A partner leaving an investment firm is not a daily event. So it made headlines when three partners quit investment firm Helion Venture Partners on Wednesday. Helion Advisors Pvt Ltd. said that the three – Rahul Chowdhri, Ritesh Banglani, and Alok Goyal who were working with deal sourcing, diligence, and portfolio support – are leaving to “pursue opportunities outside of Helion”.
The last time a similar event made headlines in India was in 2011 when the four founders of Sequoia Capital India – Sumir Chadha, K.P. Balaraj, Sandeep Singhal, and S.K. Jain – quit to start their own fund. Recently, Sequoia Capital’s Silicon Valley office also lost three of its partners.
Rahul, who joined Helion Ventures in 2007, is an IIMC graduate and Group Programme Manager at Microsoft. Alok, an IITian and masters graduate from University of Texas at Austin, has an MBA degree from INSEAD, France. Ritesh, another INSEAD graduate, was adjunct faculty at IIMB and Vice President at IDG Ventures before that.
More often than not, partners leave an investment firm when there are disagreements on strategies – more so in partnership firms than in private limited company. Although Helion Ventures has not revealed the reasons for the exits, reports state that the three are planning to start their own investment firm.
Generally, when partners leave, they also take some investees who have money invested from the existing firm. In fact, when IBM took over PwC in 2002, they made a non-compete clause (NCC) to ensure that PwC will not compete with IBM for existing clients. But despite the credibility associated with individuals who have worked with established brands, there is always a high chance that the existing clients may not leave the brand to seek their individual expertise, says D. Ashok, Former Office Managing Partner for PwC Bengaluru.
Currently a visiting professor at three IIMs, Ashok had left IBM in 2004 to start his own venture fund firm. But he got a rude shock when his clients, whom he was counting on to associate with him, did not leave the existing firm. “They were not ready to take a risk and leave that brand to join a #startup firm,” says Ashok. He added that unless there are contractual violations, there is no question of penalties or suing a partner who leaves the firm.
What happens to investees?
Investees need to stick to the existing firm for funding. But they lose out on the benefits of expert advice from their mentors who are exiting.
For Helion, now it is up to the founders Sanjeev Aggarwal, Ashish Gupta, and Rahul Chandra to spearhead the investments. “We are thankful for the contribution made by the three executives during their time at Helion. We wish them the best in the next phase of their careers,” said Sanjeev in an official statement. “The responsibility of mentoring most of the portfolio companies rest with the founders,” Sanjeev said.