Mumbai: While negotiating deals in the mobile phone services business, help for venture capitalist (VC) Harish Gandhi is just a phone call away. The relationships he forged in his previous role as head of mobile value-added services (VAS) and products business at Bharti Airtel Ltd, India’s top ranked mobile phone services firm, allows him to “talk to anyone in the industry and easily cross-check what we hear from the start-up”, says the Canaan Partners executive director.
Gandhi is among the many business heads that Silicon Valley-headquartered venture capital firms have wooed for their India offices away from large companies in the Internet and mobile phone sector. In the last year, firms such as Canaan, Norwest Venture Partners (NVP) and Clearstone Venture Partners have hired partners from companies such as online retailer eBay Inc., Bharti Airtel and Motorola Inc.
New role: Harish Gandhi is among the many business heads that Silicon Valley-based venture capital firms have wooed for their India offices.
Rajan Mehra, the latest addition to this group, spent four years at eBay India, last as country manager, before joining Clearstone as venture partner earlier this month. In his new role, says Mehra, “I can make more impact across a broad cross-section of companies.” Mehra, in fact, is the fourth person to quit eBay India to turn first-time VC after Niren Shah, now NVP’s India managing director; Matrix Partners India’s Avnish Bajaj; and Nexus India Capital’s Suvir Sujan. All four came on board eBay when it acquired Baazee.com in 2004.
VCs say professionals with early-stage investing experience are too few to choose from, which has led to hiring more first-time VCs with proven domain knowledge. “A lot of high performance executives with entrepreneurial DNA, who have worked in VC-backed companies in the last seven years have come from those verticals,” says Rahul Khanna, director, Clearstone Venture Partners. “We have a bias towards people with an operating background versus those from consulting or investing.”
Over the last two years, venture capital firms that have set up shop in India have comprised largely of past entrepreneurs with operational experience in technology areas, such as Canaan’s Alok Mittal, who co-founded recruitment portal Jobsahead.com (acquired by Monster.com) and Helion Venture Partners’ Ashish Gupta, who previously co-founded Junglee Corp. (acquired by online retailer Amazon).
But if 2005-06 saw start-up founders turning VCs, it has now extended to senior management as well. Companies such as TPG Capital Llc. and Chrys Capital have hired top managers such as Vivek Paul, formerly vice-chairman of Wipro Ltd, and former Ranbaxy Laboratories Ltd vice-president Sanjiv Kaul.
In recent times, venture capital firms, however, are shopping for talent in their favoured sectors of Internet and mobile services. Bangalore-based Sequoia Capital India was among the earliest VCs to tread this path, hiring partners such as Mohit Bhatnagar, another VAS head at Bharti Airtel, Café Coffee Day ex-CEO Naresh Malhotra and Sify ex-CEO and co-founder R. Ramaraj in the last two years. “Young companies need more than just money and (with domain expertise), we can help them in other aspects such as HR (human resources) and marketing as well,” says Bhatnagar, who is on the board of Sequoia-backed firms such as telecom software vendor Bharti Telesoft Ltd, mobile voice application firm Bubble Motion Inc. and mobile gaming and content start-up Nazara Technologies Pvt. Ltd.
While operational experience comes in use helping portfolio companies with execution, the relationships and industry knowledge these partners bring in help with both sourcing and screening deals for the venture firm. “So if a start-up has a tie-up with the operator, you can ask deeper questions—is it a pilot project, or a six month contract, one circle, or a national roll-out,” says Gandhi, who dealt with mobile start-ups on a daily basis at Bharti. A few times, Gandhi introduced start-ups to relevant people on the operator side, though he did not invest in them “to form a relationship for the future”.
The challenges, these first-time VCs say, is the change in expectations. From meeting daily and monthly milestones, they now have to answer to long-term expectations of their limited partners. The other shift, and an important one, is to go from “operating manager to adviser. You need to exercise the right amount of influence without controlling operations yourself”, says Mehra.