Vector Capital Management has tapped Kiran Rao as managing director and head of value creation, PE Hub can reveal.
Rao is joining Vector from Vista Equity Partners, where he served for five years as chief operating officer of its operations team and led its AI taskforce across more than 50 enterprise software companies. Previously, he was an operating partner at TPG and a senior engagement manager at McKinsey & Company.
In addition to his new roles at Vector, Rao will also serve on the firm’s management committee.
When asked what prompted him to join Vector, Rao told PE Hub it was an opportunity he couldn’t pass up.
“In contrast to many investment firms that chase prized assets at premium valuations and bet on growth at any price, Vector has remained steadfast in the parts of the market most firms walk away from: lender-distress situations, complex carve-outs, deep-value take-privates in established software and venture buyouts, an area where the firm is especially active today,” he said.
“In those situations, Vector’s edge is in its operational skill, honed and applied over years, in this case nearly three decades, rather than a multiple someone else was willing to pay. What excites me most is Vector’s commitment to doubling down in this area by putting value creation at the center of its approach in the AI era.”
Another enticement was the way Vector works.
“At Vector, the investment team and the value creation team are one: we diligence a company together, we go to the investment committee together, and the deal and the value creation plan are approved as a single decision,” said Rao. “Vector’s integration is a genuine competitive advantage, in how we underwrite, in how fast we move in the first hundred days, and in how management teams experience us as a partner.”
Headquartered in San Francisco, Vector was founded in 1997. The tech-focused PE firm has completed more than 60 platform investments since its inception.
Primary driver
The opportunity evolved through a series of conversations he had with Vector’s chief investment officer and managing director Amish Mehta and founding partner and managing director Alex Slusky. The talks, initially focused on the future of software and private equity investing, always led to the same conclusion: operational value creation has become the primary driver of returns. With AI now adding to the value creation process, Rao became increasingly interested.
“Vector was already in the middle of a deliberate rebuild of its execution engine, with a sharper focus and a structurally improved investment process,” added Rao. “When presented with the opportunity to lead and grow the firm’s value creation capabilities as a core engine of the firm rather than a support function, it was the right fit at the right time.”
In addition to building on the value creation team already in place, Rao said he is looking forward to “being clear-eyed about AI at the portfolio company level.”
He continued: “That means understanding where seat-based models are under pressure, where an incumbent’s data and workflows are real advantages, and what it takes to move from pilots to measurable impact across product, engineering and G&A. We assess every company on this and track it at every board meeting.”