Five anchor investors – Santrupt Misra, CEO, carbon black business, and director (group HR) of Aditya Birla Group; Pratik Kumar, executive VP for HR at Wipro; Arvind Agrawal, president, corporate development and group HR in RPG Group; NS Rajan, partner and global leader of people & organisation practice responsible for HR advisory services worldwide at Ernst & Young; and Venky Mysore, CEO and MD of Kolkata IPL Team (the only non-HR investor) – have come together to float ‘The HR Fund’. The fund – with an initial corpus of 60 crore – will be an investment company, which will soon start funding HR startups in India.
Varun Talwar, the CEO of the fund and founder of Withya Group, and Pankaj Bansal, co-founder of PeopleStrong, an HR outsourcing and recruitment process outsourcing firm, are the other key people who have put in equity. A number of limited partners, CEOs and HR heads are also gradually coming on board.
The genesis of the idea was a two-month study on HR in the US that Talwar did in the summer of 2011. He realised HR was a big business opportunity and identified 12 areas that were working well in the US. Talwar, an investor in PeopleStrong, came to India and presented a white paper to 4-5 HR heads on the fund.
“Raising money for these ideas is like selling fine art. A typical venture capital fund does not understand this space,” says Talwar. “The idea was to first go to people who understand the industry. In the future, we can look at raising money from institutional investors.”The potential investee companies for the fund will be human resources companies in software, training space, contingency staffing and those in professional employer organisations like admin staffing. The fund will look to invest in four companies this year; one has almost been shortlisted.
“The first investment is in HR social media. We want to build a social media engine for HR…something on the lines of TED,” says Talwar.
TV Mohandas Pai, chairman, Manipal Global Education Services, and an HR veteran who is not part of the initiative thinks there will be challenges for the fund. “A dedicated HR VC is interesting, but it has to be seen if it can be scaled up. In talent acquisition we are good, but need to improve in performance management, career development and talent engagement.”
But he is willing to experiment. “I have not been asked to join the fund, but if approached I would definitely want to give it serious thought,” Pai says.
What’s the rationale for a fund centred on a function that was – and is in some organisations even now – considered a support function? “More and more CEOs are recognising that HR is an important function. HR has come a long way and it is to do with business,” says Talwar, who puts the size of the HR industry in India at $2 billion.
“This shows HR has moved from the backroom to the boardroom, but exits will remain a challenge,” says Manish Sabharwal, chairman, TeamLease. “Sector-focused funds are not common and one dedicated to HR (is not common),” he adds. TeamLease raised Rs 100 crore as private equity from ICICI Venture in 2011 to fund expansion of its vocational education programmes. And in 2009, Gaja Capital Partners invested $5.38 million in TeamLease for 16.77% stake.
Knight Riders CEO Venky Mysore, who has spent 25 years in financial services, says that as a CEO, 80% of his time was spent on people issues. “There are quite a few funds that support generic ventures, but not in HR,” he says.
For the HR veterans, this is a commitment to the function. Says NS Rajan, who is one of the anchor investors in the fund: “The HR fund is committed to providing a much needed thrust to HR, which is woefully short of service providers capable of rendering world-class services to corporates. I truly believe in the fund’s vision though I have zero management role.”
While it is common to find tech entrepreneurs who are in their 20s, that’s not the case in the HR space, though some HR heads have started businesses after retirement. This fund will create an ecosystem of service providers in HR and spur entrepreneurship, according to an investor. “I am looking for a force multiplier that can start a new trend in HR and strongly believe the fund will strengthen the ecosystem,” says Rajan