Not all financial advisors are created equal. Meet Divesh Makan, consigliere to Silicon Valley's brightest billionaires
In the hierarchy of the investment business, stockbrokers have long occupied a spot near the bottom of the food chain. They are the hunters and gatherers, knocking on doors to bring in assets that earn small fees while the bigger fish arrange the headline-grabbing deals and score life-changing bonuses.
But among the throngs of brokers, who now prefer the moniker “wealth manager”, few have cultivated a client base and model like Iconiq Capital, an obscure Silicon Valley firm headed by an irrepressible Indian from South Africa named Divesh Makan. Makan, 41, has turned his otherwise run-of-the-mill registered investment advisory into an exclusive members-only Silicon Valley billionaires club that operates as a cross between a family office and a venture capital fund. His most famous client and the key to his success is billionaire Facebook founder Mark Zuckerberg, whom Makan met in 2004 when he was a broker at Goldman Sachs.
Working his way into Zuckerberg’s inner circle when Facebook was still in diapers has proved to be a gold mine for Iconiq. Already it has full discretion over $1.4 billion in client funds and advises on another $7.6 billion. Yet Iconiq’s advisory services represent only one thread of the dealmaking web Makan has woven thanks to the abundance of Zuckerberg cronies on his client roster, including Facebook’s Dustin Moskovitz and Sheryl Sandberg, Twitter’s Jack Dorsey and LinkedIn’s Reid Hoffman. His board of directors is another power list, with non-tech titans like Henry Kravis and David Bonderman, Chase Coleman and steel tycoon Lakshmi Mittal’s son Aditya.
Makan’s wealth management approach flies in the face of widely accepted post-Madoff best practices for advisors, which preach strict adherence to corporate protocols and regulatory rules. He is a throwback to the early days of Wall Street, when dealmakers like Goldman Sachs’ Sidney Weinberg blurred the lines between business and pleasure and turned the art of schmoozing into a powerful and profitable investment banking network.
Indeed Makan shuns the title of wealth manager, according to those who have worked with him. He sees himself instead as part do-it-all financial consigliere, part deal broker/venture capitalist and part human Rolodex. Makan’s currency is access and relevance. While Silicon Valley stalwarts like Sequoia and Benchmark can point to a long list of successful IPOs and a deep bench of management experts, he hawks the “Zuck & Friends” brand to piece together deals between young startup entrepreneurs and billionaire sugar daddies, as well as between the billionaires themselves.
The centrepiece of this action is Iconiq’s $500 million Strategic Partners fund, Makan’s flagship among 39 private investment vehicles, which total about $1 billion. The firm claims only 100 family office clients, but regulatory forms report some 300 investors, who put pre-IPO money into such companies as Alibaba and India’s ecommerce giant Flipkart. Key to Makan’s pitch is bowling over wannabe Zuckerbergs with raw star power. Before Iconiq led a $40 million Series D round last May for social media software firm Sprinklr, Makan invited founder Ragy Thomas to dinner with three famous billionaires.
“When someone like Iconiq wants to invest, you can’t say no,” says Thomas. “They can probably connect to anyone in the world.” Aaron Skonnard, co-founder of e-learning startup Pluralsight, received a similar “join Silicon Valley’s inner circle” pitch from Makan before Iconiq participated in the firm’s $135 million Series B round.
“They don’t want operational involvement,” says Skonnard. “They just want to connect and network and give more access.” He and his wife recently flew in to San Francisco from their home in Salt Lake City for a quarterly Iconiq networking event “where all the magic happens”.
They had more freedom at Morgan Stanley but still clashed with higher-ups over the limits to their off-the-books behaviour.
(This story appears in the 09 January, 2015 issue of Forbes India. To visit our Archives, click here.)