How to make it as a VC
Pallavi Srivastava March 17, 2008
Harish Gandhi, 37, nurtured a dream for 16 years—the dream of being a part of the venture capital (VC) industry. An MBA from the Wharton Business School, Gandhi has worked in the US for over 12 years with LCC International and Bain & Company. In 2004, he decided to relocate to India to pursue his VC ambitions.
Not just Gandhi, many others, too, want to be in the VC and private equity (PE) space in India. Here’s why: VC and PE investments into India touched $14.2 billion in 2007, almost double the $7.5 billion clocked in 2006. The number of deals in 2007 stood at 390, compared to 299 deals in 2006. According to advisory firm Grant Thornton, in January this year, there were 56 M&A deals worth $3.01 billion and 60 PE deals worth $2.05 billion. In volume terms, this was the biggest month for PE funds in India. A recent KPMG survey on the sector says: “This is an exciting time to be involved in private equity in India.” It’s ‘exciting’ not just for the firms or the cash-strapped but innovative start-ups in India, but also for people with an entrepreneurial streak, who want to enter the space as partners or directors.“I think there are enough qualified people. There is a large pool to choose from. In this model, we hire very few quality people but all of them are senior. Even the largest firms will not comprise more than 8-10 people,” says Avnish Bajaj, Cofounder and Managing Director of Matrix India. His thoughts are echoed by Helion Venture Partners Managing Director Sanjeev Aggarwal, who feels that India has a huge talent pool to select from, even though the industry itself is quite small.
The demand for VC jobs is way in excess of the supply and, probably, will always be. However, not everyone is the perfect fit.
In the KPMG survey, 21 per cent of the respondents listed management quality as a barrier to investment. Indeed, the perfect fit in this space depends on the strategy of various firms. There are, however, other factors that carry a lot of weight.
What it takes
You should evaluate your readiness for this job—do you have the ability and the networking skills?” The latter resonates as the requisite trait both according to the existing players as well as recruiters as “a good network in the industry makes a big difference”. Sanjiv Kaul, Managing Director, ChrysCapital India, agrees: “Networking is extremely important here.”
Says E. Balaji, COO, Ma Foi Management Consultants: “We have seen top management leaders from large companies taking up the role of a partner as they have had the experience of leading large operations, closing large international deals, turning around businesses, handling teams, developing market strategies, organising funds, handling investor relations and balancing value creation from both shortand long-term perspectives—all at the same time.”
“PE and VC firms rarely look for expertise in finance. They have that in abundance,” says Bose. Agrees Balaji: “PE and VC firms are beyond comprehending financials. It involves working closely with the invested firms. A partner is expected to have senior managerial abilities to make the firm’s investments work.” Agrees Bajaj, who says the formula is not same for everyone. “I will put 50 per cent emphasis on skill sets and another 50 per cent on values and culture.”And skill sets in this space mean mainly two things—the person must either come from an operational background or must have been an investor in a personal capacity.
He should be involved in this ecosystem in some way, says Bajaj, adding: “I don’t care if that person didn’t work for too many years; but the quality of his work should come across. For an operational person, there are three significant skills—significant domain experience, networking in that domain and sourcing and winning deals.”
According to Venkatesh Shastry, Partner, Stanton Chase, all aspiring CEOs and CFOs (in the space) should initially assess if they can work in multiple client contexts, with little or no operating or administrative support. Shastry expects the candidate to possess wisdom and experience to help portfolio companies to succeed in strategy and execution.
“He should have good operating experience across functionalities combined with a flair for advisory business,” Shastry points out.
And before you decide to take the plunge, it will surely help to acquire an iron fist. You will need this to take hard business and people-related decisions when necessary. Also, those who are an astute judge of people have a headstart. “It’s a very people-centric role—it’s more about building relationships and dealing with people than anything else,” says Gandhi.For Bajaj, one of the two key soft skills in the business is people evaluation and presence (read positive influence). But ultimately, he says, it boils down to your gut instinct.