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PE, VC Pros Seeking New Growth Avenues Outside The Industry

09 September, 2011

While 2010 saw a slew of private equity and venture capital professionals step out of institutional shops to go solo, the current year has seen a number of players moving out of the industry. Over the past 10-12 months, several PE executives have left the industry for pursuits ranging from starting investment banks to launching e-commerce start-ups.

Several executives, hailing from varied backgrounds like consultancy, i-banking and operations, joined the PE/VC business as global firms started flooding India and existing players expanded during the heyday (2006-2008). But as the industry starts to mature, many of these executives are heading to greener pastures, for which they are better suited.

“It is fairly difficult to be a successful private equity investor. Finding the right deal is very challenging, given how competitive the market is. It is even tougher to get a profitable exit,” feels Sunit Mehra, managing partner at Hunt Partners, an executive search firm specialising in private equity.

Rajeev Gupta, former India head of Carlyle’s buyout practice, quit earlier this year to start his own M&A and private equity advisory business. Gupta was the joint managing director and head of investment banking at DSP Merrill Lynch (now Bank of America Merrill Lynch) before joining Carlyle.

Girija Shankar Tripathy, a former senior executive at Actis with more than 12 years of experience in PE space, joined Mumbai-based boutique investment bank Singhi Advisors as one of the directors in March this year.

Rajesh Subramaniam, who was heading the India office of the venture capital firm Walden International until recently, rejoined the Mumbai-based BPO firm Firstsource Solutions Ltd as deputy managing director and chief financial officer in July this year. Subramaniam, still a venture consultant with Walden, had joined the VC firm three years ago in 2008 after serving as executive vice-president (EVP) and CFO of Firstsource.

Several industry veterans like ChrysCapital’s Ashish Dhawan and IndoUS Venture Partners’ Vinod Dham have also decided not to participate in their firms’ new funds. While Dhawan is looking to start a venture in the education space, Dham has cited family reasons as IndoUS turns focus on early-stage companies in India (as compared to stage-agnostic, cross-border play).

Again, some people, like IDFC Private Equity’s founding MD Luis Miranda and former Warburg Pincus India managing director are transitioning into consulting and advisory roles.

Experts believe that there are several push factors, which are leading to this situation. “The motivation for all the people who joined PE firms was not altogether correct. Several didn’t bargain for the stress or challenges of the job, or the fact that PE is a very unique business,” explains Mehra.

Another reason can be the change in lifestyle and structure that happens if one is in private equity space, in contrast to consulting or corporate jobs. “PE has a distinct lifestyle where nobody reports to you and there is no super structure of a larger organisation. After months of effort, you may end up doing only a single deal. Very atypical of corporate lifestyle and, therefore, this can be destabilising for those who are not in it for the right reasons,” adds Mehra, who expects this churn to continue.

When VCs Start Start-ups

Many PE and VC pros, seeing the opportunities in the existing Indian economy besides the success of entrepreneurs across the table, are also rolling up their sleeves and starting their own ventures.

Earlier this week, Sumant Kasliwal, a principal at ICICI Venture Funds Management, put in his papers and is now floating an e-commerce venture in the education space, along with another person from the domestic venture capital industry.

Manoj Gupta, who was a principal at the Nexus Venture Partners, also left the venture firm earlier this year to kick start Craftsvilla.com, a handicraft store showcasing a plethora of products such as apparel, home furnishing and home décor, among others. Prior to joining Nexus, he had co-founded WIT, a US-based semiconductor technology company, which was later acquired by Chrontel.

Others who have started their own ventures include Avigo Capital Partners’ investment director Saif Dhorajiwala, who has started Hyderabad-based solar energy firm Fourth Partner Energy, and Jafco’s former South Asia deputy head RJ Sridhar, who has started a business coaching venture.

 


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2 Comments
BHARAT KANANI . 5 years ago

When we are in PE / VC Firm, we enjoy lots of privileges, Promoters and Entrepreneurs consider us a person with Vision and highly knowledgeable and the one who can help them in taking their business on the next level of Growth. Things are fine till this, the moment you are out of the Industry and busy with own business or other Industry, you would experience reality of the business life. Things which were looking easy to talk while being PE/VC professional becomes extremely difficult to execute whey you are on the other side of table. I strongly believe that, each and every PE/VC Investors must work couple of years on the other side to gain real insights and challenges of running and growing Business. Bharat Kanani (Ex- Executive Vice President at GVFL)

Ravi Trivedi . 5 years ago

Agree with you completely Bharat. That being said, there are people in the PE/VC industry who were operators at one time, and I believe having that experience makes a huge difference while working with start-up management.

One trend I noticed is that most of the folks who have gone out to do their own ventures were at a middle tier level i.e. a VP/Principal/Director.

PE, VC Pros Seeking New Growth Avenues Outside The Industry

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