From Kedaara to Cornerstone, PE/VC firms beef up operating teams in India

Earlier this week, private equity firm Kedaara Capital appointed former Hindustan Unilever CEO Nitin Paranjpe as chief mentor and operating partner to advise on investments in the consumer sector. This comes a few months after it brought on  board former HDFC Ltd managing director and CEO Keki Mistry as an adviser for investments in the financial services sector and appointed former Wipro Ltd CEO Abidali Neemuchwala as an adviser for technology bets.

The appointments weren’t a surprise, given that Kedaara has previously inducted several executives into its operating team. But these appointments highlight a growing trend in India—an increasing number of private equity and venture capital firms, including early- stage VCs, are expanding their operating teams, industry insiders and headhunters say.

To be clear, the operating teams comprising full-time partners and other executives as well as advisers and consultants are different from investment teams that engage with limited partners for fundraising and with startups or other portfolio companies for capital deployment. These teams may be known by different names—some refer to these as portfolio management advisory, ChrysCapital calls it ‘Enhancin’ while Elevation Capital
has the ‘Founder Success Team’.

But their composition and mandates are similar. These teams typically comprise executives with experience in a variety of sectors such as banking, telecom, consumer goods and pharmaceuticals. And they help their portfolio companies to speed up growth, enhance efficiency, boost market share, and improve corporate governance processes. These improvements, the PE/VC firms hope, will lead to a better financial performance
and higher valuations, and eventually help the investors themselves in clocking profitable exits.

Kedaara—one of India’s largest homegrown PE firms—now has nearly 20 people in its operating team. For perspective, it has a 32-strong investment team. ChrysCapital has 10 full-time people in Enhancin and seven advisors, including Marico’s Harsh Mariwala, compared with about three dozen executives in its investment team, according to its website. VC firms Elevation Capital and Peak XV Partners also have large operating
teams comprising nearly two dozen people each.

Several global PE firms, too, have people in similar roles in India. Blackstone, for instance, has senior managing director Amit Dalmia, a former Hindustan Unilever executive, and MDs Prateek Roongta and Ayshwarya Vikram in its operating team in Mumbai. Carlyle has former HDFC Bank managing director Aditya Puri as an adviser and last year appointed former Bajaj Electricals head Anuj Poddar as Asia co-head of global
portfolio solutions.

What explains this growing trend and how do these operating teams help the PE/VC firms
and their portfolios?

The significant shift

Global consulting firm Bain & Co said in a report last year that the size of these teams likely doubled in India from 2019 to 2023. “Indian funds are placing more emphasis on portfolio and value creation,” it said.

Industry executives say expanding fund sizes and an increasing list of portfolio
companies have led to a sharp rise in PE/VC firms seeking out portfolio managers, at times for individual companies as well.

“There has been a notable increase in portfolio management appointments across PE and VC firms. This marks a significant shift—from having minimal or no dedicated portfolio management resources to now building sizeable teams,” says Shiv Agrawal, managing director at ABC Consultants, an executive search and talent advisory firm.

While some appointees are on a retainer basis, at times even without a designation,
some tend to be project-led, he adds. Reet Bhambhani, managing partner and chief operating officer at global executive search firm EMA Partners, pegs the increase in the appointment of operating executives at PE and VC firms at 30-50% on average in the last two-three years.

“A lot of VCs have raised funds in the last 12 months. And with that, obviously, you’re seeing increased hiring activity across levels, including analysts and associates,” says Bhambhani.

Shivani Desai, chief executive officer at BDO Executive Search Services, says that seven of the top 10 VC firms are looking to expand their portfolio teams. In the last three years alone, BDO has observed a 40% increase in the portfolio value creation teams of VCs, she says. “VC portfolio teams have grown substantially in both size and strategic importance, evolving from passive ‘portfolio management’ roles to active ‘value creation’ teams, reflecting the deep value they help founders unlock,” Desai says.

ChrysCapital managing director Saurabh Chatterjee says the PE firm’s portfolio
operations group, Enhancin, has been helping its portfolio companies to accelerate
growth ever since it started in 2017 with just two-three members.

He says the Enhancin team supports portfolio companies with guidance to increase
revenue, optimise costs, improve processes, undertake mergers and acquisitions, and
complete post-merger integration. “Our strategy is customized for each company,
ensuring alignment between management and investment objectives. Clear expectations
are set from the beginning, outlining responsibilities in revenue growth, M&A, and cost
optimization,” he says.

VCs join the bandwagon

To be sure, Indian PE firms and large VC firms, especially those that were—or still are—
part of global VC firms, have had operating teams for many years. These include the likes
of Elevation Capital, which started over two decades ago in a joint venture with Japan’s
SoftBank and was known as SAIF Partners until it rebranded in 2020, and Peak XV
Partners, which was earlier known as Sequoia Capital India and Southeast Asia and split
from US-based Sequoia Capital in 2023.

In recent years, however, not only these large PE and VC firms have increased the size
of their operating teams but relatively smaller VCs and early-stage investors have also
followed suit as they raised new funds and added more companies to their portfolios.

“As the VC industry matures in India, several funds are moving away from spray-and-pray
models to more thoughtful or thesis-driven investing. This leads to the need to build in-
house expertise to deliver outcomes, and that’s primarily driving the scale of the teams,”
says Abhishek Prasad, managing partner of Cornerstone Ventures.

At Cornerstone, nearly a third of its 20-member staff is part of the portfolio team and the
number has been on the rise over the last two-three years, Prasad says.

Many VCs view portfolio advisory services as the key differentiator in the pursuit to create
value, reduce costs, and increase the profitability of their companies.
BDO’s Desai explains how the role of the portfolio team has evolved over the years. “Therole now includes opening doors for partnerships, recruitment support, technology and marketing support, appointing board members, and so much more,” she says, terming the portfolio teams as a “force multiplier for founders”.

Taking HR calls

A few VCs are taking it a step ahead and putting in a strong human resource department
to help portfolio companies hunt for the right leadership and executive talent.

“Recruitment firms who have a proven track record of hiring mid-management to CXO
candidates are always a port of call for portfolio managers to hire the right talent to scale
up the organisation,” says Anshul Lodha, managing director at the Mumbai office of global
recruitment consultancy PageGroup, adding that VCs are more open to recruiting experts
or former entrepreneurs in their portfolio teams.

Manu Chandra, founder of early-stage investment firm Sauce.VC, corroborates this view.
“Founders are looking for operational help beyond capital, especially on recruitment,” he
says, adding that Sauce.VC’s service partners and advisors have jumped by 50% in the
last two-three years.

Cornerstone’s Prasad says the firm’s portfolio teams are often involved end-to-end, from
sourcing the right profiles or recommended talent to the interview process and negotiation
of compensation packages. “We have also participated in review and appraisal processes
in certain cases,” he says.

Interestingly, some deals even hinge on companies hiring the people the VCs want.
“Portfolio teams of VC funds partner with search firms to identify key leaders for startups - sometimes even before writing their cheque. In some cases, the deal hinges on the startup first hiring critical talent to reduce the execution risk,” says BDO’s Desai.

The onset of AI-led processes has called for more creative approaches by VCs to lend a
helping hand.

Elevation Capital, for instance, has a resident chief technology officer helping portfolio
companies “embed AI-first thinking and processes” into their business teams, says
partner Vaibhav Goel.

“With AI, hiring strategies have emerged more recently, and most high-quality talent
comes through networks rather than job boards,” he says. “We help founders navigate
this by determining what AI roles they actually need and how these hires should integrate
with their existing technical teams – whether that's bringing in a researcher, a machine
learning engineer, or someone focused on implementation without breaking the existing
workflow.”

Source: vccircle