At TVS Capital, we believe that a private equity fund is more than just a source of capital. PE funds are partners to their portfolio companies, providing them with the resources and expertise they need to grow and succeed.
Perhaps akin to mentoring someone from adolescence to adult state, this partnership is unique to every stage and type of the business. Rarely does a one-size-fits-all approach work. We believe a successful approach to business partnership is anchored on the principles of 8 Alignment, Capability and Flexibility.
Alignment: Building a successful business partnership should be anchored on the needs of the business, the entrepreneur and his team matched to the fund’s capability in addressing those gaps. Without this alignment in place prior to making an investment, a fund runs the risk of turning into another entry on the cap-table.
Capability: It’s important for a fund to identify their core areas of strength, which we call as ‘Capability Capital’ and work on areas where they have the requisite capability to add value. For instance, at TVS Capital, we pride ourselves in having built one of the best ecosystem of experts in the financial services space, especially in regulatory matters, both within the fund and outside through our deep networks.
Flexibility: There is no archetype for an ideal founder, at TVS Capital we have worked with awide spectrum of individuals across our three funds and taken most of these companies to a successful IPO path. Adapting a fund’s management style to an entrepreneurs’ needs becomes the key to success of a partnership. At times, it is in the interest of the business for a fund to exercise limited engagement rather than try and force fit one’s area of expertise to a business.And at times it is better to let another co-investor drive the initiatives which are better suited to their capability.
At TVS Capital, we have adapted our approach to business partnership to a bi-modal one: to the stage of the entrepreneurs rather than the stage of the business. For instance, a young business with a storied founder needs a different approach to an early-stage entrepreneur.
Firstly, the early stage entrepreneur. These are exceptional industry professionals who are now building businesses in nascent categories or adjacencies and solving complex problems. These are companies looking to expand markets, increase customer base, scale up management teams and set-up processes.
These are usually high engagement model partnerships; we work very closely with the founder on all areas where we have capability.
For instance, in the case of our portfolio company Increff, they have created world class software products for solving problems around inventory and merchandising for the fashion and apparel industry. However, fast growing SaaS companies while scaling up and taking their products international, may need support in building their platform teams to support that scale. Here, TVS Capital led the exercise of helping Increff with their finance function through the process of discovery and selection of their CFO. In the case of Yubi, where the founder is creating a one-of-a-kind loans & securities protocol along with infra and network, we have worked with the founder, inter-alia, on strengthening governance by inducting eminent independent directors, and helping on business and regulatory strategy.
Secondly, the late-stage entrepreneur who are seasoned having been at the helm of a similar business over decades and having seen cycles. A classic example from our portfolio would be Kamesh Goyal of Digit (which was a Series A investment for us) or Lakshmipathy of Five Star.
Here we adapt a light engagement model, we act as a sounding partner more to brainstorm strategic ideas or to share views on areas we have capability in.
Besides having the capability, execution and results matter the most at the end. Working with business partners warrants funds to dedicate time and resources to deliver on claims made at the time of investment. For this approach to be sustainable, it requires teams to be driven by a larger purpose. At TVS Capital , we are driven by our strong mission of empowering next-gen entrepreneurs to help build great multi-decadal businesses in India. This drives us to deliver on our promises with patience and perseverance.
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