The former VCs — now known as VCpreneurs — said starting up became an option since professional growth in the venture capital industry is confined to "hierarchical structures".
A fresh set of about a dozen venture capitalists in the junior to mid levels has left prominent funds including SAIF Partners, Accel, Lightspeed Venture Partners and Sequoia Capital over the last 18 months to establish their own businesses, a continuation of a trend last witnessed in the funding boom of 2015, according to data compiled by ET. Accel, an early backer of homegrown ecommerce firm Flipkart and food delivery app Swiggy, estimates that 90% of those who stepped down from the fund ended up starting their own companies. SAIF has seen at least six team members take a plunge into entrepreneurship since 2018. Entrepreneurs told ET that the move represented a big change in their career trajectory — from being a venture capitalist, which is considered a relatively passive profession compared to an operating role building businesses.
The former VCs — now known as VCpreneurs — said starting up became an option since professional growth in the venture capital industry is confined to “hierarchical structures”. “Accepting this culture and being cognisant of the fact that getting to the partner path is long and uncertain isn't motivating for all,” said a founder who quit his VC stint to start up.
"The timeline to understand if you are good investor is also relatively long," he said. At an investment fund, General Partners are the top decision makers. As a result, a stint at venture capital firms comes with a shelf life and expiry date for most executives. “VC is a great place to study businesses, however…some learnings are by experience and one cannot understand them without executing," said Shashank P S, CEO, CasaOne, who was earlier an investment professional at Bessemer Venture Partners. Harmin Shah joined SAIF Partners in 2016 knowing fully well he would not stay too long in the venture capital industry. Shah had just sold his company HandyHome to UrbanClap. He was taking on the VC role only to understand markets and companies better. “Both (SAIF and I) ultimately knew I’d start up again. SAIF was like an apprenticeship programme for me, which helped in building better frameworks,strategic lessons from portfolio companies, and deeper learning,” he told ET. “It was a planned transition,” he added. After quitting, Shah started WMall, a social commerce platform, with partner Rishabh Verma from Sequoia Capital. They went on to raise the first cheque from SAIF Partners in 2019. SAIF has also participated in all investment rounds since then. Others from the SAIF stable who have donned the founder’s hat include Arnav Kumar, who was associate vice president (AVP) but left to launch Leap Finance, a fintech platform for Indian students pursuing higher education. Pulkit Pujara and Videt Jaiswal also quit SAIF Partners to start Airblack, a social-travel commerce startup, while Abhiroop Medhekar quit to launch White Wizard Technologies, an SME account receivables platform, last year. Lightspeed’s Ishaan Preet Singh quit to found Splashstar Technologies, a company that aims to build a learning platform for creative arts, hobbies and sports. Prabhakar Reddy of Accel left to start FalconX, a digital broker for cryptocurrency.
Higher Upside as an Entrepreneur Industry observers also say that the trend will only get bigger with the maturity of the entrepreneurial ecosystem in India.
“With record fundraises by VC funds, capital is getting commoditized. Combine this with founders raising large rounds, it is but natural that young VCs feel they should be on the more exciting side of growth,” said another entrepreneur who quit his venture stint to launch his own startup. Others highlight that starting up is a very rational decision for a venture investor. “The financial security that might have gotten built over the years lets them take the risk of failing even without much change in the quality of life. Also the risk-return payoff - in a surplus capital environment is higher ,” said Subramanya SV, former managing director of Bessemer Venture Partners, who started Fisdom, a personal finance startup, which is now backed by Naspers-owned PayU. This is true even for experienced venture capitalists like Nipun Mehra, former investor with Sequoia Capital, who started a B2B e-commerce company in Indonesia called Ula, and the likes of Revant Bhate, who was a partner at Kalaari Capital but quit last year to start Mosaic Wellness, a consumer brands company, along with Dhyanesh Shah from Eight Roads Ventures. Kunal Shah, the founder of Cred has once once again decided to take the plunge into entrepreneurship after multiple stints as an investor across funds including Sequoia Capital and Y Combinator. All these top executives had an operating role experience. In fact, the first wave of VCs-turned-entrepreneurs coincided with the 2014-2015 funding boom in India. Alok Mittal, who led India operations of Canaan Partners, co-founded Indifi Technologies, a platform to expand access to debt financing for SMEs the same year. Anshoo Sharma, a venture partner at Lightspeed India, started Magicpin in August 2015. Around the same time, Asish Mohapatra, who worked with Matrix Partners, cofounded OfBusiness, a B2B ecommerce marketplace. “Investing is more like being a coach, very processed and structured, while entrepreneurship is being a player, the question is what you prefer to be,” said Bhate.
Source - ET Tech