Exits a setback for Kalaari, but not a show-stopper

The VC firm, headed by venture capital veteran Vani Kola, is in the middle of raising $290-million fund

Exits of two partners, Bala Srinivasa and Prashanth Aluru, at Kalaari Capital may dampen the VC firm’s ability to sew new deals, but will not hurt its plans to raise a new fund. 

The VC firm headed by venture capital veteran Vani Kola is in the middle of raising a $290-million fund.

Srinivasa and Aluru, both junior partners at Kalaari Capital, have resigned from the venture capital firm, according to separate media reports. Observers in the venture capital industry say the ‘‘exits are a setback for Kalaari, but not a show-stopper, as Kola is the primary driver.’’

‘‘It creates some uncertainty and reduces its leverage to go after new deals,’’ says a Bangalore-based VC who didn’t want to be named. While it may not hurt the new fund, investors may ask questions on how it plans to replace these people. 

The exits are “not material” as the partners had spent less than two and a half years at the firm and they did not come under the “key-man” clause for the fund, Vani Kola, co-founder and managing director of Kalaari Capital, told The Economic Times. 

According to the key-man clause, a fund cannot make new investments if certain executives of the firm are absent. The firm also suffered an opportunity loss when Snapdeal called off a deal to merge with bigger rival, Flipkart. 

‘‘Kalaari has done well, and made money on companies such as Myntra (sold to Flipkart; valued higher), sold enough in Snapdeal (in secondary deals to other investors) and Urban Ladder, which is seen as a steady, growing firm,’’ says the VC executive quoted earlier. ‘‘It has pocketed some gains on Snapdeal, but could have made more money.’’ 

Srinivasa had joined Kalaari Capital in 2015. He was handling the VC firm’s investments in sectors such as fintech, media and SaaS (software as a service).He is likely to join Unitary Helion, an early stage fund floated by Rahul Chandra, co-founder and managing director of venture capital firm Helion Venture Partners LLC.

Prior to joining Kalaari Capital, Srinivasa worked with Amba Research, which was acquired by  financial analytics and ratings firm Moody’s in 2013. Aluru, who  joined Kalaari Capital in May 2016, managed the VC firm’s investment opportunities in areas such as consumer internet and enterprise technology. Before joining Kalaari he was a partner at Bain & Co.

The development comes even as the VC firm plans to raise the fourth fund in the second half of 2018. 

Previously, Kalaari Capital had raised $150 million in its second fund in 2012. Till then, it operated as IndoUS Venture Partners. IndoUS Venture Partners had mobilised $189 million in its first fund in 2006.