BY POOJA KOTHARI
Sanjeev Aggarwal is a patient man. He built Daksh into one of the fastest growing BPO companies in India, before selling it to IBM. “I didn’t build Daksh to sell it. It was the institution that we built that attracted IBM,” he says. Today, he preaches this wisdom as gospel to companies he invests in as founder and managing partner of Helion Venture Partners. “We tell our entrepreneurs to focus on customers and employees, so they build an enduring company. The exits will take care of themselves,” adds he.
Sanjeev and his four partners have been anything but patient, however, in their pace of investing at a time when venture capital is scarce. In the five months of 2009, Helion has announced five investments – Brand Calculus, PubMatic, QuikCilver, YLG and Getit.
Since it set up shop in 2006, as a multi-stage, India-focused venture fund, Helion has invested in 25 companies – and an interesting mix of companies covering sectors such as technology, outsourcing, consumer services, mobile, internet, and even clean tech. The Helion portfolio primarily consists of early-stage investments, defined as investing in a company that has proven its business model but is yet to make any substantial revenue. These include Zmanda and SMSGupshup, among others. It has a few growth stage investments, such as HummingBird Suites, and a couple of late stage deals, such as Makemytrip.com. (Helion is also an investor in 9.9 Mediaworx, the company that brings out the Inc. India e-magazine.)
Its style of investing got a resounding stamp of approval last year when Helion raised a second fund of $210 million. Many of the investors from its first round participated in this as well, taking the total assets under management to $350 million. “That they managed to raise a second fund is itself a proof of great performance,” says a fellow venture capitalist.
Adds P.V. Sahad, who runs VCCircle, a blog on venture capital and private equity: “They’ve managed a good deal flow in a short period of time. How well the portfolio will do will only be known once they start making exits.”
The jury may still be out within the investor community as far as Helion’s performance as a venture capital fund is concerned. But the one area where the verdict’s very clear is in Helion’s relationships with its portfolio companies.
“Helion’s been a great coach for us,” says Nitin Srivastava, chief operating officer, Mindworks Global Media Services. His firm, co-founded with two other journalists, was funded by Helion in 2007.
Last December, Mindworks – much like the rest of India Inc. – was grappling with the challenges thrown up by an unanticipated economic slowdown. Given its ambition to become one of the largest editorial services companies globally over the next five years, it would have been very tempting to find some short-term solutions, which may not necessarily have helped the company’s future plans.
But thanks to Dhruv Prakash, HR director at Helion Venture Partners, Mindworks didn’t take any knee-jerk reactions. Prakash created a framework on managing people through an economic downturn. He developed a structure that helped the team look at the demands of the changed business environment along three dimensions: reducing costs, managing employee engagement and maintaining high performance.
Says Srivastava: “We have had many changes in the last few months – we have cut costs, restructured our processes for better efficiency, and added new service lines to increase revenue. But we managed to do so with minimum turbulence in the organisation. And what’s even better, our people are strongly aligned with the new goals and changes.” Needless to say, he credits the Helion team for this.
This was not a one-off exercise. Helion routinely lends support to the companies it invests in. Bi-monthly forums on finance and HR, annual investor-entrepreneur conferences and sharing of best practices among the investees are a few of the ways in which Helion extends organisation-building expertise to its portfolio companies.
Through a seat on the board, the Helion team spends time on high impact, strategic issues. This takes numerous forms, from simple deliberations with the CEO to strategy and leadership issues, helping a company recruit a senior professional, and sometimes even interviewing candidates on behalf of the company. In areas, such as HR, where the team lacks hands-on experience, they have picked up Prakash, a senior resource who brings three decades of experience to the table.
“We are uniquely qualified to help (entrepreneurs) since we’ve built companies in the past. We understand what it takes. Entrepreneurs in India have no ecosystem, compared to the West where entrepreneurs find advisors within their social circle. We are focused on being that support,” says Aggarwal. Besides him, partner Ashish Gupta, too, has been a tech entrepreneur.
The Helion team’s clear about their involvement with investee companies. “We don’t want to run the company. We simply want to lend our expertise in managing and building high-growth companies,” adds Aggarwal.
When they are not providing support on “high-impact, strategic issues”, Aggarwal and his Bangalore-based partners would rather look inwards. With $200 million yet to be deployed, Helion has to find new avenues for growth in the VC business – and that too, in adverse economic conditions.
Recently, it diversified into consumer services through investments such as YLG in Bangalore. “We started in our home territory (which is tech) and kept a narrow focus. Once we got a good deal flow in tech, we looked at the next big engine - consumer services,” explains Aggarwal.
True, this company’s performance cannot be judged on the usual parameters of number of exits and the valuation received for their return. Helion’s not had a single exit so far. But that is entirely in line with the investment philosophy of an early-stage venture fund. As Sanjeev Aggarwal puts it, “we are an early-stage investor. It takes about 5-7 years to find an exit. To realise a $100 million company, you need time to build it.”
“There’s a reason why it is called patient capital,” he adds with a knowing smile, sure hoping that the Midas touch will work for Helion as it did for its partners before.
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