Payal Agrawal Divakaran

by & filed under NVCA Blog, VentureForward.

Note from NVCA: As part of NVCA’s VentureForward initiative, this ‘Spotlight on Rising Stars in VC’ blog series showcases individuals in the venture industry from different backgrounds and across the workforce to share experiences, spotlight their journeys and successes, and educate the next generation of people considering a career in venture capital.

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Spotlight on Rising Stars in VC: Payal Agrawal Divakaran

Name: Payal Agrawal Divakaran

Location: I was born and raised in the Greater Boston Area, although I spent 4 years in India when I was ages 1-5. My husband (Sanjay), 11-month-old daughter (Veera), and I live in Cambridge, MA. I currently work at .406 Ventures in Boston

Years of VC experience: 3+ years in venture capital and 3 prior years in growth equity

Position description: I am a Principal responsible for leading new investments and supporting portfolio in Healthcare IT and Cloud Infrastructure segments.

Q. Who are a few of the individuals in the industry that have been the most critical to your professional journey?

Two of the hardest things about venture capital are getting in and sustaining high performance. For supporting me in both, Liam Donohue and Maria Cirino, co-founders of .406 Ventures, have been critical. They gave me the opportunity to join a firm as the sixth member of a longstanding investing team, trusting in my capabilities, cultural fit, and potential. They also provided me a platform combined with strong ongoing mentorship that allows me to excel. Ultimately, venture capital is an apprenticeship business, and this support has allowed me to accelerate my learning and my value-add to my portfolio companies.

Before I entered into venture capital, there were individuals at each juncture of my career that helped pave my path for success, so I would be remiss to not mention them. Stephen Berenson and Rick Diamond at J.P. Morgan, Bill Collatos at Spectrum Equity; Joe Fuller, Clayton Rose, and Jeff Bussgang at HBS; and Kevin Hartz and Randy Befumo at Eventbrite all played important roles. I didn’t ask any of these folks to be my “mentors” – they were colleagues who I worked hard for and with, who saw my potential from those interactions, and who believed in me enough to help during defining, and often challenging, moments in my career. In that way, not only were they mentors along the way but also true sponsors.

Q. How did you get into the VC industry and what were some pivotal programs, events, and/or organizations that helped pave the way?

When I decided that I wanted to get into VC, I networked my way into familiar firms, which is the first step to demonstrating that you are a fit for the industry. I had not heard of .406 Ventures before, but the name kept popping up as a potential good fit. After doing my research, I sent a cold email to Maria Cirino highlighting connectivity to .406’s segments and portfolio and aligning with the firm’s values around investors that have all been operators, and I was fortunate to get her attention. She introduced me to Greg Dracon for my first interview with .406, and that ensued in a 3-month interview process in which 100 stars aligned.

I didn’t leverage any programs or organizations to break into VC. I relied heavily on the packaging of my prior experiences in a way that would be relevant for a career in VC. It turns out that the profile of someone who was trained as an electrical engineer, did tech investment banking, did tech private equity, went to business school, started a tech company, and worked in corporate development at a tech company was a helpful mix of experiences for early stage tech investing. The key was demonstrating that I could draw on relevant experiences to hit the ground running, and that I had the aptitude to learn quickly where I lacked in expertise or years of experience.

Q. Which jobs, internships, or classes gave you the experience you needed for your current job in venture capital?

I get asked this question a lot in different ways, but I find that what is actually most helpful to candidates is to understand what the day job of a VC is. I describe it in four buckets of activities that require certain skills that would have to be fulfilled:

Bucket 1: sourcing opportunities, hearing pitches, and making judgments on which ones to pursue → requires skills of lead generation, pattern recognition, strong understanding of relevant segments, and sound judgment → I worked at an associate sourcing-driven growth equity firm with a strict focus on metrics, I have spent enough time in tech to be knowledgeable, and all of my prior experiences around tech companies (banking, private equity, and my own startup) have helped me develop the pattern recognition and judgement.

Bucket 2: driving interesting companies through diligence, asking the right questions to assess risk, being able to make the investment case → business analysis, financial modeling, distilling large datasets into concise communication, convincing an investment committee → I practiced and refined these skills in investment banking, in growth equity, while fundraising for my startup, and in business school

Bucket 3: negotiate the deal, structure a winning outcome, drive all of the legal discussion to close → negotiation, understanding of key deal and legal terms → I learned the basics in growth equity and refined my negotiation skills and style in business school

Bucket 4: provide value-add at the board level and on an ongoing basis, be a trusted and knowledgeable partner to entrepreneurs → infinite number of skills required, not the least of which are a lot of people skills → I attribute a lot of my skill in doing this to having been an entrepreneur but really to the combination of all prior experiences. I can’t diminish what an important role interpersonal skills play in this domain, and business school was helpful for me to grow and refine my management and interpersonal style.

Q. What career advice would you give to your younger self?

There is no replacement for hard work.

I entered into my career with a lack of capital, connections, and confidence but with the pedigree of an MIT degree. One thing embedded in me from MIT was the Institute’s motto “Mens et Manus,” Latin for “mind and hand.” – those were the assets I had, and I worked extremely hard with determination using them. Learning along the way how to work smart in addition to working hard, I created the right circumstances for a whole lot of luck and good timing.

Q. What qualities do you appreciate in the people you’ve worked with?

There are common threads among the best and most productive working relationships I have had, whether with fellow investing team members or with entrepreneurs:

Respect – mutual respect for one another, respectful communication, and a respect for ideas and knowledge

Learning – constant knowledge transfer and learning from one another

Transparency – open communication free from siloed information

Fun/Humor – enjoyable interactions, even when in the trenches together

Bonding – genuine care about and interest in one another

When I started my career, I was focused on showing people that I was smart and making sure that my voice was heard. As I grew professionally, I realized that the most impactful investors and innovators are those who lift others up with them, listen more than they speak, and chose their moments and words wisely. 

Q. What impact do you hope to make on the venture capital industry?

One of my focus areas is to increase access and opportunity – in particular, access to capital for female founders, access to VC investing roles for female candidates, and the opportunity for executive leadership positions for female talent. In just three years of being in the industry, I recognize the influence that I can have and aim to be moving the needle. I’m starting by keeping track: how many female founders I meet, how many we fund, how many female candidates I introduce to portfolio companies/VC funds, and how many are hired. Grounded in data and an understanding of the state of the process, I hope to provide helpful guidance to founders and candidates and hold myself accountable on impact. 

Keep up with Payal via her LinkedIn, Twitter, and website!