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August 31, 2007

Where are (the worthwhile) Indian Internet and Mobile cos.?

Today's DNA has an article quoting VCs like Avnish Bajaj of Matrix Partners and Ashish Gupta of Helion VC - who were earlier Internet entrepreneurs themselves - saying how they were finding more interesting companies to fund outside of these sectors.
"If I were to look back, and observe what has happened in the past one year, I think internet and mobile have been disappointing in terms of current opportunities. We still haven't seen enough of promising, innovative, made-for-India kind of start-ups," says Bajaj. He adds that when they started out, he would have expected to do 4-5 deals by now in internet and mobile VAS, as opposed to the two he has made.

..."Across the board, most VC funds have at least a couple of investments in the internet and mobile space. But the rate at which these investments have taken place has been slower than what everyone had made it out to be. It has not lived up to the hype or caught fire very quickly," said Ashish Gupta, MD, Helion Venture Partners.Helion has made two investments in internet companies (Komli and makemytrip.com) and two in mobile VAS (JiGrahak Mobility Solutions and Kirusa) since it closed its $140 million fund last August.

According to data from Venture Intelligence, Internet & Mobile VAS companies have accounted for only 13% of the VC investments (by value) in the first eight months of 2007 as against 38% during the same period in 2006. In terms of number of deals, Internet & Mobile VAS companies have accounted for 25% of the deals in 2007 compared to 31% in the first eight months of 2006.

This trend is not surprising since, since despite a lot of cheerleading in the Indian blogosphere, the fact is that there are hardly any truly Indian Internet and Mobile VAS applications have gained traction globally. At best, there are some companies - like Slideshare, Zoho and Mobio) - with founders of Indian origin based in the US and do some back-end development work in India.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 26, 2007

Profile of Virgin Comics

The Mint has a profile of Virgin Comics Llc., a company co-founded by former MTV executive Sharad Devarajan and Gotham Chopra (and backed by author Deepak Chopra, filmaker Shekhar Kapur and Virgin Group’s Richard Branson), which is aiming to take Indian culture overseas via the comics route.
ACK (Amar Chitra Katha) books are popular with the Indian diaspora, but Virgin’s model is different—the company wants to make its comics, with Indian characters and others, successful in the US, the biggest market for English language comics in the world.

...And Virgin Comics’ revenues from these top sellers has been more than $600 million (Rs2,460 crore) for the 12 months of data available on ICv2 (it arrives at this number based on sales of these comics by Diamond US, a company that has had an exclusive distribution agreement with Virgin since January). More than half of those revenues came from the Devi, Snakewoman and Ramayan 3392 AD series. Devarajan would not disclose the closely-held company’s global revenues.

Virgin Comics has also been quick to realize the multimedia benefits of being in the comics business. Sadhu is being made into a motion picture starring Nicholas Cage. Virgin has alliances with India’s Jump Games Pvt. Ltd to create mobile games; Studio 18 to make horror movies; MySpace for a comic book platform that allows readers to create comics in partnership with some of the world’s best-known comics writers such as Carey; UTV Motion Pictures Plc. to create superhero franchises; and Sony Online Entertainment to produce games for the personal computer.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 25, 2007

"Indian telcos need to be valued differently"

Randall L. Stephenson, Chairman & CEO of AT&T Inc., in an interview to
Business Today:
People keep missing this market. They keep evaluating the market using old traditional ways of valuing the cellular business. We come from the us and in the western culture and we are accustomed to these $30 (Rs 1,230), $40 (Rs 1,640), $50 (Rs 2,050) revenue per subscriber numbers. Who would have ever thought that you can make money at $8 (Rs 328) or $9 (Rs 369) per subscriber? So, here is a market where I would have never forecasted that companies coming here and are making 30 to 40 per cent profit at $8 revenue per subscriber. The model's very different here. The cost structures are very different here. They are engineering the networks very differently here.

I guess what I am suggesting is, looking at the numbers, you've got to look at India differently. This market is about 17 per cent penetrated with wireless. So, can you penetrate the rest? I suspect you probably can. But you need to look at what model would the government put in place to get infrastructure out there. So, with just 17 per cent penetration the market is just getting started.

...Considering the fast economic growth of India and the intellectual capital, I think achieving a 50 per cent penetration with a $7 (Rs 287)-revenue per user seems very achievable. I have no doubts that number is achievable. I have seen it play itself out far too many times.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

An Ethiopian red carpet for horticulture cos.

Business Today has an interesting article on Indian horticulture firms find it more attractive to grow in this African country.
For Dr Reddy, it was a journey from red tape to red carpet. He recalls: "Like most people, I had certain notions about the country (Ethiopia). To my pleasant surprise, when I landed there, not only did government officials receive me personally, they also got all the required permissions for us to operate within six days. Imagine, all the paper work was done in six days and no corruption."

... Sample the largesse: all floriculture activities in Ethiopia are granted a 5-8 year tax holiday depending on the quantum of investment and people employed. Under a European Union (EU) grant, the Ethiopian government provides up to 70 per cent of the project cost as a loan at a mere 7.5 per cent. lso, freight costs are half of that from India and the EU allows flowers from Ethiopia to be imported at zero duties under the Lome Convention of Preferential Exports, whereas Indian exports are taxed at 6-9 per cent.

Moreover, buyers pay a premium for the long stems and the big head flowers grown in Ethiopia, while labour is available for eight Ethiopian Birr (approximately Rs 38) a day compared to Rs 120-130 in India. Vinod Reddy of Holetta points out: "Though labour is slightly less productive than in India, this problem can be overcome with training."


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Funding microfinance firms

Business Standard columnist Key Sarkar has an interesting piece on the experience of funds like Bellwether, Unitus and Lok Capital which fund microfinance companies.
One of the big realisations Bellwether had, according to Prasad, was that transforming NGOs into for-profit MFIs is hugely time-consuming. While the statutory requirements of changing the legal identity have a time cost certainly, what really was more time-consuming than planned was bringing about the change in attitude. Transforming accounting systems and human resource management in existing NGOs actually took 70 to 80 per cent of the time earmarked for these companies.

What came as a very pleasant surprise and was an absolute delight, according to Prasad, was the quality of people promoting MFI start-ups. The fact that people with valuable corporate experience are setting up MFIs is a trend unique to India.

...Mehta says that from his deals in the pipeline and the proposals that they get, it may be that MFIs working in the urban areas would proliferate. A lot, however, remains to be learnt on how the urban poor will behave and what impact it will have on MFIs. Start-up MFIs like Ujjivan or Arohan or even Janalakshmi would be important sources of data to understand how these MFIs will fare.

Although Prasad and his team did realise that in order to sustain healthy growth of their investee companies they would need to fund support companies focused on the MFI sector like software companies, credit bureaus or training institutes, they have not been lucky in finding such companies to support. “We will need to market ourselves better to promoters who are thinking of setting up such companies,” admits Prasad.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 24, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-08-15-1: Vadodara-based civil engineering firm seeks $1-5 M for setting up a factory to produce products used in construction industry.

07-08-15-2: New Delhi-based events listing portal seeks <$10,000 for marketing and operating expenses.

07-08-15-3: Bhopal-based manufacturer of empty hard capsules for pharmaceuticals seeks to sell out for <$1-M

07-08-15-4: Agra-based online retailer of educational books seeks <$100,000 for expansion.

07-08-15-5: Mumbai-based Flower Bouquets retailer seeks $1-5 M for establishing support infrastructure (including a call center) and national expansion.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-08-08-1: New Delhi-based 12-year-old corporate travel and event management company, with 34 people and turnover of Rs.8 crore, is looking to sell out.

07-08-08-2: Bangalore-based relocation management company seeks <$100,000.

07-08-08-3: Ajmer-based dealer of surgical equipment seeks <$1-M.

07-08-08-4: Bangalore-based HR Services company seeks <$100,000 for expanding operations geographically.

07-08-08-5: Mumbai-based maker of LCD monitors, with a manufacturing facility in Sri Lanka, seeks $1-5 M for expanding its manufacturing base and setting up a R&D center for LCD applications.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

August 20, 2007

Why did Wipro buy Infocrossing?

The $600 million buyout of the US IT services firm is the biggest acquisition by an IT firm by a long shot and very different from Wipro's earlier "tuck in" or "string of pearls" acquisitions.

Businessworld proposes that the deal is aimed at pre-empting problems relating to data migration.
Infocrossing’s revenues during the last fiscal were $232.4 million, while its net profits stood at $9.3 million. Wipro’s all-cash buyout is equivalent to 2.5 times Infocrossing’s revenues and 64 times its earnings.

The buy is significant as it comes at a time when American clients demand more control over customer information and software they share with Indian outsourcing firms. Many US firms even want their data to reside in the country, and a new legislation to enforce this is currently being debated in Washington.

Through Infocrossing, Wipro hopes to pre-empt the growing data migration problem plaguing the offshore outsourcing industry.

Economic Times has an interview with Wipro IT Services CFO K R Lakshminarayana about Wipro's M&A strategy.

We follow a three-fit mechanism while acquiring companies - strategic fit, cultural fit and financial fit in that order. Under strategic fit, we figure out where does the new asset fall and how will it add value to the overall roadmap.

The cultural fit focuses on the issues pertaining to the post-acquisition amalgamation of the business within the existing Wipro framework. Pricing, which falls under the financial fit, is not considered on a short-term basis, but it’s rather a long-term factor. So, when we acquired Spectramind in ’02 for close to $100 million, we valued it at two times its sales, higher than what the market was expecting then. But strategically, it helped us leapfrog ahead of our peers.

...So far, our acquisitions span various regions in Europe and the US. Some of our targets include Finland-based Saraware, Austria-based NewLogic and Enabler from Portugal. All these companies are based in small towns with a strong element of local culture. But over a period of time, we have succeeded in weaving these companies into the Wipro framework. Two years ago, we were circumspect, but having concluded these acquisitions, we feel better about it now. Currently, we are looking for targets in Germany and France on a priority basis.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Why are VCs arrogant?

In a posting on the rising popularity of VC Rating site thefunded.com, Jeff Bussgang explains why.
Why are VCs often arrogant? Is that what they teach us at VC breeding schools? I think some of it is just the nature of the business. As I mentioned in my post “Dr. Seuss and The Land of No”, VCs have the job of saying “no” hundreds of times for every “yes” that they fund. To be efficient, they are trained to say “no” quickly and not waste time on projects they simply don’t like or don’t believe in. Whether you believe in a project or not is such a subjective standard, that it can always be open for debate and argument. But VCs can’t afford to have debates and arguments about projects they don’t like, they must quickly, unemotionally move on to the next one.

Entrepreneurs, on the other hand, are emotionally attached to their projects and wired to believe that what they are working on is the absolute best thing going on – after all, they chose to work on it at the expense of every other new start-up or job they could have pursued. Thus, it is hard for them to contain their natural enthusiasm over why what they’re doing absolutely deserves to get funded. And nothing is more frustrating for a “walk through walls” entrepreneur than to be dismissed by a VC, no matter how graciously.


His solution?
The trick, therefore, is for VCs to simply treat entrepreneurs with R-E-S-P-E-C-T. That’s all entrepreneurs are askin’ for. Just because a VC may not like the idea, or even the person hawking the idea, doesn’t mean they shouldn’t treat them with decency and respect. On the flip side, the entrepreneurs should remember that it’s the VCs job to sift through hundreds of opportunities and spend time only on very few. If it’s not a good fit for them, move on. That’s why TheFunded has struck a chord.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

The investment banking boom in numbers

Business Today has a cover story on booming business of investment banking.

So how much exactly are promoters willing to fork out for I-banking advice and deal execution? Ravi Sardana, Vice President, I-Sec, the investment banking arm of the ICICI group, warns that when deal sizes increase, companies typically tend to opt for a fixed-fee format. Nobody's complaining. "In billion dollar deals the fees can vary from 0.10 per cent to 1.5-2 per cent," he offers. For instance, when a few months ago the promoters of Anchor Electricals sold an 80 per cent stake to Matsushita of Japan for Rs 2,000 crore, Kotak Mahindra Bank, which represented Anchor, pocketed a fee of Rs 25 crore, accounting for 1.25 per cent of the deal size (see Laughing All the Way from the Bank, to find out how much bankers are taking home). "Fees are stable. There hasn't been any fee compression for the past 24 months," says Vedika Bhandarkar, Managing Director & Head of Investment Banking, JP Morgan.


f the likes of UBS and Citi-which is second to UBS in fees earned in 2007, with $70 million-are hogging the M&a show, it's because they're players with a global platform, whose consolidated balance sheets can be leveraged during a buyout. For instance, in the Hindalco-Novelis deal, UBS (along with ANN AMRO & Bank of America) threw the Birla company a $2.8 billion debt lifeline. "With companies doing global M&A, financing becomes as important as advice," says Sardana. Pure investment banks like JM Financial for their part stress the value of advice, along with decades of relationship-building. Says Kampani: "New ideas are critical. As are relationships. The two, along with the ability to finance deals, make a perfect combination." Yet, leveraged buyouts are slowly but surely gaining ground, with I-bankers earning in fees $13.80 million from nine such deals in 2007 so far. The advantage of such buyouts: Debt can be less costly than servicing equity even as it provides tax breaks.

But if the global banks are beginning to put the domestic veterans in the shade in M&As, on the capital markets front it's another story. UBS, for instance, isn't a major player in capital raising, earning just $7.6 million from four transactions. Citibank, however, is collecting close to $20 million from initial public offerings and follow-on issues. The leader, though, is DSP Merrill Lynch, which has raked in fees of $28.3 million so far in the year. Morgan Stanley ($16.1 million), Kotak Mahindra Bank ($12.7 million) and ICICI Bank ($10.3 million) are the others who are strong in the primary market, aided in small measure by their strong retail reach. And the fees in this arena are relatively stable. Says Aditya Sanghi, Managing Director-Investment Banking, YES Bank: "Commissions in the IPO and follow-on market are 2-3 per cent."

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Catering start-ups that are going places

Businessworld columnist Rashmi Bansal profiles two start-ups that are creating waves delivering quality lunches to office goers. Not unexpectedly, the article is titled "The New Age Dabbawalas".
Mom’s Kitchen’s USP is simple, no-frills food and ‘no repeats for 30 days’ — all at an affordable price. The service caters to a clearly defined segment — value conscious bachelors, students and the elderly. Meals cost Rs 30 each, with a Rs 25 budget option.

But just as it is with airlines, so it is with lunchrooms. Although there is a huge market for low cost carriers, a lucrative little segment still prefers business class. Take Calorie Care, India’s first customised, calorie counted meal service. At Rs 150 a meal, you get health food dressed up in a range of designer recipes, from various cuisines.

...Of course, Calorie Care is about more than weight management. While 20-25 per cent of the customers are looking to either shed some pounds or gain muscle, around 5 per cent have medical conditions like diabetes, which require special meals. But the majority simply want a balanced, healthy meal. Calorie Care’s core client base is the financial services sector — Deutsche Bank, Goldman Sachs and the like. “We’ve found success with well-paid professionals pressed for time, willing to pay for health and convenience,” says Calorie Care’s CEO Cyrus Driver. Currently, Calorie Care serves 300 individual customers in Mumbai, and a similar number of corporate lunches, which take the form of healthy buffets.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 13, 2007

Alternative energy gaining steam?

Businessworld has a cover story on alternative energy scene in India.

Extract from the section on Wind Energy:
For India, these wonder machines have already helped generate more power with each passing year — from 2,483 MW in March 2004 to 7,093 MW last March. In October 2005, India raced past Denmark to become the world’s fourth-largest producer of wind energy after Germany, the US and Spain. In 2006, India installed 1,840 MW of additional capacity. It is also way ahead of China, which will add 5,000 MW only by 2010. Asia, which generates 10,600 MW through wind alone, beat the rest of the world last year with 53 per cent growth in installed capacity.

A global consolidation in the wind energy industry has also been taking place. As a result, 80 per cent of the world’s wind energy business is now cornered by top five players. Pune-based Rs 1,530 crore Suzlon Energy, India’s largest and the world’s fifth largest wind turbine maker, glides on a 52 per cent market share in the country. The $4.2 billion (Rs 16,800 crore) Danish major Vestas and Enercon from Germany together make up another 30 per cent. Until July this year, Suzlon’s order book bulged with a whopping Rs 13,500 crore — Rs 1,710 crore coming from India alone. “Our strategy is to develop efficient products to make power at the lowest KW per hour cost,” says Tulsi Tanti, managing director of Suzlon in Pune. The company aims to scale up its equipment output capacity from 2,700 MW to 4,200 MW by 2008.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Interview with One97's Vijay Shekhar Sharma

Venture Intelligence featured an interview with Vijay Shekhar Sharma, Founder & Managing Director of One97 Communications as part of the July issue of the US-IVCA / Venture Intelligence India VC report. One97 is one of the pioneering start-ups in the Indian Mobile VAS space and recently raised its first round of funding led by SAIF Partners.

Some extracts from the interview:

VI: How were you funding the company until now?

VSS: We were the first company to put a revenue sharing model in place with operators. That gave us recurring revenue and made the company cash positive.

VI: What were your challenges in fund raising?
VSS: Two challenges: first, deciding on the network the fund could provide and second, the kind of size commitment they can make for future investments. A third factor was the comfort with the VC: what kind of team it was, the chemistry between team members, the kind of person who will come onto our board. The VC on the board becomes your everyday business partner.

VI: How does One97 compare with VAS providers in advanced markets?
VSS: The good part about being in India is that we are at curve of extreme innovation. There are all ranges of audience to serve - very high tech users to ultra low tech users. So our organisational DNA is built around serving such extreme requirements.

I am sure – similar to IT services – the “skilled Indian manpower” story applies to the VAS / mobile applications as well. Applications with high R&D and high efficiency requirement applications are definitely going to come out of India. Given (SAIF’s) support and general business guidance, we can come out with universal applications from India too.

VI: Can you talk about your expansion into China?
VSS: The mobile customer base in China is significantly large - four times more than what we have here (in India) today. We will be able to do long tail services…and we can have a scalable model. This along with our partner’s (SAIF) networks and capabilities, make China a preferred destination for us.

VI: How would you differentiate your firm vis-à-vis your competitors?
VSS: In the short to medium term, our investment in technology is our differentiating advantage. In the long term, our strength will be operational efficiency and lead-time/new use cases of technology and features in our application development.

VI: What do you think will be the key drivers impacting your sector over the next 3-5 years?
VSS: Right now, entertainment seems to be the primary area of VAS. In the future, utility services and every day applications will be the key drivers. SMS is already an integral part of life. This in turn opens up possibilities for applications in areas like microfinance and other parts of the value chain. Customer growth will be a driver too.

VI: When do you anticipate your next funding event?
VSS: There are two parts to it. One, we are specifically looking at taking over a small to medium sized firm for growth. That can happen tomorrow or next month, but whenever that happens that would call for a round of funding. Secondly, for funding our linear scalable growth.

VI: How did you become an entrepreneur?
VSS: In 1997, while still at college, we raised funding from a VC in the US for an India-focused search site Indiasite.net. It was ranked number one in 1996-97 at various places on web. We later sold the site to India Today and the company to Lotus Management LLC.

I then turned to telecom because the Internet was already being perceived as a “bubble” and was getting crowded. Also, there was money in telecom even for three lines of content, while in the Internet space, there was a monetization gap.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Lobbying goes professional

Business Today has article on how lobbying in India is acquiring a more professional face.
Not too long ago, effecting such a policy change may have simply meant a quid-pro-quo, where money is exchanged for a favour. However, deregulation over the years has meant that there are fewer government approvals required, less bureaucratic control over rules and regulation, and far more access to information. The Right to Information Act, for instance, allows anyone to access information from government departments, including the freedom to "inspect works, documents and records". With their decisions open to scrutiny, bureaucrats want to play by the rules more than ever. Says a veteran of the lobbying business: "Corruption continues to be rampant in the government, but that is not a substitute for a convincing case." Moreover, to have a convincing case is no longer a sufficient condition; it is a necessary one. In other words, you may still have to pay money to get your work done, but you can no longer hope to blatantly violate the law. However, if a company believes that a particular law or regulation is counter-productive, it can lobby-by building favourable opinion among key stakeholders-for a change in it.

... Often times, like in the case of Vodafone, nothing less than intervention by the promoter suffices-especially, in the case of sectors such as petroleum and aviation that are in the throes of deregulation and hence the rewards are immense. Liquor-baron-turned-aviation-czar Vijay Mallya of Kingfisher fame, who recently acquired Air Deccan, a low-cost carrier, is well on his way to bringing down a policy wall that prohibits airlines that aren't at least five years old from flying overseas. Why? Kingfisher Airlines is just three years old, and Mallya is keen to fly foreign routes. The Union Cabinet is currently mulling such a proposal, and if the decision goes in favour of Mallya, then Kingfisher may start flying overseas next year.

...Retired bureaucrats also make key allies in the battle to woo the system. Until recently, such lobbyists have preferred to work within companies-either as board members or advisors-but the changing policy environment has emboldened a few of them to set up shop on their own. Take for instance, Pradip Baijal and C.M. Vasudev, former Chairman of TRAI and Expenditure Secretary, respectively. The two have floated Neoses, a consulting firm, that advises companies on how to deal with government departments. One of their clients is Huawei Technologies, whose application for clearence to supply equipment to BSNL has been hanging fire due to security concerns. Huawei is a Chinese company and is said to be owned by communists close to the Chinese establishment. Says Baijal: "We understand the processes involved in government approvals, and are hence able to help foreign companies do business in India."

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 06, 2007

Indian EIRs - and their VCs - strike it rich as Bladelogic pulls off IPO

Dev Ittycheria- and Vijay Manwani- co-founded BladeLogic, Inc., a Lexington, MA-based provider of data center automation software, pulled off a successful IPO in July even as Hewlett Packard announced an $1.6 billion acquisition of its rival - the Marc Andreessen founded Opsware.

This latest story of Indian-born entrepreneurs striking it rich in the US tech industry has multiplied their VC investors' money several fold. Early investor Bessemer Venture Partners' (BVP) total investment of $6.5 million for instance is now estimated to be worth $120 million.

Interestingly, both Ittycheria and Manwani were entrepreneurs-in-residence - the former at BVP and the latter at Battery Ventures - before founding BladeLogic. Ittycheria and Manwani had earlier worked together at Breakaway Solutions after the Internet consulting company had acquired their previous companies (Applica Corporation and Eggrock Partners respectively).

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-08-01-1: Chennai-based publisher of English career magazines seeks $100,000 to $ 1-M.

07-08-01-2: Bangalore-based Enterprise software company offering solutions to the forging and construction industries seeks $10,000 - $100,000.

07-08-01-3: Chennai-based entrepreneur seeks <$10,000 to develop an information portal for home products.

07-08-01-4: New Delhi-based hotel and resorts co. seeks <$1-M for setting up economy hotels for business travelers.

07-08-01-5: Mumbai-based wireless sensor network infrastructure and integration company seeks <$1-M.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web site.

Are you an entrepreneur seeking capital? List your company in the Venture Intelligence VC Market using the form here

The new face of angels

Businessworld has an article on the difference between the current angel investment "wave" versus the pre-2000, NRI-led one.
Unlike the largely expatriate angels who came to India in the late 1990s and invested in companies with a global focus, these new angels are lending a helping hand to fledgling enterprises that have the Indian market as its primary focus (at least for now).

...(Avnish) Bajaj of Baazee fame has made several small investments in many companies like Pangea3, Pinstorm, Orbit, Indus Biotech and Cleartrip. His investments range from Rs 10 lakh to Rs 20 lakh. “As a rule, I will not touch anything where I do not get between 0.5 per cent to 1.5 per cent of the stake,” says Bajaj. He and his peers also say they realise the main reason their expatriate predecessors failed was that they were hamstrung by the fact that they were largely absentee-investors, who merely introduced Indian start-ups to clients in the United States.

Hence, Bajaj and the new angels say that they are taking on a more strategic role in their companies, and helping them tap the potential of the domestic market so they can achieve critical mass before thinking of going global. This fits in well with the shift in focus of global IT, BPO and biotech companies, who are all looking at India as the next big growth market.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

August 05, 2007

India Inc shrugging off US banking crisis in its global buyout march?

Even as news reports in international publications like the Wall Street Journal scream scary tales on how "the big chill gripping global credit markets has caused 46 leveraged financing deals around the world to be pulled since June 22" (as against zero last year), Tata Steel has gone ahead and made another overseas investment to support its Corus acquisition (let alone worry about financing the $11 billion deal), while JSW Steel has announced that it will soon complete due diligence on a $1.2 billion US acquisition!

From the WSJ report:
The credit squeeze has slowed to a trickle the flood of debt financing that has driven the buyout boom for the past couple of years. None of the 46 pulled financings have led to the cancellation of takeovers. But with banks saddled with billions of dollars of debt they can't sell to investors, it could make it harder for other deals to get initial financing from banks.

Already, some companies that had put themselves on the auction block are shelving sale plans.

From the Business Standard report on the JSW acquisition:
JSW Steel Vice-Chairman and MD Sajjan Jindal told Business Standard the company would have “some equity contribution” for the acquisition of the target rolling mill, while most of the cost will be raised by leveraging the target company’s balance sheet.

...Analysts said Jindal would probably contribute $200 million and raise $1 billion through the LBO route to fund the acquisition.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

PE Interview: Dilip Kothari

Here are some extracts from the interview with Dilip Kothari, Founding Managing Director of JMF India Private Equity Fund, that appeared in the Venture Intelligence quarterly Private Equity Roundup report published in early July. The full interview (available to Venture Intelligence "Series C" subscribers) provides a more detailed profile about the PE arm of JM Financial group and other interesting snippets from the fund-raising experience

VI: What would differentiate JM Financial India Fund from other funds?
DK: When we were raising money, the joint venture with Morgan Stanley had created a lot of synergy from a deal flow perspective. While the circumstances may have changed somewhat now (JM sold its stake in the JV to Morgan Stanley in Feb 2007), the original thesis still remains – JM is a strong organization in institutional broking and investment banking. This makes us a one stop shop. So a promoter could think in terms of: Can I get private equity money (from JM) if I need growth capital? Will they help me take the company public, if necessary? Can they help us in an off-shore M&A type of activity or for listing in the US or for a GDR or ADR? So this combination makes us different from other players.

VI: What sectors would you look at?
DK: We have already invested in the manufacturing, retail and auto components sectors. We are looking actively at financial services, be it NBFCs or banks. We are also looking at the BPO, pharma and logistics sectors.

VI: What about investment size?
DK: Our sweet spot is $15-20 million, with an average investment horizon of 4-5 years. We don’t want to make a lot of investments that we cannot manage actively.

VI: What attracted you to the first three investments?
DK: In the auto components sector, there is a massive cost arbitrage from the outsourcing story. Sona Group makes a lot of components for their Japanese counterparts and also for European carmakers. There is a clear cost advantage in doing that. We found it compelling.

On the manufacturing side, International Tractors has a tie-up with Yanmar of Japan, the second largest tractor manufacturers in the world. Yanmar has also taken a 12% stake in ITL. The export story here was also very compelling.

As for Satya Paul (Genesis’ brand), upscale retail brands in India have barely scratched the surface in terms of sales. We have seen the company grow at 45-50% CAGR over the last two years. We are looking at a national rollout. They have 11 stores now and plan to have a network of 70 stores, besides establishing a presence in Dubai and London.

...VI: Old Lane Capital Management and Evolvence are LPs in your fund…who are the other LPs?
DK: A strong institutional investor in India has invested in us, but I am not at liberty to name them. We also have HNIs, family offices from the US and institutional investors.

VI: Doesn’t Old Lane have its own India strategy?
DK: But their focus is on property and infrastructure.

VI: Has the dynamics changed after Old Lane was acquired by Citigroup?
DK: From our perspective, no. The management is the same, the brand is the same.

August 02, 2007

VC Market: Audio Visual Solutions provider seeks to raise $1-5 Million

Bangalore-based Audio Visual Integration company with pan-India presence, also present in new verticals like Lighting, Security, IT and networking services, with strong brand equity, and a customer-base representing ITES/MNCs/Aerospace/Medical/Education/BFI/Home automation/Consulting and maintenance/Govt. sectors, wishes to induct a private equity partner to capture additional market share.

The PE Partner/s will be investing in a sector which has huge and sustainable growth potential.

Investment Contact: Bala ugotbala@rediffmail.com / 9880245288

VC Market: Generic pharmaceuticals maker seeks $1-5 M

Generics are growing rapidly across all markets, and the developed markets in particular are in need of cost-effective generic pharmaceuticals. India as a source of generic pharmaceuticals is reaping the benefits.

Having started as an outsourcing services provider, this Hyderabad, AP-based firm has development projects for clients from Europe which will be commercialized through launches during the next 3-5 years. The company requires seed capital to finance these exclusive development contracts that would result in long-term supply agreements and milestone-linked payments.

For more details about this investment opportunity, please contact us at vcmarket@ventureintelligence.in