India’s homegrown unicorns are witnessing a steady stream of top executives quitting to launch their own ventures, undaunted by cautious funding sentiments, and most of these entrepreneurs are not looking to emulate their former employers but to hit profit in a short time.
Since May last year, at least 17 senior executives have left companies such as Flipkart, Snapdeal, Ola, Zomato and Paytm to launch startups. Some of them are already running fast-growing businesses and a few even sold out their business to their former employers.
“I think the time has now come for more bootstrapped, more cash-flow friendly models,” said Srinivas Murthy, who quit ecommerce major Snapdeal as senior VP for marketing in January to take the entrepreneurial plunge.
He plans to set up tech-enabled offline stores but refuses to go into details. “Mine isn’t a unicorn idea by any stretch; but it’s one which can turn profitable soon, with very little investment from VCs/PEs,” Murthy said.
Bhuvan Gupta, who quit as VPengineering at Snapdeal in November to cofound online marketplace OfBusiness, said his startup already has over 100 employees and is doing business across 10 states currently. “People may call ecommerce ‘a cash burn business’, but we’re already cash positive,” he said. “I always wanted to do a startup and there’s always an age and time when you can take such risk,” Gupta said.
The number of unicorn executives taking such risk is possibly at the highest ever. Industry observers and analysts attribute this to a combination of factors – higher aspiration levels of individuals, differences with the promoter CEO, cash in the bank, and a well-connected network.
“An increasing number of professionals are leaving unicorns and the trend will continue unless the funding situation changes drastically,” said Anuj Roy, partner, digital practice, at executive search firm Transearch.
“The ability to create impact, solve business problems and higher aspiration levels of individuals are the key drivers for these professionals to take an entrepreneurial plunge,” he said.
According to a new report by CB Insights and KPMG, venture capital investments in India’s startups nearly halved to $1.5 billion in fourth-quarter 2015 from the July-September quarter.
Tech startups are now focusing heavily on belt-tightening measures: job cuts are becoming increasingly common, hiring numbers are being pared down, and salaries to new joinees are down from the earlier soaring levels. Bulge bracket salaries paid out to top brass are increasingly coming under the scanner.
“Some of these people who’ve exited saw this coming,” said a top honcho at a leading ecommerce company. “Others felt this was the right time to take advantage of a good idea and move out, given the big money, networks and resources they had at their disposal,” he added.
Several senior executives have left top ecommerce marketplace Flipkart in recent months to start their own ventures, including former commerce and advertising business head Mukesh Bansal, former chief business officer Ankit Nagori, former senior director for retail Manish Kumar, and former chief people officer Mekin Maheshwari who is “on a journey to impact education in India”. In end-March, Bansal and Nagori announced that they are teaming up to launch a healthcare and fitness startup with $5 million of their own cash.
Ola saw exit of its payments business head Rushil Goel and head of design Sunit Singh who is likely to launch a design startup. Swaminathan Seetharaman, earlier VP-engineering at the taxi aggregator, left to cofound a startup called Pianta.com.
Namita Gupta, earlier chief product officer at Zomato, left to launch Airveda, which manufactures personalised air quality monitors. “I wanted to start a business that is economically viable and has a social objective,” she said. Priced at around Rs 10,000 apiece, the product is being lapped up by schools, hotels and hospitals. “The market is very big. Around 13 Indian cities feature in the list of most polluted places in the world. There are states (in India) with just one air quality monitor,” said Gupta, 37.
Then there are Rahul Chari, former VP-engineering at Flipkart, and Sameer Nigam, earlier SVP-engineering at Flipkart, who started up together and then sold out to their former employer. In April, their payments startup PhonePe was acquired by Flipkart in under six months of the duo leaving the company. It is expected to give an edge to Flipkart as it looks to build a payment business to catch up with Snapdeal and PayTm.
Aftab Malhotra, cofounder at London-based mentoring platform GrowthEnabler, said such things will increasingly happen “as senior executives who know the business in and out exit the company”. “They will come up with a business plan that caters to the gap the company wants to fulfil. And if they left the former organisation on an amicable note after proving themselves, it will be easier,” he said.
Vinod Murali, MD of venture debt provider Innoven Capital, said, “There are founders who even fund such aspirations of their top employees. It’s their way of giving back to the startup ecosystem.” Darrell Green Authentic JerseyShare This