Is failure a badge of honor? What Zerodha’s Dinesh Pai looks for in founders who stumble

In a fireside chat at the Mint Money Festival, he spoke about why execution matters more than ideas, how failure can be a lesson, and what retail investors should know before jumping in.

What do you look for when you back a founder?

It always comes down to the person. There’s no “typical” background. What we care about is the depth of thought and the time a founder has spent obsessing over a problem. You can sense very quickly if someone is chasing a buzzword, like AI just because it’s fashionable, or if they’ve lived the problem and can teach us things we didn’t know. Those conversations make us sit up. At the end of the day, you’re betting on someone who will ride the ups and downs with their team.

Between ideas and execution, what matters more?

Execution is everything. An idea is just potential. We’ve all had hundreds of ideas but what separates founders is the courage to put everything on the line and build.

The question we ask is: will this person abandon ship at the first sign of trouble or will they stay with the problem long enough to find the right solution? Of course, you also need to know when to pivot. Sticking to a dead idea is no virtue either.

How do you view failure in founders?

In India, failure still carries a stigma. In Silicon Valley, it’s almost a badge of honour. For us, failure isn’t disqualifying, what matters is why it happened. Did the founder fail at something they genuinely cared about or were they just following a trend?

I’d much rather back someone who failed in fintech but is trying again in fintech, because I know they’ve lived that customer pain. What we don’t tolerate is dishonesty or treating people poorly.

How do you monitor such a wide portfolio of 150 companies?

We don’t, at least not in the conventional way. Of the ₹1,200 crore we’ve deployed, 20–30% is concentrated in about 20–30 companies, and those we track more closely. But it’s never about spreadsheets or monthly reviews—it’s about conversations. If a founder needs help with hiring, PR, or distribution, we step in. Otherwise, we trust them. Venture capital is about backing people, not micro-managing balance sheets.

How do you choose between startups with similar ideas?

We go back to the founder again. Markets are cyclical, ideas come in waves. What matters is whether the founder has unique insight into why this product should exist now. And we’re realistic about the fact that most angel or seed investments fail. So, if you’re an angel investor, be careful. Protect your rights, know that probabilities are against you and only invest money you can afford to lose.

Can retail investors safely get exposure to startups?

Honestly, I wouldn’t recommend it to everyone. Angel investing looks glamorous, but the odds of losing money are much higher than the odds of hitting a “six”.

Platforms exist, but Sebi’s requirement of accredited investors for angel funds should make you pause—it’s there for a reason. If you don’t have the time or bandwidth to track companies and understand founders, you’re better off staying away.

What’s one investment that failed and taught you a lesson?

We once backed a lending enabler for non-banking financial companies (NBFCs). It didn’t work out and we lost around ₹30–40 lakh. At the time, those were large cheques for us. The lesson was to be careful with valuations and not chase markets we don’t deeply understand. Today we deploy much larger sums, even ₹200 crore in a quarter sometimes, but we’re still accountable internally. Even if it’s a small cheque, we need to explain why it made sense.

Final advice for young founders?

Don’t be always swayed by headline-making success stories. For every school or college dropout who hits the spotlight, there are thousands who don’t. Also, be brutally honest about your odds, and tackle tough problems you’re genuinely passionate about, because even if the business fails, you’ll come out wiser, smarter, and stronger.