From reshaping early stage innovations to reimagining entire industries, few investors have attempted to rewrite the playbook for venture capital the way General Catalyst is attempting to do. In the last year, GC has raised $8 billion to fuel a new wave of AI innovation, rebuild health care systems, strengthen defense capabilities and back companies that can define the next century. Its footprint is expanding across the world and India is right at the center of that strategy. A $100 million investment into defense tech innovator Rafi, a major bet on integrated health care with PB Healthcare and a defining role in India's quick commerce segment with Zepto. These are just some of GC's India bets. Leading this new era of purpose-driven capitalism is its CEO Hemant Taneja, an investor, author and one of the most influential thinkers in technology today. He joins us now on Young Turks Reloaded.
Hemant, great to have you back on the show. Thanks very much for your time. Let me start by talking to you about how you reflect back on 2025. It's been quite the year. AI surging, we've of course had a fair degree of volatility and uncertainty as far as geopolitics is concerned. I remember you called it the year of peak ambiguity. Is that how you would sum it up?
Yeah, first of all, thanks for having me. I look, it has been peak ambiguity because you saw from a geopolitics perspective how relationships between countries, look at US India for example, how that was pretty volatile and then there continues to be a lot of volatility in the capabilities of the technologies. So we started the year with a really clear view that we have to navigate a lot of ambiguity as we think about building the next set of businesses. Now what I think about at the end of this year is I actually think we're going to look back and say 2025 is a year that diffusion of AI started. So if you go back to November 2022 when ChatGPT was launched and everybody all over the world, every CEO, every industry, every country was thinking about what to do with AI. All these companies got started in different industries. Vertical language models got started getting built. AI rollups, a lot of activity. Now, what's happening is you're starting to see evidence of what AI can do in how it melts labor into productivity. And this is the year we're going to look back and say it's starting to show real capabilities in production.
I'll get to AI in just a second, but let's address the issue of geopolitics. And you come in here from the valley. What is the mood at this point in time in the diaspora, especially as far as how this relationship has turned out under the Trump administration? We don't have a deal yet. There's a question mark on when that deal will happen. Is there a growing despondency or frustration on where things currently stand between the two sides?
Look, I think there's definitely disappointment because one of our core beliefs was, given how strong the Indian diaspora is in the technology sector in the US, that there was naturally going to be a deep collaboration between US and India, especially on technology matters. And so there's disappointment that that hasn't yet happened and in fact, even when the tariff discussions started, the thought was India was actually going to be on the front of the line at resolving what those relationships are going to be like. Having said that, I do believe in the long term it just makes too much sense for these countries to be working closely together in the context of geopolitics, in the context of innovation. And I remain optimistic that we're going to get there.
Geopolitics aside, it doesn't seem to have put the brakes on investors looking at India, US investors looking at India. We've just had this week Amazon announced $35 billion of fresh commitment to India, $17.5 billion from Microsoft. And of course the VC money continues to come in. Do you see any indication or evidence that this could potentially impact investor sentiment?
Not really. We are very optimistic about the opportunity in India. I mean, I did a review with our team in Bangalore yesterday and just looking at the kinds of companies that are getting built, the traction they're having, it just speaks to the growth opportunity in India. Now, as we were mentioning earlier, we are actually trying to build resiliency in all the key sectors: healthcare, defense, financial services. And innovation is going to only flourish here. Given the fact that it's such a growth market and the entrepreneurial DNA is so strong and you've got all these IPOs happening which is just motivating for the founders, I just think it's only going to accelerate.
Let's talk about those IPOs because General Catalyst was an investor in Misha. Misha is one of the listings that we've seen happen. There's been a flurry of them from Lenskart to Urban Company to of course the most recent one being Misha. What do you make of this move to the LSE of the listings that have taken place? I mean most of them have done well. Some of them have in fact come up very sharply like Ola from their listing highs. But on balance, what do you make about the Indian IPO story specifically from a new age startup point of view?
First of all, it's just great to see that there is an IPO market. I think the other thing is what I see which is it just encourages more capital into the sector. But what I see that's really interesting is think about the kinds of business models that are getting built. It reminds me of what happened in China 20 years ago. So you got these unique companies that got created that were especially for the growth opportunity in the country itself and that's what's happening and that's really exciting to see. The first set of IPOs that we talked about were companies like Freshworks which were really global software companies taking advantage of the fact that you can build them here cost effectively, but now it's about India's growth, India's quality of life and the innovations that can make a difference for people. I think those are going to be some of the biggest outcomes, so we're very excited about what these companies are doing.
And just on that point, I remember you said that it's not fair to look at these companies from a Western lens. Explain to me what you mean by that, especially in context of how people judge this addressable market debate and what that eventually means as far as opportunity as well as valuation is concerned. How do you look at what we've seen happen both in terms of market opportunity, valuations as well as the path to profitability?
Well, look, there's a lot of conventional ways you look at the Indian market. The spend demographic isn't that strong and whatnot. You have to think forward. If you're growing at these kinds of rates for the next 10 years, what is that opportunity going to be? So what you're starting to see is these business models that are very robust. And if you look at them maybe in the context of today's TAM, perhaps it will seem small to you, but as the market is growing, this such an expanding market that these are going to be really interesting companies. I mean, the idea that you'll have 30, 50, 100 billion dollar companies serving the consumer demographic and over time I think in the other industries, healthcare, defense and so on, that would have been very difficult to imagine. I could totally see that happening in the next 10 years in India.
Yeah, absolutely. How do you respond then to the fear that India has not really been able to establish itself as far as the AI map is concerned and that could potentially be a threat going forward and which is probably why we haven't seen the kind of FDI inflows into India because we don't have an AI stock per se. On the other hand, the argument is also that this perhaps derisks us because if you do have an AI meltdown in the rest of the world, then India perhaps will be in good stead. What do you believe India's role is going to be in this AI era?
Yeah. So, look, our view of the world is there are two big trends. Global resilience where every country is trying to figure out how to create strategic autonomy in key industries. AI would be one of them. Defense, industry, industrials, healthcare and so on. And the second is the AI capabilities. I think the global resilience trend is very strong in India and so if you build the next generation healthcare companies and defense companies here and you make them viable and market leaders, they are going to be well positioned to be global companies. So that part is actually working super well. When you think about on the AI side, India has a lot of challenges in my view. I think a few things you just mentioned. One, we don't have the infrastructure here. You don't have semiconductor capabilities or cloud or models. If you were to start today, you would say it'll take you 15 years to build that. And you don't have 15 years. If Indian companies are going to be globally leading, they can't be waiting for 15 years for those capabilities. I think that's an issue. So what should we do? Well, so I was going to say but you do have a lot of open source capabilities that are there. So I think India in the short term has to lean into it while figuring out what to do in terms of developing local model capabilities. So I think that's... I'll tell you the other challenge that's very top of mind for me in India is we also have the youngest demographic here. So on one side you have to put all those people to work in interesting jobs that create upward mobility. On the other side, if your companies are going to be globally leading, they're actually going to be very efficient from a human capital standpoint just given the AI productivity. And that tension and thinking about what the workforce demographics need to be, what the opportunity needs to be for the emerging workforce, I think that is probably a really important topic for him to be thinking about uniquely.
But what is happening as far as the workforce is concerned? We've seen numbers coming in from the valley both in terms of layoffs as well as hiring freezes. Even here people are now talking about the fact that 18 or 20 or even higher percentage of their coding is being done by Gen AI. So what are the big trends emerging as far as the workforce is concerned and what the workforce is going to look like 5 years on?
Look, I think the kids coming out of college, my daughter just graduated this year from college, finding a job, what are you telling her? It's actually incredibly hard for them because she's in programming and when you to your point about using AI models effectively, I think those emerging entry-level jobs in AI are being done by Claude or, you know, pick your favorite coding agent.
We're big investors in Anthropic. So we're champions of Claude. That's why it naturally came out of my mouth. I would say so I do think that's sort of a challenge, but the key is how do you train these kids to use AI effectively? And if you think about what an enterprise is going to look like that truly effectively uses AI, those enterprises are going to be a workforce where humans are managing agents, agents are managing humans. So it's a very different kind of an organization. And so learning how to work with these agents and having those skills are actually going to be almost as important as how effectively you can code to be able to work in these technology companies. So I do think the pedagogy has to change in terms of what you're teaching students as well and that's a education sector moves slowly but we have to figure this out relatively quickly to say how do you train kids that are getting out of college to be very effective at using and managing AI for the day-to-day jobs.
You talked about Anthropic and also IPOs. So both from a global point of view as well as an India point of view, 2026 another blockbuster year for IPOs?
I'm very optimistic. I think there are a lot of companies that are thinking through going public. Frankly, the second half of this year would have been where a lot of IPOs happened but given the uncertainty because of geopolitics, I think that got pushed. But I do think now there's a lot more stability in the markets and the issue never was are there enough companies to call companies into public, the issue was more when do those CEOs want to put those companies into the markets where they control their destiny as much as possible. I do think next year is a very exciting year for that.
But how do you weigh in on the valuation debate as far as AI is concerned? Is it too much? Is it too soon? Are we closer to seeing a correction or perhaps even a meltdown? I mean, what's the read from your vantage point?
So, I think I'll give you a nuanced answer with that. First is, you know, Anthropic raised at $160 billion valuation. I would say on a value basis, that was probably the cheapest deal that got done. The number is not as big but their revenue is also big and so it actually wasn't sort of a crazy multiple in that regard. So these model companies are actually accruing valuation because they're just on this hyper growth trajectory. So I think we just have to sort of get our arms around the fact that there's a handful of these companies that got built to be very, very large very, very fast because of AI, because AI compresses progress. But I would say on the other side, what that does create obviously is FOMO. So now everybody wants to fund the next research out of OpenAI or Anthropic in the hopes that they can build the next model. There's a lot of money going in there at extraordinary valuations and it's very unclear to me what happens to that. So that to me is where if you were to say is there a bubble, there's a dynamic there that's very hard to explain except that if one of those got to AGI it would be worth it and so smart investors are saying let's index them all and hopefully one of them works and it'll be a good return.
So you're saying the bubble is outside of the three or four big guys?
And then I think if you look on the applied AI on top of that and going back to my earlier comment that diffusion did start this year, I actually think there are real businesses getting built and they're going right after the labor spend and these companies are capturing value and scaling very, very fast compared to the way the SaaS companies and software companies got built 10 years ago. So I think in that sense it's actually really the exuberance around will science lead to new models where I personally feel discomfort. A lot of the other places we're investing, I have a lot of confidence that there are just some extraordinary businesses to build there.
So discomfort about research models?
That's where I sort of struggle as to how do you fund these research teams with such large amounts being spent predominantly on compute, not really knowing when these are science projects, you don't really know if they're going to work and then they have to go build a business on top. So how do you really think about allocating capital to companies like that? Very, very hard to figure out.
