Peak XV Partners’ managing director Piyush Gupta, recently put in his papers. Earlier during the month, Abhishek Nag and Vaibhav Agrawal quit Lightspeed Venture Partners. In March, Nexus MD Sameer Brij Verma quit after a 13-year stint at the firm.
The common thread in most such exits is that they are quitting to strike out on their own by setting up their own funds or startup ventures. Out of the 10 partner exits in the last 10 months in India, nine plan to launch a fund or a startup.
Take the case of the latest exit – Peak XV’s Gupta. Reports suggest that he’s in the process of setting up a secondary-focused fund. Lightspeed’s Agrawal, and Nexus’ Verma are also setting up their own funds.
“The startup and VC industry in India is evolving fast and the risks and rewards for individuals are extremely high. Given this backdrop, many people at senior levels in the industry are likely to be facing critical inflexion points in their careers,” Aditya Narayan Mishra, MD & CEO, CIEL HR, told Fe.
According to Rupessh Goel, managing director, head of credit administration, SVB India, there are many personal and professional reasons why executives and partners leave a VC or private equity (PE) fund or firm, just like anywhere else.
“New entrepreneurial pursuits or opportunities; family obligations; or personal career goals that diverge from the firm’s strategic direction, strategies, approach or allocations, are some of them” he said.
According to Tracxn, India has 1,700 VC funds that have a combined portfolio of 1,630 companies. According to Mishra, naturally some of them will branch away to explore new possibilities.
For instance, last year, managing partners Anup Jain and Rajeev Suri, exited Orios Venture Partners. At the time of leaving, they said that they would be pursuing something new and exciting soon, without elaborating much. They confirmed to Fe that they are in the middle of setting up a VC fund.
“Yes, we will be launching a fund and at present it’s a work in progress,” Jain said. Suri and Jain had joined Orios in 2018 and led key investments in startups such as BatterySmart, Kenko Health, Zupee, Varaha, Hypd, among others.
One of the earliest and most talked about exits was in 2022 when Karthik Prabhakar resigned from Chiratae Ventures to launch his fund, Peer Capital. His new firm has made six investments so far, including Flash.co and Vaaree, according to Crunchbase.
As per a recent report by CII, Indian startups are likely to create 50 million new jobs and add $1 trillion to the economy by 2029-30. Considering the growth seen in India’s startup ecosystem, the desire to start a tech business is also high among everyone and VCs are no exception, analysts point out.
Take the case of Brij Singh Bhasin, a general partner at Rebright Partners, who stepped down in September last year, to launch Snow Mountain AI, a generative AI-focused startup. He says that VCs have an edge over others, given they have a fairly better idea about the techniques of fundraising.
“Some of Rebright’s LPs will be investing in my new venture and we will continue to collaborate closely in the future as well,” Bhasin said in a post on X while announcing his departure.
Analysts say it won’t be surprising to see many more managers getting inspired to launch their own startups, considering the opportunity that lies ahead. In the calendar year 2023, India’s share of global VC funding was 2.9%, with total funding amounting to $7.3 billion. This was despite the funding winter. The numbers were higher in CY22 when it reached $20.6 billion, representing 4.8% of the global figure.
Analysts say that the one key factor which is motivating partners to move out to pursue their entrepreneurial dreams is the rapid changes in investment markets in India. “We have many late-stage startups now who are still away from their IPOs and hence there is an opportunity for secondary investments. Seasoned investment bankers are trying to leverage this,” CIEL’s Mishra said.
Talking about the impact of high-profile exits from VC or PE firms, Goel said the firms with strong teams that plan ahead for volatility will be most adept at managing through executive changes. VCs also say such changes within a firm may unfold significant opportunities for the firm as well.
“An exit can open doors for upward mobility within the firm. This creates space for existing team members who are eager to step up, potentially leading to invigorating leadership dynamics and the introduction of fresh strategic visions,” Anirudh A Damani, managing partner, Artha Venture Fund, said.
While the impact it has on the existing firm will depend on how the remaining leadership manages the transition, for VCs opting to pursue their entrepreneurial dreams, seems to be more of a natural progression that coincides with the evolution of the ecosystem, analysts point out.