They say life imitates fiction. But do you know that life can imitate science too? And fund management is a science by itself. It harbors life hacks and secrets that can be harnessed to improve the quality of our life, the quality of our thoughts, and the quality of our successes. Dwelling on life hacks from fund management at the recently concluded Femvest 2021 virtual summit on women’s financial empowerment, Dr. Archana Hingorani, Founder of Siana Capital, spoke on the topic ‘Why Fund Management is like a Life Hack’.

Private Investing is huge, and is in fact one of the largest attractive areas across the world. “It is where almost a trillion dollars of money that goes into globally,” observed Dr. Archana. India is a new entrant to this space relative to the rest of the world. The business of Fund Management is all about the business of credibility, trust, and commitment, and not about only ‘giving money’. It is about due diligence and vigilance, risk diversification, and partnerships with entrepreneurs.

Dr. Archana then proceeded to glean five life hacks from fund management.

Life Hack 1: Business Partner = “Life Partner”

The entrepreneur that you are trying to find is almost like finding a life partner. The different steps that you need to take for fund management, private equity cycle are:

  • Initial diligence and execution
  • Documentation and signing
  • Portfolio management
  • Portfolio exit

Most or all these steps could be mapped to their equivalents in the process of finding the perfect life partner. This was one of the main life hacks from fund management.

Life Hack 2: Be the Jack of all and Master of some/more than one

You have to have the ability or Investment Acumen to decide whether the companies suit your investment schemes and time. In private equity, the most important thing is the time you have. It is very imperative to build the right relationships with investors.

It’s not about just taking money from investors and giving it back to them after 8-10 years. Having those traits and skills to help you nurture your relationship with investors is important.

Life Hack 3: Ability to balance between good cop and bad cop

You have to have within your team a good cop and a bad cop, if you have to be able to give bad news in a good way. If you don’t have the ability to move back and forth between you and your team and colleagues, you will certainly face challenges.

Some handy tools for getting desired outcomes without damaging the relationship:

  • LP:GP Fundraise
  • Team Management
  • Pipeline and deal sourcing
  • Vendor management
  • Fund: Invested Negotiations
  • Portfolio exits
  • Portfolio management
Life Hack 4: Cash is king, Company cash flows = Home cash flows!
  • Businesses with higher cash runways survived to see the lockdown through
  • Cash distress can lead to shortcuts, unaffordable discounts, and bad decision making
  • Getting customers to firstly even pay, then pay on time, then pay an increased price is a tough journey
  • Business plans on paper/excel look great, but hard cash is required to keep the business and promoters afloat
Life Hack 5: Practice and Passion
  • 10,000 hours is a magic number of greatness (Malcom Gladwell) – it needs passion to put in those hours
  • Fund management is both a science and an art
  • Commitment and Passion is important for any relationship with Investors, Entrepreneurs, and team