Interview with Vikram Gupta of IvyCap Ventures
Last week, we interviewed Vikram Gupta, Founder, Managing Partner and Investment Committee Member at IvyCap Ventures. He has about 16 years of experience in Private Equity, Business Consulting, M&A, Strategy and Operations in Healthcare and Life Sciences, Education, Consumer Goods and other industries. He has held leadership positions across various well-known companies in India and Abroad.
Prior to founding IvyCap, Mr. Gupta was the Chief Operating Officer (COO) with IndiaVenture Advisors Private Limited, a Private Equity Fund Management company sponsored by the Ajay Piramal Group. Mr. Gupta conceptualized, raised and deployed the first PE fund from the group, a Healthcare and Life Sciences Focused PE fund. He raised the entire fund from a large base of institutional and HNI (High Networth Individual) investors in India. He managed all the aspects of the Private Equity business including Fund Raising, Investors Relationship Management, Deal Sourcing, Deal Evaluation, Deal Closure, Fund Portfolio Management, Value Creation, Risk Management and Exits.
Pay close attention to the details, folks…
How did you get started as an entrepreneur and when did you know it’s time to move into Venture Capital?
VG: I started my first entrepreneurial venture when I was in Grade 7th. It was a simple idea of creating a lottery system that was sold only to the people I knew in my community. I still remember that I made a profit of Rs 100 out of that venture. However, the real interesting thing for me was the satisfaction of trying something different and getting the appreciation of many people around me. My education in Engineering and Management has given me an interesting perspective of life and given me immense confidence that I can make a significant difference in this world. Post my MBA degree in the US, I worked with the largest consulting company in the world for over four years. I moved back from the US in 2005 to take serious risk of trying a few business ideas back in India. I saw an opportunity in Medical Tourism and started one of the first Medical Tourism companies out of India. I learned my lessons very quickly and realized that I needed to be much better prepared before I could take entrepreneurship more seriously. I accepted the offer to join the Piramal Group to work in Strategy and Planning and helped the company drive its growth in their Pathlabs, Custom Manufacturing and Drug Discovery and Development Businesses. I set up India’s first Healthcare and Life Sciences focused Private Equity Fund in 2007 that sponsored by the Piramal Group. This gave me the exposure to the Private Equity world in India. In March 2011, I set up IvyCap Ventures Fund, a unique Fund with many firsts to its name.
What are you most excited about investments in startups?
VG: Investments in Startups is not just about writing a cheque to help them fund their businesses, it’s a lot more about supporting the entrepreneurs on access to highly relevant relationships, mentoring on what NOT to do and giving them the confidence to continue to try things despite the risks of failure. At IvyCap Ventures, we have created a highly organized Mentorship program for our entrepreneurs that are greatly appreciated by our portfolio companies. What excites me most about startups in India is the energy that young entrepreneurs have these days straight out of the campuses. I am noticing an extensive mushrooming of entrepreneurs at very early ages. This is a good thing for our country as more and more Angel Groups has come up recently. A Venture Capital Fund like ours invests at a stage when the companies are looking for Series A or B funding. Its extremely satisfying to see much higher levels of maturity of entrepreneurs at that stage since they would have already been mentored at that stage by their Angel Investors
What are you looking for in a start up and how startup entrepreneur can grab your attention?
VG: We look for differentiated ideas, fire to be number one or number two in their respective industry segments, some proof of the pudding of the business through a pilot, a few existing customers and willingness to accept Mentorship in an organized manner. We have noticed that entrepreneurs coming from the network of Premier educational institutions of the country usually fit the criteria above and therefore we actively seek such entrepreneurs through our vast and organized network of IIT and IIM Alumni.
Explain common mistakes startups do while pitching?
VG: Pitching is all about showing your real passion, potential and aspirations to achieve what you are working on. While most investors look for business plans highlighting the business idea, products and services, target customer segments, competition, financials etc., many entrepreneurs do not do enough homework on who they are meeting and what is more important to the investor they are pitching to. Entrepreneurs should know that there are different types of investors who have different objectives and expectations. Investors who invest their own money may have longer time horizons of investments while investors who invest other people’s money have shorter time frames of exits.
Which sector you are more likely to invest (industry trends) and how do you reach your potential start-ups?
VG: We invest in Technology, Healthcare, Education and Rural/ Agriculture focused companies. Our anchor investor is the Alumni Trust that has a large number of IITians as investors. We operate through the network of IITians around the world. We have a direct reach to more than 65,000 IITians across 30 countries. A core group of these IITians are actively involved in our Mentor program and another group involved in supporting us with resource gap fulfilment in our portfolio companies. Most of our deals come through this network of IITians.
Once the investment has been made, how VCs actually support the venture development and how IvyCap Ventures do it? (Non financial values)
VG: Our Mentor program is highly structured and organized. We do not make any investment until we are have a Mentor program alignment with the target company. The entrepreneurs have to believe in this support and therefore confirm their belief through an extra equity allocation for these mentors. So far, we have been very successful with this program in our portfolio companies.
Do you have any tips for those, desiring to go into the business world?
VG: Many people keep debating in their minds about when to take the risk and jump into entrepreneurship. Many-a-time they may have excellent ideas and may know in their hearts that they would potentially succeed with those ideas. The real risks could be in execution and therefore getting the right team and funding in place. My specific message to such people would be as under
- Follow your dreams
- Always put all your options on the table and weigh them against risks and rewards
- Test your idea with a few selected people – don’t worry about losing it.
- Once convinced that it would work, just go for it.
- Always have a few mentors around you.
- Go back to the people who trust you and whom you can trust.
- You will find investors – Just look for them at the right places
Big thanks to Vikram for taking so much time to talk with us! Hope you enjoyed it, readers – sound off with your thoughts and comments below!