It was a year of keeping the house in order. Alternative asset investors, who are often uncharitably dubbed as interfering, nit-picking and nagging by many an entrepreneur, got more hands-on with portfolio companies and leveraged their cross-functional capabilities and global exposure to help them stay above water.
While fresh business proposals gathered dust at VC offices, it was existing portfolio companies that got some undivided attention. Around 66% of the respondents, who participated in the VCCircle Deal Outlook 2010 survey, said, they were in touch with portfolio companies at least once a week, while 31% said they engaged with them once a month.
This heightened engagement with portfolio companies comes in the backdrop of the Subhiksha fiasco, where investors allegedly did not realise when the budget retailer went bankrupt. Several PE and VC firms hired executives with experience in various industries to advise their portfolio companies. For firms doing controlled transactions, this becomes a necessity.
Around 38% of the respondents said, they were very much involved in the operation of portfolio firms while 49% said they were moderately involved. Bringing in operational and financial skills for corporates is becoming important for investors trying to differentiate themselves in a crowded market.
One of the top tasks for investors is setting up processes and professionalization followed by helping with finances, hiring and business development.
2009 meant rolling up the sleeves and getting hands dirty for private equity investors. 2010 will reveal if it worked.