Every other week, I get at least one, sometimes two, introductions or inbounds from senior corporate leaders wanting to ‘pick my brain’ around startups / venture, or wanting to have ‘open-ended conversations’. Not all of these are around exploring job opportunities, though about half are. The rest are split between offering advisory (to startups) and investing in them, or both.
I can understand the motivation for this. Startups are an exciting high growth sector, and there is lots happening. Many senior executives are keen to transition into startups or venture investing. Some may have hit retirement age, so they may be desirous of giving back / paying it forward as an advisor or angel investor, not to mention seeing it as a great learning opportunity.
I am happy to help too, but it is hard for me to get on every call, do every coffee request or chat. I do try, but now it is getting to the point where a) it is getting repetitive for me – most calls have similar advice b) it is beginning to suck out an hour from my schedule every week at least. So i thought I would convert the verbal advice that I usually share on calls into a written public piece. The advantage of this is two-fold – one, i can share this with the requestor as a pre-read, and perhaps obviating the need for a call, and two, by making it public, it would useful to a wider audience.
How can senior (or the rising midstage) corporate executives work with startups?
There are four ways in which corporate executives can engage with the world of startups or venture.
1/ They can join a venture fund, as an investor or operating partner / venture advisor.
2/ They can join as a full-time employee, typically as a CXO, sometimes as a COO or CEO.
3/ They can become an advisor, typically for a consulting fee, sometimes gratis. This can be a full-time role if the executive gets enough paid assignments.
4/ They can angel-invest in startups.
[As some readers have shared, they can also do their own startup. Indeed! That is of course beyond the scope of this article!]
Now, the order in which the above is written is intentional. #1 is the hardest to pull off / happen, and #4 is the easiest (of these four). Let us double-click into each of these.
1/ Joining a venture fund
Venture funds aren’t all a single type. There are microVC funds (AllIn, Sparrow etc.) which are <$10m in fund size, to seed funds (India Quotient, Kae etc.) which are $75-150m in fund size, to early stage / preSeriesA funds which are $250-400m, (Blume where I work, Stellaris etc.) to Growth funds (Norwest, Bessemer etc) and finally stage-agnostic funds which strength both at early stage as well as growth stage (Peak XV, Elevation etc.). Growth funds and stage-agnostic funds are $500m+ in size.
Now venture funds can draw down 2% of the overall fund raised as ‘fees’, from which the salaries of the fund’s managers and staff are paid. So for a $50m fund, this is $1m or ₹8.3crs. This is effectively the hiring budget (other costs are office rent, travel etc.).
Typically the smaller the fund, the lesser the fee income, and hence there is less money to hire anyone other than essential staff (investment team, fund management + back office, and admin). Larger funds have larger fee income, and there is money to hire platform resources who help their portfolio companies with recruitment, GTM / marketing support, fundraising etc.
A senior corporate leader looking to join a venture fund, should reach out to larger stage-agnostic funds first like Peak XV, Accel, Elevation, Matrix, Lightspeed, Nexus etc., first. They are the ones who have larger budgets. They could reach out to the Partners of these funds directly. If possible, the executive should find someone in common to refer them. Most of us in venture get zillions of mails, and a reference helps in cutting through that clutter.
Do note that most recruitments from corporate India to Venture Funds tends to be in Portfolio support or Platform roles like Gayatri Vasudeva Yadav joining PeakXV or Siddharth Sangwan joining Lightspeed.
What about investment roles? These are tough to break into, primarily because of the competition for the roles, and the background or experience needed to succeed in the role. As I shared in my piece ‘Breaking into VC’, all VC roles are actually sales roles where the VC convinces a great founder to pick their firm, and their firm’s brand of capital over other competing funds. The better the corporate executive is known to founders, or the more they belong to the startup world, or are familiar with the networks of the founder persona they are targeting, the easier it is for them to be seen as someone who could convince a great founder to pick their fund over others, and thus the easier it is for a fund to hire them. This is harder if the executive is coming from the corporate world and is not well-networked or known to elite founders.
Getting into investment roles coming from corporate roles, is somewhat easier if the executive is a sector specialist (like a senior HUL / P&G exec joining a consumer fund like Fireside, or a senior Visa or ICICI Bank leader joining as a fintech investor). It is harder to get into generalist investment roles unless the executive can convince the senior partners of the firm to take a bet on them. The corporate executive can make it easier for them, by showcasing their expertise in the sector, and their ability to attract great founders to the fund, by a track record of writing / content creation and angel investing. Absent that track record, or some history with the leadership of the fund, it will be hard for the corporate executive to stand out vis a vis competition.
Before we move on from this section, I would like to highlight Private Equity firms and the role of the Operating Partner, as one option, especially for senior CEO profiles. Very few VCs have Operating Partner roles. It is a Private Equity (PE) construct. This is a role that works with the Investment Partners in these funds, and provides oversight from a business perspective. This is more hands-on than in venture firms, led by the fact that often PE funds have controlling stakes in the companies, and they are active managers of the companies they have invested in. While this isn’t venture, and there isn’t the kind of excitement and growth that early stage startups have, it may well suit the temperament of a senior CEO persona. Also, PE funds pay much better (given their AUM). Typical PEs worth exploring are ChrysCapital, Kedaara, Multiples etc. (lots more but these are well-known names).
2/ Joining a startup as a CXO
Many growth startups would like to have seasoned corporate executives, especially those who had led large teams, and have been part of fast-growing entities, join them. Corporate Executives too would like to join startups for the higher pay and and for the ability to grow faster / drive greater impact. Logically we should have more and more corporate executives move into CXO roles in growth-stage startups. But the actual number, though based more on anecdata than data, doesn’t seem as high.
It isn’t just that enough corporate executives aren’t moving to startups. It is also that several don’t last too long once they join. For every Abhinav Sinha who has been in a Oyo for nearly 10 years, there is a Hemant Bakshi who quits Ola Cabs in four months. If anything the number of Abhinav Sinhas or folks who stick around are far fewer than their fast-moving corporate counterparts.
At the core of it is that chemistry with founders (and for founders with executives) matters. Corporate executives need to be comfortable working with folks younger than them, and frequently taking orders from them. Secondly, founders need to be comfortable with creating space for the incoming executives. Both are hard, and hence there are few examples of long-lasting corporate executives in a startup.
One pattern I have seen in my past six years is that there is an overwhelming tendency for founders to prefer executives (for full-time roles and as advisors) who have worked in the same industry as they are in. So if it is a payments fintech, then they are happy to work with someone from a Bajaj Capital or Shriram Finance, but not from a Unilever or Airtel. Founders want immediate value, and they don’t want to pay for learning on the job.
How should corporate executives explore opportunities with startups? Well, if they have a specific startup in mind they could try writing directly to the founder, leveraging folks in common as references. Or they could reach out to the VC funds that have invested in them.
If the corporate executives are in exploration mode, then they can reach out to venture funds, especially the larger stage-agnostic ones such as Peak XV, Accel, Elevation, Matrix, Lightspeed, Nexus etc., but also the early stage ones such as Blume, Chiratae, Stellaris, 3One4, Prime etc. All of these funds have a platform resource or two who helps their portfolio companies in fundraising. The names of these ‘Talent Leads’ (and email ids) are mentioned on fund websites. All ‘Talent Leads’ are happy to hear from senior corporate executives. The executive can expect at least one intro or two, but unless founders see instant value, it is unlikely that this will proceed ahead.
3/ Advising startup founders
As shared above, founders will be more willing to appoint the corporat executive as a paid advisor if they are from the same industry, and can provide immediate value. It is easier for the executive to get advisory assignments if they are already working with other founders. Clearly the first assignment is the hardest, and the executive could consider giving it free. This is easier to do if they are still working in a traditional corporate job, and don’t need the money really; much harder if they have quit their job.
One way for corporate executives to think of advisory roles, as well as the next ‘way of working’ i will explain below – angel investing – is to see them as roles they can play in the transition /exploration phase of shifting to startups. To clarify: let us imagine the executive is a senior executive in Bajaj Finance, and is keen to explore doing something with startups. The executive could target over the coming year or so to meet 24 founders (2 every month), by keeping 2-3 hrs on weekends or weekday evenings free for advisory calls or meetings. The executive could reach out to founders in the same sector as they are, in this case, lenders, and introduce themself. I would very much doubt if even one startup in their sector will refuse to meet them. Then depending on the chemistry match, the executives could start working with one of the founders giving gratis advice, unless founders are willing to pay for it. The executives could help in sparring with them on their strategy, introducing them to talent, reviewing their plans, taking the occasional interviews for them, and offering to invest etc. Over time the executives could explore converting this or another one into a paid assignment, or convert the assignment to a full-time role.
4/ Angel investing
Angel investing, as with advising startup founders, is best begun in the transition phase to build the executive’s personal brand and track record, to showcase it to venture funds or other founders. Do note that the executive won’t (barring an exceptional situation or two) find it easy get into the captables of elite founders. They have to kiss many frogs till they find their startup prince.
As with points #2 and #3, the more executives reach out to founders in their space, the better. Executives should also have a clear understanding of the value they can offer founders beyond the $10k or $25k they are investing. Can they help the founders think through regulatory challenges? Or can they help on hiring, or help founders refine their GTM approach etc. The more specific the help executives can offer the better.
Angel investing is something that can be managed comfortably along with the corporate executive’s existing job, though many operators who do angel investing typically end up using that as a springboard to entering the venture or startup scene.
Somewhat analogous to angel investing, though different, is investing in a venture fund, like Blume (or some of the funds I mentioned above). The advantage of investing in one fund is that you save a lot of paperwork. It can be painful, administratively, for very senior CEOs to individually invest (and there can be corporate governance issues as well that may emerge) in many startups. This is where investing in funds help. While you will not have a direct relationship with founders, you can get to interact with the fund’s portfolio founders, and advise / counsel, or even learn from them! At Blume, we do have a number of CXOs and HNWI who invest in our funds, to save on the administrative hassle.
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If you are a corporate executive who is keen to explore, or is exploring roles in venture or startups, I hope this has given you an initial starting point. If you have specific questions on top of this, then feel free to superdm me at superdm.me/sajithpai – I will be happy to answer them.