Drawing on a record inflow of venture capital in the past decade, 297 founders have set up some 253 startups, igniting talk of a new-look “startup mafia,” as such cohorts of entrepreneurs are termed in industry parlance. These entrepreneurs, who have all raised venture funding, were earlier employed at companies such as Zomato, Zoho, Freshworks, Paytm, Citrus Pay, Snapdeal, Swiggy, Udaan, Oyo and Ola, according to data exclusively analysed by Longhouse Consulting for ET.
SoftBank-backed Oyo led the pack with 60 entrepreneurs, followed by ride-hailing platform Ola, with 51 such founders. They were followed by B2B ecommerce startup Udaan — the founders of which are former Flipkart executives — with 29 founders, and software-as-a-service startup Freshworks, with 28 founders.
For this study, the talent advisory firm considered executives who had spent two years at a startup and launched a new venture within two years of quitting that job.
Unique Skill Set
Longhouse has only taken into account startups birthed out of the mentioned companies, and not the overall ecosystem. In addition, they had to have either raised over $1.5 million in funding, or have hired a team of over 25 people, to be considered for this list.
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The data took into account startups formed till end of 2022. Longhouse did not include executives from India’s best known internet startup, Flipkart, which has its own long-established cohort. The list also excludes executives from other Walmart-owned companies, PhonePe and fashion portal Myntra.
ETtech“For any business, you need deep insights, and (startup) mafia come out of well-established businesses because not only do they get a vantage point on newer opportunities but also find colleagues with whom they can partner to pursue these new opportunities,” said Nitin Gupta, founder and chief executive of fintech platform Uni Cards.
The scale at which Indian internet startups operated in the 2015-16 era helped build a base of important skills in executives employed at such ventures, according to Gupta. He worked at fintech company PayU in India during its early days, before going on to lead Ola Financial Services. “One solved for a large target audience, managing millions of transactions, and got exposure to complex and large problems,” said Gupta, who set up his own venture in September 2020.
According to Anshuman Das, cofounder and chief executive of Longhouse Consulting, today’s Indian founders — unlike previous generations of entrepreneurs — are exploring ideas that are far more indigenous, and the trend is expected to continue. “This has also led to India leading the way for innovation in certain areas (such as fintech and SaaS),” he said.
Genesis of Startup Mafia
The term ‘mafia’ for startup executives who go on to launch their own ventures draws from the famous ‘PayPal Mafia’ moniker, which was used to describe former employees of the payments platform who became entrepreneurs. Other Big Tech companies such as Google, Facebook and Twitter also saw some of their top executives take a leap into entrepreneurship, establishing popular internet companies that include Instagram, Pinterest, Quora, Medium and Square.
Entrepreneurs graduating from highly successful startups come with specific skill sets, as they have hustled to build business lines. Their domain expertise is also attractive to investors.
“I was told by investors that they’d give me $20 million if I started something in the fintech space, but I decided to focus on solving the problems of car owners,” says Amit Lakhotia, founder and chief executive of Gurgaon-based startup Park+.
ETtechLakhotia was a vice-president at Paytm in charge of building the payments business from 2012 to 2015.
“This category (superapp for cars) didn’t exist, but I had the confidence because even wallets did not exist when I was building Paytm,” says the founder, whose firm has raised funds from Sequoia Capital, Matrix Partners and Epiq Capital.
Matrix partner and managing director Tarun Davda said the venture capital firm, which has backed the likes of Ola, Jupiter Money and Dailyhunt, runs an ‘experienced founders’ theme.
“We define an experienced founder as a domain expert who has knowledge of a clear gap that exists in the market, and is not taking the product-market fit risk because he knows the exact problem and focuses on the GTM (go-to market) strategy,” Davda said.
Hard Skills
These employee-turned-founders are also a good bet for investors due to the thoughtful approach they can bring to building a business, versus just hustling. “When it works, it works really well, and they end up burning a lot less capital,” said Davda.
Take the case of Ragini Das, cofounder of community-led professional networking platform Leap Club. She worked at Zomato with sales and then moved to user growth, including international launches, expansion and product marketing.
“I got to work on the entire gamut of things…basically, I saw it all during that period,” says Das, who spent six years at the Gurgaon-based food and grocery platform before deciding to start up on her own. She teamed up with Anand Sinha, her reporting manager at Zomato, to set up Leap.Club, which has 29 employees now, with around 15,000 paid users.
Investors are of the view that the current macroeconomic downturn and funding slowdown are an opportunity for entrepreneurs to build companies.
“For large company executives, the downturn is the apocalypse. Your colleagues are losing their jobs, budgets are getting cut, you’re getting called in on weekends and no longer have the support staff you were used to,” said Ritesh Banglani, partner at early-stage VC firm Stellaris Venture Partners. “For a startup executive, it’s any given Monday.”
Moreover, ESOP buybacks and IPOs have allowed executives to build a personal financial cushion that encourages risk-taking.
Banglani said that 30 of the 38 companies that Stellaris has funded over the past six years were started by executives who either founded or worked at a VC-funded company before. Of these 30, founders of 11 companies are repeat entrepreneurs, whose previous ventures also raised venture capital.
Company Culture
Matrix Partners’ Davda says executives who have worked at startups and scaled businesses are efficient when it comes to hiring. “They are able to build teams more efficiently because they come with a network. These are not young kids who have not hired experienced executives. They know who to hire and know what mistakes not to make,” he said.
SuperOps founder Arvind Parthiban, who put in stints at Zoho and Freshworks before starting up, said the culture at both companies was similar. He said that apart from employees, there are several cultural elements SuperOps has taken from Zoho, “which are trust and the concept of directly responsible individuals, where everybody’s inputs are taken but one has to respect the final call of the decision maker.”
Gupta from Uni Cards said learnings at previous organisations have been crucial as they led several of today’s mafia to become better leaders. “Running teams is valuable at scaled set-ups because it gives way to a lot of learnings. We have learnt and corrected from our mistakes, which has led us to form the best practices for our teams,” said Gupta.
Lakhotia, who has worked at online travel portal MakeMyTrip and Indonesian ecommerce platform Tokopedia, apart from Paytm, said, “If I’m able to support 10-12 people to build businesses here and then go out and start their own ventures, it will be amazing.”