Peak XV’s partner exodus shows how messy the AI pivot will be for VCs

Peak XV’s partner exodus shows how messy the AI pivot will be for VCs

Peak XV, one of India and Southeast Asia’s most influential venture firms, is losing three senior partners just as it accelerates into AI and prepares a U.S. expansion. On paper, the firm has never looked stronger: multiple IPOs, billions in gains, and more than 80 AI-related bets. Yet internal disagreement at the top has forced a reset. This isn’t just a personnel story—it’s an early warning about how brutally AI is reshaping venture capital strategy, power structures, and even who gets to write the next generation of term sheets.

The news in brief

According to TechCrunch, Peak XV Partners has parted ways with senior partner Ashish Agrawal after an internal disagreement, with partners Ishaan Mittal and Tejeshwi Sharma choosing to leave alongside him. All three have been with the firm for 7–13 years and were involved in some of its most prominent fintech, consumer, and software bets, including Groww.

Peak XV says board seats held by the departing partners will be transitioned quickly and stresses that multiple partners already cover most portfolio companies. At the same time, the firm has promoted Abhishek Mohan to general partner and appointed Saipriya Sarangan as chief operating officer.

The exits come after a standout exit year: TechCrunch reports that five portfolio companies IPO’d in late 2025, generating roughly ₹300 billion (about $3.3 billion) in unrealised mark‑to‑market gains and about ₹28 billion (around $310 million) in realised gains. Peak XV, which spun out of Sequoia Capital in 2023, now manages over $10 billion across 16 funds and says it has made around 80 AI‑linked investments while preparing to open a U.S. office within 90 days.

Why this matters

This clash at Peak XV is a case study in what the AI pivot really looks like inside big venture firms: not a smooth strategy offsite, but a re‑sorting of power, conviction, and risk appetite.

Who wins and who loses?

In the short term, founders backed by the departing partners lose continuity. Even if board seats are reassigned smoothly, the reality is that early champions—those who did the hard internal selling—are now outside the firm. Their new fund will likely try to maintain friendly ties, but incentives will diverge the moment a company raises a competitive round.

Peak XV, however, gains strategic clarity. By framing the rupture around an “internal disagreement” and simultaneously elevating leaders plus doubling down on AI-native talent, the firm is signaling to LPs: we’ve chosen our path. In a market where AI is sucking oxygen out of almost every other thesis, indecision is more dangerous than churn.

The losers could ultimately be more traditional growth-stage founders in India and Southeast Asia—especially in fintech and consumer—who valued Peak XV’s historical pattern recognition more than experimental AI bets. If the firm reallocates time, mindshare, and reserves towards AI-heavy deals and U.S. adjacencies, some late‑stage domestic opportunities may see thinner support.

What problem does this solve or create?

The decision to prioritise AI and technical depth responds to a real structural problem: AI investing isn’t like backing generic SaaS. Evaluating models, infrastructure moats, and GPU‑driven unit economics demands people who can read research papers, not just pitch decks. Peak XV is explicitly saying that the “generalist GP” era is ending for this category.

The risk is over‑rotation. If AI valuations correct—or regulators move faster than expected—firms that have hollowed out non‑AI leadership may find themselves misaligned with local markets that still need logistics, credit, and B2B software more than yet another foundation‑model wrapper.

The bigger picture

Peak XV’s turmoil fits into three broader shifts in global venture capital.

1. The end of the monolithic VC brand
The split of Sequoia into separate U.S./Europe, China (HongShan), and India/SEA (Peak XV) entities already showed that the era of single global brands is fading. Local regulation, geopolitical tension, and different tech cycles make fully centralised strategies fragile. The latest departures underline that even within a region, consensus on where to deploy billions—AI vs. sector‑specialist or geography‑focused approaches—is increasingly difficult.

We’ve seen similar patterns elsewhere: senior partners at top‑tier U.S. firms spinning out to start focused AI, crypto, or climate funds when they can’t push the mothership fast enough in their preferred direction.

2. AI as the new biotech for VC structure
In biotech, firms long ago accepted that you need scientist‑investors and specialised operating partners. AI is trending the same way. Peak XV explicitly says it wants researchers and engineers in the investment team. That will change governance: term sheets, portfolio construction, and deal pacing may end up set more by people with lab and infra backgrounds than traditional growth equity investors.

This is a competitive response to players like a16z, Index, and Lightspeed, all of which are building deep AI benches and – in some cases – standalone AI funds. If you can’t credibly analyse model architectures and data pipelines, you will either overpay or miss the best founders.

3. The India–U.S. AI corridor is formalising
Opening a U.S. office within 90 days is more than optics. Indian and Southeast Asian AI startups increasingly structure themselves with U.S. go‑to‑market and Indian engineering. At the same time, U.S. AI companies are turning to India for talent and cost‑efficient product teams. Peak XV wants to sit in the middle of that corridor, not at one end.

That puts it into more direct competition with global funds already active in Bangalore and Singapore. The internal disagreement may well have been about how aggressively to play this cross‑border game, and at what opportunity cost to purely domestic bets.

The European and regional angle

For European readers, this might look like a distant, India‑centric story. It isn’t.

First, many European LPs—family offices, pension funds, even sovereign vehicles—are already exposed to India and Southeast Asia through funds like Peak XV. Changes in leadership and strategy shift their risk profile, especially if the portfolio tilts harder towards frontier AI. For LPs already wrestling with the EU AI Act and ESG frameworks, this raises tough questions about how AI risk is being underwritten in emerging markets.

Second, Europe’s own AI scene is tightly coupled to India. German, French, and UK scale‑ups are building sizeable engineering and data teams in Bangalore, Hyderabad, and Pune. A more AI‑obsessed Peak XV could end up backing the Indian arms of European-founded companies, or co‑investing alongside European AI funds in cross‑border deals.

Third, regulation matters. The EU AI Act, GDPR, and the Digital Services Act are exporting compliance expectations worldwide. Any AI‑heavy portfolio that wants to sell into Europe will need governance, dataset transparency, and model‑risk processes that stand up to EU scrutiny. Peak XV’s push to hire AI-native talent will only go so far if portfolio companies lack regulatory literacy—a gap where European investors may actually have an edge.

Finally, there is a competitive contrast: many continental European VCs have been noticeably more cautious about going “all‑in” on AI, often preferring balanced theses around industrial tech, climate, or vertical SaaS. Peak XV’s move is a useful mirror: are European firms being prudently disciplined—or simply too slow?

Looking ahead

Expect three developments over the next 12–24 months.

1. A visible new fund from the departing trio
Agrawal, Mittal, and Sharma have already flagged that they’re starting a new VC firm. Given their track record across fintech, consumer, and software, they’re likely to raise a substantial fund quickly, probably with a more classic multi‑sector India/SEA thesis and a less doctrinaire view on AI.

Founders they previously backed will be courted as reference points, and LPs will quietly enjoy the extra diversification. The market will quickly compare portfolio quality and pace between Peak XV and this spin‑out.

2. Peak XV will try to prove the AI thesis via landmark deals
To convince sceptics that the internal rupture was worth it, Peak XV needs a few high‑signal AI wins: either early backing of infrastructure players in India/SEA or visible co‑leads in U.S.–India AI companies. Watch for:

• A dedicated AI or “deep tech” vehicle, or at least separate reporting on AI exposure.
• High‑profile AI-native hires with open-source or Big Tech research pedigrees.
• Portfolio companies repositioning themselves more explicitly as AI-first.

3. More governance strain across large VC platforms
Peak XV will not be unique. As AI reorders investment priorities, other multi‑stage firms will face similar internal showdowns: should we double down on AI and infrastructure, or maintain balanced exposure to fintech, SaaS, and consumer? Do we build technical GP benches, or rely on advisors?

Partners who lose those debates will increasingly spin out, taking their sector networks with them. LPs will need to read between the lines of “amicable separations” to understand which side of each AI bet they’re actually on.

The bottom line

Peak XV’s partner exits are not a random reshuffle; they are the price of making a hard strategic bet on AI and on a deeper India–U.S. corridor. If the firm’s AI‑heavy approach pays off, it will look prescient; if not, it will have traded away valuable sector depth for a narrative. For founders and LPs alike, the real question is no longer who left, but which vision of the future of venture they are each backing—and which one you want to be aligned with.