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VC firm Helion Advisors recently backtracked on an investment it had almost closed because it found the promoter not open to the concept of sharing wealth with employees. In another case, a family-owned business did not empower employees to take risks. This was when Helion had to intervene and convince the promoter to change his HR tack.
“Venture capitalists are investing more than just money in start-ups and are getting more proactive in talent management. We call it active capital,” says Mr S. Venkatesh, President, Human Capital at Helion Advisors that has 34 companies in its portfolio.
New angle
Helion has developed a new angle to the evaluation process by adding an HR matrix to assess promoters and other key personnel of deals under evaluation. In fact, the deal is done only if the company passes the Helion HR test.
The involvement of VCs in the hiring process too is getting more intense, says Ms Nirupama VG, Managing Director of recruitment firm Ad Astra Consultants. “We are seeing more instances of VCs taking active role in the hiring process.” This is for two reasons, she points out: One is that the start-up may not have the expertise to hire talent at the CXO levels and the second is that many a times, big name VCs can help attract talent to a small start-up company.
Mr Harish Gandhi, Director at PE fund AIF Capital, who was with a VC firm earlier, agrees that there have been instances where potential employees have sought to speak to the investors before accepting a job in the invested company. “They tend to feel comfortable if a big name is involved in the company.”
COMPETENCY MODEL
Helion, for instance, has helped several of its companies, including MakeMyTrip.com, put its IPO team together. It has even developed a competency model for leaders in the companies it invests in.
Mr Sachin Bansal, CEO of Flipkart.com, an online bookstore based in Bangalore, which has investors such as Accel India and Tiger Global, says that in their case, VCs only get involved in high level HR decisions like building team structures, but do not interfere in compensation strategy or hiring.
But Mr Gandhi points out, “Start-ups tend to feel comfortable to have the strong backing of VCs while hiring top level talent. It always pays to have an extra pair of eyes and ears.”
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