What is the HR Fund?
- The HR Fund is a privately held investment company that provides growth capital to Human Resource (HR) entrepreneurs
- The HR Fund looks at investing in HR focused businesses
- Currently, the Fund has invested in two companies
- PeopleStrong (HR Outsourcing and Recruitment Process Outsourcing)
- People Matters (HR Knowledge and Media)
- The HR Fund is headquartered in Gurgaon, India
What is The HR Fund’s philosophy?
- The philosophy of the Fund is to invest in companies that we believe can be market leaders in HR
- The HR Fund wants to illustrate to the HR and business world that there is much more to HR than just recruitment. In essence The HR Fund is actively promoting a wider industry shift in favour of HR & Talent management
- The founders of The HR Fund have identified a huge latent opportunity to organise the workforce in India, Asia Pacific and the Middle East. The HR Fund aims to institutionalize the HR industry in these regions – to build HR services companies and to make them public
- The HR Fund’s investment philosophy is as much entrepreneur focused as on the business itself. HR Fund looks for dynamic entrepreneurs who are able to balance passion and values with sound business sense
- There is a fundamental transformation occurring in how HR is viewed at the highest levels. An increasing number of HR professionals are taking up senior board level positions
- HR, as a key function of business, in Asia came to the fore only in the early 90s. Thus the HR industry is still a very young, high-growth industry in this region
- A detailed analysis of the HR industry in the US points to the potential size and scale that can be achieved
- The founders have a successful track record of creating HR companies and also an in-depth understanding of the global marketplace for HR companies
What differentiates The HR Fund from other investment companies?
- Focus on HR: Exclusive focus on the HR domain. The HR Fund prides itself to be the first, and for now, the only dedicated HR investment company
- Stellar Team: The HR Fund’s Founders & Advisors come with extensive professional experience and highly successful track records. The team has prior experience of building profitable businesses
- Investors: The Investors of the Fund are professionals of the highest calibre. These individuals comprise senior and respected professionals of the HR, Finance and Technology industries and will add value to any business that the Fund invests in
- Proven Track Record: Back in 2006, The HR fund was the anchor investor in PeopleStrong. Today PeopleStrong has grown to be a leading HRO & RPO firm. The HR Fund has worked closely with PeopleStrong as a hands-on investor – enabling, guiding, and mentoring the business.The HR Fund will replicate the same approach across other investee companies in the future
- Investment Philosophy: The HR Fund spends substantial time identifying, vetting, and guiding new entrepreneurs before and after the decision to invest
What is the structure of The HR Fund?
- The HR Fund is a privately owned investment company. The company is registered as Withya HR Fund Private Limited
- Withya HR Fund Private Limited is a company incorporated under the provisions of the Companies Act, 1956 and has its registered and corporate office at C-81B, DLF Super Mart -1, DLF City Phase IV, Gurgaon
- Investors directly invest into Withya HR Fund Private Limited and in return they are allocated shares of Withya HR Fund Private Limited
- The investors’ money is pooled together as a corpus, which is then used to make equity investments in private HR companies
- The HR Fund looks to take board positions in all its investee companies
How does the Fund’s investment strategy work?
The HR Fund has established a comprehensive investment strategy, which is based on the following three pillars: (a) clearly defined investment parameters; (b) proprietary Investment Opportunity Analysis Frame work; and (c) entrepreneur mentorship
a) Clearly defined investment parameters: The HR Fund only looks at investing in HR businesses which meet the following parameters:
- Private companies in the HR space with scalable business models
- Early to mid stage companies
- Investment ticket size between INR 2 Cr to 8 Cr
- Priority to HR Technology companies with additional focus on Professional Employer Organizations (PEO), Training, Recruitment with Secondary focus on HRO, RPO, Payroll, Consulting and others
b) Proprietary Investment Opportunity Analysis Framework: Post application of the investment parameters, the Fund applies its proprietary Investment Opportunity Analysis Framework to potential investee businesses. Some key features of this framework analysis are:
- Idea Analysis- Each idea is evaluated on scalability, intellectual property and first mover advantage
- Entrepreneur Analysis: Each entrepreneur is evaluated to determine his/her ‘stage’ on the entrepreneurship journey
- Layer Analysis- Various functions (or layers) within a company are evaluated for efficiency and rigour
- Cognitive analysis – Each management team member is analysed to understand if they are more inclined towards right (creative), left (analytical), right and left (integrated) brain thinking
c) Entrepreneur Mentorship: This is crucial to the Fund’s investment philosophy where the fund vets founders and their businesses to see if they can mentor the entrepreneurs to take their businesses to the next level. This is a comprehensive, interactive analysis and the outcome is a detailed report of their strengths, weaknesses and core competencies
- Once a business goes through the above three levels of analysis, The HR Fund subjects it to external financial and legal due diligence
- Post successful due diligence reports, the Fund negotiates valuation, stake and board positions before finalizing the investment decision
How does The HR Fund operate?
- The HR Fund has adopted best in class governance and operational practices
- The HR Fund has a Board of Directors that works with the management team. These directors consist of promoter, as well as independent and investor representatives
- The management team is full time in-house team that looks at the strategy, marketing and operations of the Fund
- The Fund has outsourced its audit & legal functions to external vendors with Deloitte Haskins & Sells appointed as the external auditor
- Internal governance & processes followed are as follows:
- Quarterly Board meetings
- Regular fund reports sent across to board and investors
- Reports comprise regular MIS, strategic updates and investment reports
- Budget formation, review and approval is a dedicated exercise
- Investee company governance & processes:
- Monthly MIS reports are submitted with additional reports and discussions around quarterly and annual reports
- Budgeting and strategic planning is a dedicated exercise
- The HR Fund attends the quarterly and annual meetings in its capacity as a Board member
What are The HR Fund’s portfolio companies?
- The HR Fund has so far invested in two companies– PeopleStrong and People Matters
- Both these companies use innovative technology in transformative modes to reshape the HR and Talent Management space
- Leading HR Outsourcing and Recruitment Process Outsourcing company
- Specializes in HR Shared Services, Consulting, Payroll Management and Recruitment Solutions
- Headquartered in Gurgaon, India
- For more information, please visit: http://www.peoplestrong.com/
- People Matters
- Leading knowledge and media platform in the HR space and holds a premier position in the HR industry
- Is fostering an HR leaders’ community of thought-leadership
- Operates a print and an online magazine; specializes in HR events, conclaves and research
- Headquartered in Gurgaon, India
- For more information please visit: http://www.peoplematters.in/
What are the risks of investing in The HR Fund?
- The HR Fund is a high growth company which is operating in a high growth industry - and with high growth comes high risk. Most of the risk comes about due to the nature of work the Fund is doing. It will look to invest in high potential private HR companies and nurture and grow their business. Value realization will happen with investment exit
- Potential investors should look to understand that the risk is in line with the nature of these investments. For example, these kinds of investments should not be compared to real estate investments which afford higher returns in lesser time frames
- While The HR Fund will do its utmost best to maximize the value of its investments, it cannot provide any guarantees for the same. The HR Fund has built robust processes, a clear and well defined investment strategy, and a strong team to achieve the same
What are the ways an investor can exit from The HR Fund?
- An investor can cash out his/her equity as and when new investors enter, especially when an institutional investor steps in
- With every round of fundraising, the value of shares is expected to increase and the quantum of increase will depend on the fund management and the investee companies’ performance. The first round of fundraising is ongoing, post the anchor investors round
- Additionally, returns can be booked if any of the investee companies goes public
Is there a lock-in period for investors?
- Since The HR Fund is a private investment company, there is no legal lock-in for any investor
- However The HR Fund believes that it takes 5-7 years to truly grow a brand or a company; this is also the optimal holding timeframe for any investor
Does The HR Fund fall under SEBI regulations?
- No, the Fund does not come under the purview of SEBI as of now
- This is because presently the Fund is a private investment company
- When The HR Fund acquires more than 50 retail investors, the fund structure will have to change. At that time, The HR Fund might realign itself to a typical VC Fund structure
What is the growth plan of The HR Fund?
- The HR Fund will continue to identify and invest in high performing HR businesses in India
- The HR Fund will look to ramp up its global presence with expansion into other key Asian markets
- The HR Fund has recently forayed into Singapore and US and has signed up multiple investors there
- Our presence in Singapore and US provides our portfolio companies with an entry point into the Singapore/Asia Pacific and the US regions
- Down the line, the Fund will look to partner with companies/businesses operating out of these locations and aim to build global partnerships
- These partnerships could range from equity investments to joint ventures, to new HR focused platforms and entities
- Most importantly, The HR Fund will continue to build its ecosystem, refine its investment strategy and work with exciting HR ideas