More obvious rebuttal: IIT is merely a mark that you were smart at a certain age. When investing in startups you don't want to disregard what they did since or, god forbid, exclude older people entirely.

Focussing on IITians at any age is like leaving stale comments scattered in a codebase and being misled by them.

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The less obvious rebuttal: Getting into the IITs marks one as smart, but not making it doesn't necessarily mark one as inferior.

In my experience those who rank 1-50 are in a stratospheric league of their own. But choosing between ranks 1500+ and the best of other indian colleges (who often didn't pass the IIT tests) is a crap shoot. There's just too many deserving students for the IITs to accomodate.

(Full disclosure: I prepared for the IITs for two years, didn't make it. It was a long time ago, but perhaps I still bear the scars.)