Entrepreneurial Bug Turns Funders into Founders
Over a dozen startups have been launched by former VC & PE investors in the past 12 months
The entrepreneurial bug seems to spare no one these days. In the last 12 months, over a dozen startups have been launched by former investors -from vice-presidents in venture capital firms to managing directors at private equity firms -in areas such as e-commerce, education technology , health technology and payments.Anshoo Sharma, principal at Delhibased Lightspeed Venture Partners, and Brij Bhushan, vice-president at Mumbai-based venture capital firm Nexus, according to sources, are launching Samast Technologies, a startup in the hyper local shopping space. Sharma and Bhushan, both in their mid-30s, previously worked to gether at consulting firm Bain & Co.
“I am still at Lightspeed and do not have any comment on this,“ wrote Sharma in an email response to ET. However, sources said that the duo has started the hiring process and their star tup is likely to close a round of venture capital funding soon. Abhishek Shah, who had been a VC at Unilazer Ventures, is now an entrepreneur-in-residence at Lightbox as he gears up to launch his own health tech startup by yearend. “Entrepreneurship was always the plan. It was always a question of when, never an if,“ says Shah, who has also been an angel investor.
His stint as a VC helped tremendously , he feels. “As a VC, you would have seen a few hundred pitches and more importantly , seen where many businesses went wrong valuable lessons to learn from.“
The Indian startup ecosystem has been on a tear over the last 12 months, with several fledgling ventures looking to take advantage of increasing internet and smartphone penetration. Overall, VCs put $1.1 billion to work across 90 deals in the first quarter of 2015, against $362 million across 66 deals in the corresponding quarter last year, according to data from VCCEdge.
In recent months, these factors have tempted several others to go down the same route. Barely a month ago, Aloe Private Equity's MD for India, Vivek Mehra quit the firm to float a food-tech startup called Culinary Cart. In April, it was Bala Parthasarathy, managing partner at seed-stage fund AngelPrime who left it to launch his startup by year-end. Mayank Kumar, former VP at corporate VC fund Bertelsmann India Investments, joined media veteran Ronnie Screwvala as a co-founder and managing director of online education venture U Education.
“Venture economics is a get-richslow game. You spread your capital across ventures and when one or more create value, you get a small portion of the overall profit. But if you have the idea and the appetite for starting your own venture, the risk may be larger but the upside too will be much more,“ says Sandeep Murthy, partner at venture capital firm Lightbox Ventures “It makes abundant sense for these investment professionals to start their own ventures,“ says Aneesh Passi, co-founder, Basil Advisors, a talent advisory company that works with PE and VC funds. “They have huge understanding and market know-how on different aspects of this ecosystem since they meet at least 2-3 startups daily . Strong connections in the VC circuit too can help them to raise funds faster and more efficiently ,“ he adds.
But becoming an entrepreneur after being an investor has its own pros and cons. “As a VC you are al ways able to understand the scalability challenges and build a sustainable, capital efficient business model,“ said Manoj Gupta, former principal at Nexus Venture Partners, who co-founded ethnic products e-tailer CraftsVilla in 2011 and recently raised Rs 100 crore in a round led by Sequoia Capital India. “But downsides could be building a top heavy structure and you may end up over emphasising on the team from the start.“
Some of these investors have their fingers in several pies. Amit Banka, former managing director of Unilazer Ventures, has set up two startups in partnership with others: quick service restaurant Cones & Curries and Business Doctors, besides angel investment platform Equity Crest.
For some like Sampathkumar Pudhukottai, who worked for a decade as venture capital investor at Kalaari Capital, starting up had been long pending. “When I was moving back to India in 2005, I wanted to start my own company and even explored options in fashion e-commerce, but the internet market was not ready then. I did not have a magic formula at the time,“ said the IITMadras and IIM-Calcutta alumnus, who worked with portfolio companies like Myntra and UrbanLadder at Kalaari.
Pudhukottai finally decided to set up his startup last year when his friend from IIT Madras, and now co-founder, Balaji Ramanujam reached out in April last year. He formally joined the education technology startup Imagin8ors in January this year. “Entrepreneurship is unpredictable as every day involves a new thing, whether it is hiring, working on the product or brainstorming,“ said 39-year old Pudhukottai.
ET18JUN15
“I am still at Lightspeed and do not have any comment on this,“ wrote Sharma in an email response to ET. However, sources said that the duo has started the hiring process and their star tup is likely to close a round of venture capital funding soon. Abhishek Shah, who had been a VC at Unilazer Ventures, is now an entrepreneur-in-residence at Lightbox as he gears up to launch his own health tech startup by yearend. “Entrepreneurship was always the plan. It was always a question of when, never an if,“ says Shah, who has also been an angel investor.
His stint as a VC helped tremendously , he feels. “As a VC, you would have seen a few hundred pitches and more importantly , seen where many businesses went wrong valuable lessons to learn from.“
The Indian startup ecosystem has been on a tear over the last 12 months, with several fledgling ventures looking to take advantage of increasing internet and smartphone penetration. Overall, VCs put $1.1 billion to work across 90 deals in the first quarter of 2015, against $362 million across 66 deals in the corresponding quarter last year, according to data from VCCEdge.
In recent months, these factors have tempted several others to go down the same route. Barely a month ago, Aloe Private Equity's MD for India, Vivek Mehra quit the firm to float a food-tech startup called Culinary Cart. In April, it was Bala Parthasarathy, managing partner at seed-stage fund AngelPrime who left it to launch his startup by year-end. Mayank Kumar, former VP at corporate VC fund Bertelsmann India Investments, joined media veteran Ronnie Screwvala as a co-founder and managing director of online education venture U Education.
“Venture economics is a get-richslow game. You spread your capital across ventures and when one or more create value, you get a small portion of the overall profit. But if you have the idea and the appetite for starting your own venture, the risk may be larger but the upside too will be much more,“ says Sandeep Murthy, partner at venture capital firm Lightbox Ventures “It makes abundant sense for these investment professionals to start their own ventures,“ says Aneesh Passi, co-founder, Basil Advisors, a talent advisory company that works with PE and VC funds. “They have huge understanding and market know-how on different aspects of this ecosystem since they meet at least 2-3 startups daily . Strong connections in the VC circuit too can help them to raise funds faster and more efficiently ,“ he adds.
But becoming an entrepreneur after being an investor has its own pros and cons. “As a VC you are al ways able to understand the scalability challenges and build a sustainable, capital efficient business model,“ said Manoj Gupta, former principal at Nexus Venture Partners, who co-founded ethnic products e-tailer CraftsVilla in 2011 and recently raised Rs 100 crore in a round led by Sequoia Capital India. “But downsides could be building a top heavy structure and you may end up over emphasising on the team from the start.“
Some of these investors have their fingers in several pies. Amit Banka, former managing director of Unilazer Ventures, has set up two startups in partnership with others: quick service restaurant Cones & Curries and Business Doctors, besides angel investment platform Equity Crest.
For some like Sampathkumar Pudhukottai, who worked for a decade as venture capital investor at Kalaari Capital, starting up had been long pending. “When I was moving back to India in 2005, I wanted to start my own company and even explored options in fashion e-commerce, but the internet market was not ready then. I did not have a magic formula at the time,“ said the IITMadras and IIM-Calcutta alumnus, who worked with portfolio companies like Myntra and UrbanLadder at Kalaari.
Pudhukottai finally decided to set up his startup last year when his friend from IIT Madras, and now co-founder, Balaji Ramanujam reached out in April last year. He formally joined the education technology startup Imagin8ors in January this year. “Entrepreneurship is unpredictable as every day involves a new thing, whether it is hiring, working on the product or brainstorming,“ said 39-year old Pudhukottai.
Sreeradha D Basu & Madhav Chanchani
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Mumbai
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