute demands. 

This migration has accelerated compared to a decade ago. Today's founders can access substantially more capital, enabling rapid international expansion after raising pre-seed or seed rounds. Many complete funding, go through global accelerators, and relocate to the US within months. 

A market 100X larger

The economics are straightforward: the US software market dwarfs India's by more than two orders of magnitude. For AI companies targeting enterprise customers, this scale difference makes relocation an imperative rather than a choice.

The shift is reshaping scaling trajectories. Unlike traditional SaaS businesses, AI companies are achieving growth rates previously unseen in software. "Companies are going from zero to a couple of hundred million dollars in ARR within 12 to 24 months," Gandhi notes. "We've never seen this kind of growth before."

This acceleration has raised the bar dramatically. Reaching $1 million in annual recurring revenue, once a celebrated milestone, now happens so quickly for multiple companies that it barely registers as an achievement.

India's structural advantages

Despite the US market pull, Indian companies retain competitive edges that fuel their global ambitions. A large pool of ambitious developers, cost-effective talent, and an established IT services reputation enable faster, more economical product development.

"Indian teams are very good at customer support and providing high-quality, white-glove services that global teams often struggle to do," Gandhi says. "That combination gives Indian founders an edge."

Nexus has deployed this thesis across its AI portfolio, investing from infrastructure to applications.

Most of Nexus’ investments target the application layer, particularly vertical AI solutions building agentic workflows for specific subsectors. The firm also continues its traditional focus on developer tools, backing companies creating fundamental building blocks for AI development stacks.

The consumer market challenge

While Indian companies show promise in enterprise markets, Gandhi expresses scepticism about competing for Indian consumers against global giants. OpenAI and similar players are expanding aggressively into India with localized offerings and dedicated teams.

"My prediction is that global players will likely win over Indian consumers," Gandhi says. "But there might be opportunities to win in certain categories that need more localization, like education."

Exceptions may exist in highly regulated industries where data sovereignty matters. Defense represents one sector where Indian-built models could have inherent advantages due to government requirements for domestically controlled technology.

For consumer products, the logic is simple: people want the best product available, and today those products remain predominantly global.

A fast- evolving ecosystem

Nexus, which raised its seventh and largest fund of $700 million in 2023 (bringing total assets under management to approximately $2.6 billion), now completes approximately 20 deals annually across India and the US, up from five or six when Gandhi joined.

The firm primarily invests in seed and Series A rounds across enterprise software, fintech, commerce, AI, and life sciences, with notable portfolio companies including Delhivery, Zomato, Postman, and Unacademy.  

The entrepreneur demographic is shifting younger. College students and even dropouts increasingly launch companies as their first career move, mirroring patterns in US markets. "Six or seven years ago, you didn't see many 20- or 21-year-olds building startups as their first job," Gandhi recalls. "Now you see a lot more of that."

The funding and talent gap

Despite progress, significant disparities persist between Indian and US AI funding levels. Gandhi attributes this partly to talent differences: "The talent bar in the US is much higher," making investments there easier to justify.

While optimistic about long-term talent development in India, Gandhi acknowledges the current gap represents a meaningful constraint on ecosystem growth. Indian funds have grown larger and are deploying more capital domestically, but the discrepancy with US AI funding remains substantial. 

Capital alone doesn't explain the gap, talent availability matters equally, if not more.

"Fundamentally, I don't see a separate playbook for Indian AI companies," Gandhi says. "Whether you're in India, the US, or anywhere else, you have to compete globally."