Payal Agrawal Divakaran says she’s always been fascinated by the technology around her.
“All of the electronics in my house growing up—those were my toys,” .406 Ventures' newest hire told BostInno. “I was constantly taking things apart—the PC, the fax machine. I saw how these things improve our lives so much—and there was this real curiosity to understand how they work.”
So, it comes as no surprise that she knew she wanted to pursue engineering from a young age. And it became clear very quickly that she had the aptitude for it. By the time she was in junior high, teachers at Divakaran’s school in Waltham were telling her parents that she should probably skip multiple grades, due to the fact that she was excelling at math, along with other subjects. Her mother decided that for her to have a normal social life, it was best to keep her in the same grade with others her age, and enrolled her in private school: The Academy of Notre Dame in Tyngsborough.
Divakaran went on to attend MIT, graduating in 2008 with a degree in Electrical Engineering and minoring in Management. During that time, she was on the founding board as VP of Information Technology of the Network of Sloan Undergraduate Women (now known as WBL)—which was aimed at empowering females with the resources they need to explore non-traditional career paths. After she finished school, she decided to leave Massachusetts, where she had lived her whole life thus far, to explore a new opportunity at J.P. Morgan’s Technology Investment Banking group in New York City. There, she was advising big public technology companies on a range of financial issues, from mergers and acquisitions to raising equity.
Eventually, though, Divakaran ended up back on home base. Spectrum Equity, which has invested in companies like SurveyMonkey, Seamless, Lynda.com and Ancestry.com, brought her back to Boston for a role that centered around sourcing investment opportunities, meeting management teams to evaluate businesses, doing the diligence and deal execution.
From investor to founder...
At some point, though, Divakaran got bit by the entrepreneurial bug, and made a life-changing move: She left Spectrum after three years to attend Harvard Business School as a full-time MBA student.
“Boston is a lot more level-headed, more pragmatic when it comes to setting expectations for companies, valuations—and the reason that matters is that it means there’s a lot more sanity here...In the Valley, it's a constant race."
While in business school, Payal spent a summer in Corporate Development at Eventbrite, helping the company to hone an M&A strategy, navigate creating a market landscape, and set processes for due diligence. During that time, Divakaran admits that she started having an internal debate—the age-old West Coast versus East Coast dilemma. But ultimately, she decided to stick with Boston. When it comes to sectors like Healthcare IT, data and analytics—areas that .406 happens to focus on—Divakaran says this city is especially vibrant.
“Boston is a lot more level-headed, more pragmatic when it comes to setting expectations for companies, valuations—and the reason that matters is that it means there’s a lot more sanity here,” she said. “In the Valley, it's a constant race, trying to keep up with all the competition for engineers, the competition for money. It’s a very different environment. I actually came away thinking, ‘Wow. I’m so glad to be back in Boston.’”
And it's a good thing she did come back. It's while at HBS that Divakaran co-founded SpotRocket—a site that ranks global startups, helping students find job opportunities at companies with high potential to cater to their interests. SpotRocket participated in the Rock Center Accelerator program, and more recently, Divakaran says has there’s been some heavy inbound interest. The startup is currently in talks about potentially selling the website and transferring the IP.
Going from the investment world to founding a company may not seem like the most likely move, but Divakaran says it actually benefitted her in the long run.
"So often VCs have their own perspective and their own view...I think there’s just so much more that can be accomplished when you understand where the entrepreneur is coming from.”
“What I learned in the three years of investing prior to business school is that it’s not as much having a unique idea—because those are hard to come by,” she explained. “There were weeks at Spectrum where I would talk to five companies doing the exact same thing at different stage. Really, what’s going to make a difference is the team and the execution capability. So I came to business school feeling like I had something to contribute relating to that.”
...And back to investor
Now, Divakaran aims to leverage what she learned at HBS and from growing her own startup and funnel that back into her new position at .406 Ventures, a VC firm that invests in early stage tech companies.
“.406 was started under the premise that there weren’t enough venture capitalists who had actually been entrepreneurs and operators” she said. “What the SpotRocket experience has done for me is it puts me in the shoes of the entrepreneur when they come through the door and pitch us their ideas, and as we invest. So often VCs have their own perspective and their own view...I think there’s just so much more that can be accomplished when you understand where the entrepreneur is coming from.”
At .406 Ventures, the focus on cybersecurity, healthcare IT, data/analytics and cloud tech, and its portfolio includes Bedrock Data, Bit9, CloudHealth Technologies and Veracode. But Divakaran says she’s specifically drawn to companies that “have the courage to solve a big problem.”
“We really love to see hustle,” she added. “If we can’t sense that, then it’s hard for us to get behind a company in the early stages.”
Photo provided by Payal Agrawal Divakaran.
