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December 23, 2011

ET NOW’s ‘Super Angels’ helps Fetise.com raise up to Rs. 25 Crores from Seedfund

From the Press Release:

ET NOW’s Super Angels, a special series on the ‘Starting Up’ show which provides a platform for start-ups to make pitches to Angel Investors, witnessed a Mumbai based start-up company – Fetise.com (Men’s Apparel e-commerce platform) raise capital up to Rs. 25 Crores from Seedfund, represented by Mahesh Murthy, one of the Super Angels on the show.

On what attracted Seedfund to invest in Fetise.com, Mahesh Murthy, Managing Partner of Seedfund says, “Very often we see e-commerce start-ups who want to sell everything to everybody. But here we found a team that focussed on one target audience: upscale men and they’ve executed well to build a wide and deep line of products for the audience, as well as significantly differentiate from other e-com players.”

On the experience of raising funds on the Super Angels platform, Chetan Bafna of Fetise.com says “The sheer pace of growth within e-commerce in India makes this an exciting business. Our fundraising process started 6 months ago on Super Angels, and we’re overjoyed that the fundraising has closed on the TV platform too.”

The next phase of Super Angels will be beginning in January 2012 with 10 start-ups making a bid to follow Fetise.com and raise funds successfully on the platform.

Super Angels is a part of Starting Up which plays out every Tuesday at 10.30 PM, Saturday at 9 PM and Sunday at 10 AM only on ET NOW.

Related video:

Deal Alert:Trinity Ventures, Nexus invest $5.3 M in database software firm ScaleArc

Edited Extracts from the Press Release:
ScaleArc , a Mumbai and Silicon Valley-based database infrastructure software maker founded by Varun Singh, former CTO of Web18, has secured a $5.33 million second round of financing. The round was led by Trinity Ventures with participation from existing investor Nexus Venture Partners. The new funds will accelerate geographic and staffing expansion to meet increased demand.

In addition, ScaleArc announced the appointment of Justin Barney, who previously ran sales divisions at companies like Citrix and Juniper Networks, as president and COO.

ScaleArc’s iDB software, which is available for MySQL, SQL Server, Oracle and Postgres database environments, offers real-time query analytics and control, instant horizontal scaling, caching, dynamic load balancing and more, all without any changes to existing applications or databases.

ScaleArc customers include e-commerce, SaaS, online gaming and digital media companies.
With exponentially growing data and increasing transaction rates, organizations face substantial cost and complexity in scaling their database architecture in a cost-effective manner while increasing performance, visibility and uptime. The ScaleArc iDB software provides a wide spectrum of capabilities: real-time query-analytics and control, instant horizontal scaling for capacity growth or high availability, one-click query caching, automated sharding, dynamic load balancing, enforcement of security policies, and much more, all without any changes to existing applications or databases. It is the only solution that reduces overall CapEx and OpExcosts by up to 50% and delivers instant performance improvements of 6x-24x with no disruptions to existing environments.

ScaleArc’s customers cover a wide range of industries including eCommerce, web 2.0 / SaaS, online gaming, digital media companies, service providers, and enterprises.

Quotes

"As a leading mobile and online games company, Indiagames runs some of the most sophisticated and demanding database environments in the world, and our game RA.ONE Genesis pushed all boundaries for scale," said Vishal Gondal, founder & CEO Indiagames Ltd. "Using the ScaleArc iDB product in our production environment has led to significant productivity gains for our DBAs and simplified how we horizontally scale our systems for capacity growth and high availability without changing our applications or databases. We are especially pleased with the real-time query analytics capability of ScaleArc iDB and the instant troubleshooting and comprehensive control that it provides to our DBAs. We think some day all database environments will be deployed like this."

"At Netmagic Solutions we manage mission critical IT infrastructure for our enterprise customers delivering over 99.99% uptime to more than 1,000 customers worldwide,”said Sharad Sanghi, founder and CEO of NetMagic Solutions. “The ScaleArc iDB software plays an important role in our constant drive to increase service levels while reducing service costs.iDB has greatly improved the efficiency of our IT Operations by simplifying traditionally complex tasks such as adding or removing application or database servers. We have also seen substantial increase in performance through iDB's one-click caching, and having full visibility into every query helps us pinpoint and solve problems in seconds."

“Justin brings a wealth of operational leadership built over a distinguished career working with start-ups as well as large companies,” said Varun Singh, ScaleArc founder and CEO. “Justin’s appointment and Series B financing from Trinity Ventures and Nexus Venture Partners will allow us to meet increased demand as we continue to develop and market our new breed of database infrastructure software technology.”

“ScaleArc has struck upon a powerful yet elegant architectural approach to solve many thorny problems in today’s dynamic high performance data center applications,” said SandeepSinghal, co-founder of Nexus Venture Partners.

“Trinity Ventures has been actively looking for innovative companies solving database scaling and performance issues and ScaleArc’s new database infrastructure software approach is as refreshingly simple as server virtualization was a decade ago,” said Fred Wang, general partner at Trinity Ventures. “ScaleArc is the type of innovative company that Trinity Ventures seeks to support.”

About ScaleArc

ScaleArc is the pioneer in a new category of database infrastructure software that simplifies the way database environments are deployed and managed, and lowers costs without any changes to applications or databases. The ScaleArc iDB software abstracts database servers from application servers to provide instant horizontal scaling and connection management, and enables real-time visibility into every query to provide instant analytics and troubleshooting, one-click query caching, wire-speed security enforcement, etc. Until now, achieving such capabilities required significant investment in engineering resources and ongoing maintenance with too manysingle-purpose solutions from multiple sources that require constant changes to applications, as well as individual management and upkeep. Visit us at www.ScaleArc.com


Varun Singh
Founder & CEO

Varun is a technologist with broad experience in several fields, from running Linux-based BBS systems in the pre-internet-boom days, to writing about technology and open source software at magazines like PC Quest, CHIP, Digit and Network Computing, to creating India's top online technology brands such as TechTree and Tech2, to hosting technology shows on TV Channels like CNBC TV18, CNN-IBN and ET Now. He led large engineering teams for Web & Application Development as CTO at Network 18's web division and built the highly scalable technology behind large websites like IN.com, MoneyControl.com and various other portals. Varun's direct, hands-on experience with web and database technologies is what led him and his team to identify the emerging challenges of database environments and to their subsequent inventions around database virtualization and the formation of ScaleArc.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

December 19, 2011

Deal Alert- Accel Partners invests in Trivone Digital

From the Press Release:

Accel Partners has completed Series A investment in Trivone Digital a Bangalore-based new age digital media and content company.

The funds will be utilised by Trivone towards meeting its working capital requirements as well as pushing growth through the inorganic route in the months ahead.

“We are delighted to have Accel Partners on board and look forward to working closely with them as we chart out a growth path for ourselves. We believe that the expertise gathered by Accel Partners over 25 years of building more than 300 successful enterprises will hold us in good stead,” said Subu Subramanyan, Founder and CEO of Trivone Digital Services.

Trivone’s strategy is the ability to create world class content, which will enable it to build Digital media properties and offer managed services to clients. Currently the company offers services by way of creating, sourcing and packaging content for online delivery to a wide cross-section of large Enterprise customers.

“Trivone, given the media and Content expertise of the team, is well set to build a best in class Digital Media Company”, said Mahendran Balachandran, Partner at Accel India.

Trivone is promoted by veteran journalist L. ‘Subu’ Subramanyan and it manages three premier IT Media Properties – www.techtree.com, www.channeltimes.com and www.cxotoday.com. The company plans to build several Digital media properties in specific verticals and increase its presence in the Digital Media landscape in India.

Earlier in the year Trivone had acquired the management rights for the three IT portals, viz., Techtree.com, ChannelTimes.com and CXOToday.com from UTV.
Explaining the rationale for pure play digital media, Subu said, "Internet penetration in India is at the cusp of rapid growth. We see a tremendous opportunity for these properties to grow, both online and mobile".

About Accel

Founded in 1983, Accel Partners has a long history of partnering with outstanding entrepreneurs and management teams to build world-class businesses. Accel today invests globally using dedicated teams and market-specific strategies for local geographies, with offices in Palo Alto, California, New York City, London and Bangalore, as well as in China via its partnership with IDG-Accel.

Accel has helped entrepreneurs build over 300 successful companies, many of which have defined their categories, including 99designs, Actuate, AdMob, Agile Software, Alfresco, Angry Birds (Rovio), Atlassian, BBN, Bonobos, Braintree, Brightcove, Cloudera, ComScore, Diapers.com (Quidsi), Dropbox, Etsy, Facebook, Fusion-IO, Gameforge, GlamMedia, Groupon, Imperva, Infinera, Interwoven, IronPlanet, JBoss, Kayak, Lookout, Macromedia, metroPCS, MoPub, OPOWER, Polycom/PictureTel, Playfish, Portal Software, QlikTech,Rapt, Real Networks, Redback, Responsys, Riverbed, Spotify, Squarespace, SunRun, Trulia, UUNet, Veritas, Walmart.com, Webroot, Wonga, XenSource and Zimbra. In India, Accel has made investments in companies such as Babyoye, enStage, Exclusively.in, Flipkart, HealthcareMagic, Kaatizone, Letsbuy, Myntra, MuSigma, Perfint, Virident, QwikCilver, Deeksha, and Vinculum.

For more information, please visit the Accel Partners web site at www.accel.com find us on Facebook at www.facebook.com/accel.

About Trivone Digital Services

Trivone Digital Services Pvt. Ltd. is India’s leading digital media and content services company that runs some of the country's top IT portals including techtree.com, India’s largest consumer technology portal, CXOToday.com, an exclusive portal for decision makers and Channeltimes.com, the information vehicle for IT channel partners. The company also undertakes Managed Services including creating, editing, sourcing and packaging content for delivery online and complete outsourcing of all Digital Content assets for a wide variety of clients.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

December 18, 2011

Kidswear retail gets serious

Extract from the Business Today article:


There is quite a crowd on the kids' wear bandwagon, and segmentation has stretched in the past year to include luxury. While Big Bazaar is among those that cater to the mass segment, Gini & Jony and Lilliput operate in the medium category. Homegrown brand Lilliput Kidswear, which started in 2003, has the early mover advantage, with 261 exclusive outlets and 541 shop-inshops in the country.

...The Associated Chambers of Commerce and Industry estimates that the industry is worth Rs 38,000 crore, and growing at a compound annual rate of about 20 per cent to reach Rs 80,000 crore by 2015. Kidology's same-store sales - a retail industry metric to distinguish a rise in sales within a store from an overall increase in sales due to the opening of new stores - have grown more than 40 per cent in the past year. Besides its own stores in Delhi and Mumbai, Kidology also sells through other retail outlets in Mumbai and Hyderabad. It is in talks with private equity funds, and plans new stores in Chandigarh, Ludhiana and elsewhere.

"Competition is definitely increasing, and consumers are becoming brand-conscious," says Anil Lakhani, Executive Director, Gini & Jony. The 31-year-old brand, which sells through 230 exclusive stores besides other outlets, is growing at a compound annual rate of 33 per cent.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

December 16, 2011

"Focus on your 3Cs: Credibility, Cash Flow and Crew" – Rajeev Mecheri of Mecheri Smart Capital

Cross-posting from the Venture Intelligence Entrevista series:

Lessons from the Startup to Scale-up to Successful Sale of iMetrex Technologies, a building technologies and security venture catering to the Indian enterprise market - The Venture Intelligence Team



Rajeev Mecheri, Managing Director, Mecheri Smart Capital (Bio & LinkedIn)

Interview by Hari Krishnan of Venture Intelligence, followed by interaction with students at the Department of Management Studies IIT-Madras on November 9, 2011.

Highlights:



Please click on the links below to view corresponding video snippets:




Click Here to Download the Audio of the Interview
- mp3 format - 52 mins; 24 MB
Use Right Click & Save As to download to your desktop

Click Here to Download the Audio of the Q&A session - 21 mins; 10 MB
Use Right Click & Save As to download to your desktop



Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

December 04, 2011

"2012 to be poor for exits, good for investments"

In an interview published in The Mint (in text and video formats), Vikram Utamsingh, Partner - Transactions and Restructuring & Private Equity Advisory, KPMG India, says that while the exit track record of India-dedicated PE funds has not been great in the last few years, things are likely to improve from here.
...results are going to be bad for a couple of years because the industry is holding on to a portfolio of investments and we can assume that at least one-third of them will not make returns. So what are investors going to do with these investments? Ultimately, investors will have to exit them, write them off, or something. I think the industry will continue to see some bad news, for a couple of years.

Hopefully, the next 12 months are going to be a very good period for PE investments. To begin with, we have a stock market which is not very vibrant. So, there are a lot of IPOs that are not happening. These companies are now coming to PE firms to raise money. Those firms are also getting a bit tempered on their valuation expectations. There is a hope for the industry that 2012 will actually be a good year for PE investments. From the exit point of view, it will certainly be negative but from investment point of view it will hopefully be positive.

...I think returns will improve over a period of time simply because the quality of PE deals that investors are doing has improved. If you go back to investments in 2005-06-07, there was to some extent a herd mentality, people were thinking they were losing out at an investment opportunity becaushttp://www.blogger.com/img/blank.gife five firms were bidding for it. There was undue excitement on investments. I think PE firms have significantly matured now, they have undergone a negative business cycle and I guess reality has struck them.They are not in a rush to make investments today. There is no pressure on funds to do two, three investments a year. I think the quality of investment has improved and, therefore, you shall see the results of quality of investment in 2014, 2015.

Click Here to download the latest KPMG report on PE exits in India.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

December 02, 2011

"India’s entrepreneurial journey at least 5 yrs behind China’s"

From the article in Forbes by Journalist Rebecca Fannin.

India’s entrepreneurial journey is at least five years behind China’s path. There’s no Jack Ma or Robin Li in sight or a big-time IPO like Youku. India lacks the entrepreneurial buzz and fast pace of China tech clusters. Indian entrepreneurship has been led by grassroots efforts, and the government hasn’t always been venture friendly.

If India is ever to break through, it needs to ditch an image as just for outsourcing or low-cost engineering and business services—a major challenge for the world leader of the booming $500 billion global outsourcing market. But India could eventually become a tech minipower and grab some of the limelight from China. Contemporary corporate centers such as Whitefield on the outskirts of Bangalore and the Gurgaon satellite city in Delhi showcase that India is rising.

For sure, India needs a lot more deals with the stature of online travel site MakeMyTrip, a deal that barely gets noticed next to China’s higher-profile Internet home runs. After all, MakeMyTrip listed on NASDAQ in August 2010, nearly seven years after Ctrip, China’s leading travel site, had its own debut.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

November 30, 2011

Rob Chandra of Bessemer on E-Commerce Valuations

Forbes has a video interview with BVP Partner Rob Chandra in which he talks about Internet and e-commerce company valuations. He also talks about the impact created by Internet companies including Chennai, India-based Bharatmatrimony.com in which BVP invested recently.



Click Here for the accompanying Forbes article.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

November 18, 2011

Alok Mittal on the Happiest Minds Funding

Startupcentral has an interview with Alok Mittal of Canaan Partners on the $45 million first round funding led by his firm for Wipro veteran and Mindtree Co-founder Ashok Soota's new IT Services venture.
What do you find interesting about the business model?

The business model draw for us (Canaan) was the outsourcing play. We already have a couple of portfolio companies (iYogi and UnitedLex) in that area. As far as the software services sector is concerned, in the past, significant shifts in information technology spends have created space for new companies. There is a shift taking place now in terms of enterprises in the US and Europe adopting cloud and mobility-based solutions. We think Happiest Minds has the potential to grab a large slice of this market.

Will they work closely with some of your India and global portfolio companies which are in the same area?

Absolutely. In fact, the founders have been very diligent about walking through both our and Intel Capital’s portfolio companies. They’ve picked a dozen that they could partner with. Their core differentiation is going to lie in the solutions that they come up with. Canaan has a number of computers in the cloud computing area. For instance, we have one that is in the area of testing for the cloud. Happiest Minds will look to partner with such companies to create their own solutions.
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

November 14, 2011

Deal Alert: Aditya Birla PE Invests Rs.95-Cr in telecom tech firm Alphion India

From the Press Release:

Aditya Birla Capital Advisors (ABCAP), the private equity arm of the Aditya Birla Financial Services Group (ABFSG), today announced an investment of Rs. 95 Crores from Aditya Birla Private Equity – Fund I in Alphion India Private Limited (AIPL). AIPL is the principal subsidiary of Princeton, USA based Alphion Corporation (Alphion).

Alphion develops, manufactures and globally provides optical Fiber-To-The-Premises (FTTx) access systems, subsystems and integrated photonic devices. Their access systems offer optical networking solutions for the rapidly emerging FTTx market and the portfolio includes a full range of products for central office, outside plant, customer premise and network management. Alphion is a full member of the ITU FSAN group and a leader in developing key technologies for the next generation of passive optical networks. Alphion is the pioneer in developing all optical PON (passive optical network) network extension solutions to extend the reach of broadband services. Alphion GPON solutions enable the convergence of wireless and wire-line networks as it is suitable not only for multiple-play voice, high speed Internet, data and video services but also for backhaul of WiMax, 2G/3G/4G cellular and future wireless networks.

Commenting on the occasion, Bharat Banka, Chief Executive Officer, Aditya Birla Capital Advisors Pvt. Ltd. said “Alphion is a unique player in the telecom sector offering proprietary R&D based, very high speed optical networking systems and solutions which empower carriers and local service providers to deliver high quality services with substantially lower operating costs. Apart from India, where we expect encouraging growth prospects with investments in broadband and data services infrastructure, Alphion is also positioned to capture customers in other emerging markets. We are excited to partner with Alphion and play a value-added role”.

Mr. Banka further added “As per published research and internal estimates, the global market for PON equipment currently is about US$ 4 billion p.a. and is growing at a CAGR of 20%. The current Indian market for PON equipment is estimated at about US$ 300 million p.a. and is expected to grow rapidly as service providers are in the process of rolling out FTTx services across India. Alphion currently has significant market share of this segment in India and emerging markets and is poised to further expand its position.”

“We are pleased to have ABCAP join us as a major partner,” commented Dr. Bharat P. Dave, Chairman and Managing Director of AIPL and Chairman, President and Chief Executive Officer of Alphion Corporation, “Their strong endorsement of Alphion and our vision will allow us to continue to be a leading provider of FTTx network solutions in India as well as other emerging global markets.”

About Alphion
The Alphion Group of Companies consists of US-based Alphion Corporation and Alphion India Private Limited, its principal subsidiary in India. Alphion develops, manufactures and markets communications systems, subsystems, integrated and discrete photonic components based on its proprietary QLight® technology platform. Alphion products are sold worldwide to service providers and OEMs in the Fiber-to the-Premises (FTTP), telecommunications, CATV, fiber optic sensing, test & measurement, medical imaging, and defense system markets. Alphion offers a growing line of broadband access products, which support complete end-to-end GPON network solutions. The AOLT-4000 Optical Line Terminal, AONT-100/200/300 Optical Network Terminal family, and Passive Optical Splitter family are in full compliance with the International Telecommunications Union’s standard for GPON equipment (ITU-T G.984). This ensures that the Alphion product family meets the stringent carrier-class requirements and interoperates with a broad spectrum of other manufacturers’ GPON equipment. Alphion is a member of both FSAN (www.fsanweb.org) – a consortium of carriers and equipment suppliers developing tomorrow’s broadband network standards and the ITU (www.itu.int).

Alphion India Private Limited has operations in Mumbai, Chennai, Bangalore, New Delhi, and Gurgaon. For more information about Alphion and its products, visit www.alphion.com

About Aditya Birla Capital Advisors

Aditya Birla Capital Advisors Private Limited (ABCAP) offers asset management and advisory services in Private Equity, to domestic & global investors. The company has adopted a unique investment style of partnering with its portfolio companies by providing strategic and operational intervention and has its focus on growth investments in mid-market companies, with India as the investment destination.

ABCAP currently manages Rs.1100 Crores in two funds, Aditya Birla Private Equity – Fund I (Fund I) and Aditya Birla Private Equity – Sunrise Fund (Sunrise Fund). Fund I is growth capital focused and targets minority stakes while investing in mid-cap, high-growth, India-centric companies, and has a sector-agnostic approach. Fund I has invested in GEI Industrial Systems, Credit Analysis and Research (CARE) and Anupam Industries. Sunrise Fund is uniquely focused on providing growth capital to proven businesses/ concepts within sectors in early stage of exponential growth. Sunrise Fund has invested in SMS Paryavaran.

For more information, please visit www.adityabirla-pe.com

November 11, 2011

Deal Alert:Ventureast invests Rs.25-Cr in meat processing firm VKS Farms



Edited excerpts from the press release:

Ventureast Life Fund, an early growth and growth stage fund focused on the food and agriculture, clean environment and healthcare delivery sectors, has invested Rs.25 crores in VKS Farms, a Coimbatore-based, integrated meat processing company. Shekhar Kundur, General Partner of Ventureast, joins the Board of VKS Farms. The funding will be utilized for completing VKS's back-end operations, and expanding its retailing capability.

VKS's differentiation stems from its diverse product mix of chicken, egg, meat and salt; integrated poultry supply-chain, spanning 'grandparents' to commercial birds facilities to processing to retailing; exports to over 30 countries, besides domestic presence; and state-of-the-art processing plant built to international standards.

Shekhar Kundur said, “Hygienic meat retailing is the way forward in this unorganized market. With a comprehensive and efficient supply chain in place, we expect VKS Farms to have a strong competitive edge in the sector. The Company's wide presence in the export market will supplement this.”

“The investment by Ventureast will position VKS to achieve a four-fold growth in the next three years. The investment will be utilized to fund completion of the Company‟s backward integration and expansion of its meat retailing initiative. These will enable VKS to deliver hygienic, processed meats to the end-consumer”, said A.Sivakumar, Founder and Managing Director of VKS Farms.

November 10, 2011

Profile of online vegetables delivery firm Veggiebazaar

An extract from The Economic Times profile
... His business model is simple: Veggibazaar.com takes orders online and delivers the very next day. This not only ensures freshness of the products—an essential feature of the company—but also means that he does not have to worry about bulk storage space and associated facilities, which is a huge saving.

... Since its launch, Venkatesan has pumped another Rs 1.2 crore into the company, of which Rs 60 lakh came from the couple's saving, Rs 40 lakh was raised by diluting the shares through a CA firm, while the balance was borrowed from family and friends. Venkatesan's effort is beginning to pay off. The company broke even in March this year, and has been yielding monthly revenues of about Rs 11 lakh ever since. Venkatesan says that he is now looking at the franchisee model for further expansion, both within Chennai and outside, starting with cities such as Bangalore,Trichy and Coimbatore.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India View free samples of Venture Intelligence newsletters and reports.

November 09, 2011

Naveen Tewari of InMobi on SoftBank and Ram Shriram

Extract from The Economic Times profile of the mobile advertising company made famous by the recent $200 million investment that it attracted from SoftBank:
On Raising Funds From Ram Shriram. There was a phase when credit cards of the entire founding team were used to just pay salaries! With little success in raising funds from sceptic Indian investors, I decided to take a flight to Silicon Valley, where our venture received positive response. Everyone believed in the power of the mobile internet. I was introduced to Ram Shriram and I was really looking at it as a once in a lifetime experience more than anything else. About 20 minutes into the presentation, Ram suddenly got up and said “Close the presentation, we are funding this. What is the execution plan?” I was in a state of shock not only because of his reaction but also because there was no execution plan to show him at that stage whatsoever.

On InMobi's International Expansion. As we evaluated the market, we soon realised that while there was some activity in the mobile advertising industry in the US, the rest of the world was primarily a virgin market! We saw that emerging geographies like Indonesia, South Africa and Malaysia are relatively untapped and hence we trusted our conviction and set up in these geographies. Lot of people criticised us for this, but we saw the results almost instantly. We have now set up offices in over 15 countries and have set up a completely decentralised model with regional headquarters across the world.

On the SoftBank Deal and the Journey Ahead
We’ve been looking to raise private equity for over six months now and what struck us as soon as we met with the SoftBank team was how well they understood the mobile internet market. This gave us the confidence to partner with them. With this new fund infusion we are looking to expand our reach in developed markets like the US and Europe, we are also looking to expand to new geographies like South America. We also realise that it’s important for us to innovate with new products, one product we’ve recently launched is ‘Smart Pay’, a payment gateway for mobile app developers; we will be announcing a number of other new products over the next six months.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

The Bargain Hunter: Sun Pharma's Dilip Shanghvi

From The Economic Times profile
Shanghvi has a conservative approach to doing business,with eyes firmly focused on cost and the bottom line. As bullish peers made ill-timed and expensive (in hindsight) acquisitions in western markets in the past decade, Shanghvi steered clear of bidding wars and oneupmanship. Instead he chose to buy distressed assets on the cheap with a view to turning them around. Taro,a financially mismanaged company whose shares were in the doldrums when Sun offered to buy control, is one such asset. Shanghvis perception of value is free of external stress factors, says the former CEO of a generics company.

In nearly every major strategic decision it has made,Sun has parted ways with conventional wisdom. In the 1980s,while Indian companies were hawking antibiotics and other short-term treatments to general physicians, Shanghvi saw an opportunity in selling meds for chronic diseases to specialists such as psychiatrists and cardiologists. India has since witnessed explosive growth in these segments. Then,when competitors began investing in researching completely new drugs an arduous expensive process with no guarantees he chose to back so-called differentiated medicines where risk is less. And whilst rivals planted flags in three continents, Sun Pharma chose to focus on just home market India, and the US.

Some of these contrarian bets have paid off. At Rs 5,721 crore in revenues, Sun is more than double its size five years ago and No.4 after Ranbaxy, Dr Reddys and Cipla. It is a leader in key specialist-focused therapy areas in India.On the bourses, Sun Pharma is twice as valuable as No.2 by market cap Dr Reddys Labs. It is also the most profitable among leading Indian generics companies with an operating margin of 34%. After buying Taro, it ranked as the number two Indian generics company in the US with $500 million in revenues in fiscal year 2011.
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India। View free samples of Venture Intelligence newsletters and reports.

November 05, 2011

"Entrepreneurship is all about getting the job done" - Raju Venkatraman of MEDALL

Cross-posting from the Venture Intelligence Entrevista series:



Interaction with Raju Venkatraman, Founder & CEO, MEDALL Diagnostics

Interview by Chandu Nair, Founder of Scope eKnowledge, followed by interaction with students and other entrepreneurs at the Department of Management Studies IIT-Madras on October 24, 2011.

Highlights:

The ability to "zoom in and zoom out"

- As an entrepreneur, whenever the situation warrants it, you should be able to work in a hands on fashion and get involved in the details. Similarly, you should also be able to step back and focus on the bigger picture (and leave the details to others).



Please click on the links below to view corresponding video snippets

The motivation as an entrepreneur is not in "being the boss"

- It's more about "getting to scale" (and hence the impact you can make)

"There is no such thing as a right decision. You should make a decision and then make it right."


The Essence of Business is to "Sell, Deliver and Collect"

- Early lesson learnt while helping out with father's business.

"The First Paying Customer is Key"

- If you have this validation, plunge ahead.

"Entrepreneurship is about getting the job done"

- As a student, you should grab opportunities to take part in organizing Extra Curricular activities which will provide you early experience in this aspect. Also, the focus in the early part of a career should be on "creating an impact" wherever you work - the salary, position, etc. are secondary.

Advisors make the journey less lonely
- But entrepreneurs can’t expect to delegate accountability to advisors

Why Rural Markets need more High Tech

- And why "Appropriate Technology" is not the answer (at least in diagnostics)

Click Here to Download The Full Interview Podcast - mp3 format - 47.5 minutes, 28 MB
Use Right Click & Save As to download to your desktop

Click Here to Download the Q&A session
Use Right Click & Save As to download to your desktop

October 29, 2011

Profile of employability training firm Talent Bridge

Smart CEO has profile on this company which focuses on making youth from Tier II and III cities more employment ready.
After three years of research, the Graduate Certificate in Corporate Readiness (GCCR) is a copyrighted program from TalentBridge to help students from smaller towns prepare for interviews and a corporate career.

...The company conducted an online survey, which showed that 77 per cent of the time corporates are looking for the right attitude in students, 13 per cent for communication skills, six per cent on subject knowledge and four per cent on other specific needs. The first typical question hiring managers ask candidates is, “Tell me about yourself.”

...The company has seven full time trainers and 50 empanelled trainers. They are all trained under a ‘Train the Trainer’ program, which is based on a video content TalentBridge has developed and used as a framework. In 2010-11, about 1,500 students were trained and its current year target is 5,300, which Shukla is confident of exceeding.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

Off Topic (Slightly): Impact of Financialisation

NPR's Planet Money has a very interesting podcast with Satyajit Das, a finance professional-turned-author, where he talks about the imbalances created by finance (and financial engineering) driving businesses, rather than the other way round. He provides a very graphic example from his career at an airline firm - which began to make more money by making bets on the price of oil than from transporting people (and hence became more of a Financial Institution than an airline). Das also talks about how finance getting into the driver's seat has led to too many bright young minds getting into this area (because the money is better, etc.) and how, one of the benefits of the great credit crunch of 2008/09, is taking some fizz out of finance.

You can listed to the podcast from here

Here is the Amazon.com link to the new book ("Extreme Money") by Das on this topic and more.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

October 18, 2011

Data Highlight: Blackstone Lights Up Q3'11 Investing Over $500-M

US-headquartered Private Equity firm Blackstone stepped on the gas on its India investments, committing to invest over half a billion dollars in just the three months ended September 2011, according to the Venture Intelligence quarterly Private Equity Roundup Reports. Overall, Private Equity firms invested about $2,249 million across 98 deals during the quarter (not including Real Estate investments).

Three of Blackstone's investments during the period were targeted at companies involved in Power Projects: SKS Chhattisgarh Power Generation ($261-M via the Blackstone owned Sithe Global Power); Visa Power ($111-M) and Monnet Ispat & Power ($29-M in the listed group company of Monnet Power - in which it had invested $60-M last year). Blackstone was also involved in the largest real estate sector investment announced during Q3’11: a reported $200 million investment in Bangalore’s Manyata Embassy Business Park. The firm also wrote a small cheque (by its standards) - of about $33 million - to financial inclusion-focused tech firm FINO.

As per data available in the Venture Intelligence Private Equity Deal Database, the latest investments take Blackstone's overall India investments (not including Real Estate) to over $1.8 billion. It's first investment, announced in April 2006, was a $50 million cheque for Pune-based Emcure Pharmaceuticals. 2011 also witnessed Blackstone's first exit from its India portfolio - via the sale, in June, of BPO firm Intelenet (in which it had acquired a majority stake in June 2007) to UK-based Serco.

October 17, 2011

VC firms invest $217-M in Q3’11

Venture Capital firms invested $217 million over 43 deals in India during the three months ending September 2011, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity, Venture Capital and M&A transaction activity in India. These figures take the total VC investments in 2011 to $752 million across 136 transactions (compared to $504 million across 97 deals in the first nine months of 2010 and $707 million across 132 transactions during the entire year).

The amount invested during Q3’11 was flat compared to the same quarter in 2010 (which had witnessed $212 million being invested across 42 deals) and significantly lower compared to the immediate previous quarter ($325 million across 56 deals), the Venture Intelligence study showed.

Information Technology and IT-Enabled Services (IT & ITES) companies attracted the most investments at 21 deals worth about $89 million, followed by Energy and Financial Services companies (that attracted about $47-M and $21-M respectively across 5 deals each). The share of IT & ITES deals dipped to 49% in volume terms (and 41% in value terms) during Q3’11 compared to 55% in volume terms (and 49% in value terms) in the corresponding period a year ago.

Within IT & ITES, Enterprise Software and Mobile VAS companies, that attracted 4 investments each during Q3’11, narrowed the lead of the traditional favorite sector of Online Services (which attracted nine investments). The largest deals in these sectors included online used car exchange service MotorExchange ($13-M from Tiger Global and existing investor Canaan Partners), data backup software provider Druva Software ($12-M from Nexus Ventures and existing investor Sequoia Capital India) and mobile social networking firm SMS Gupshup ($11-M round led by new investor Tenaya Capital).

The latest quarter witnessed two investments in renewable energy producers: Green Infra (a reported $18-M from IDFC PE) and Bharat Light & Power (undisclosed sized investment from DFJ). Green Infra, which was originally incubated by IDFC PE in 2008, has a portfolio of 164 MW of operating assets, with another 100 MW in the pipeline. Bharat Light & Power, founded by Tejpreet S. Chopra, former President and CEO of General Electric India, also plans to multiple renewable sources including wind, solar, bio mass and hydro.

Among Financial Services deals, Sequoia Capital India provided additional funding to electronic transactions enabler Prizm Payment Services (in which it had originally invested in early 2008), while IFC, the World Bank’s private sector investment arm, chose to invest in low cost ATM provider Vortex Engineering and Tata Capital’s special purpose lending vehicle for cleantech projects.

VC firms found exit routes for four portfolio companies in Q3’11 – including one via an IPO (that of Tree House Education). Pre-school chain Tree House Education, backed by Matrix Partners India, Omidyar Network and Foundation Capital, pulled off its IPO in an extremely choppy environment raising $25.3 million. Citrix Systems acquired Nexus Ventures-backed Cloud.com, a US-based provider of software infrastructure platforms for cloud providers, for a reported $200-250 million. Nexus first invested in Cloud.com (then called VMOps) in Aug-09 and reinvested as part of the $11-M second round funding in May-10. The deal represents the third exit by Nexus in the last 12 months: online classifieds website OLX was acquired by Napsters in Sep-10, while open source web-conferencing company Dimdim was acquired by Salesforhttp://www.blogger.com/img/blank.gifce.com in Jan-11. (On October 4, 2011, Nexus announced the acquisition of another of its US-headquartered portfolio company Gluster, a provider of open source storage solutions for standardizing the management of unstructured data, for $136 million by open source software firm Red Hat).

# # #

Venture Intelligence, a division of Chennai, India-based TSJ Media Pvt. Ltd., is the leading source of information on private equity, venture capital and M&A transactions in India. For more information, please visit http://www.ventureintelligence.in

October 11, 2011

Deal Alert: Nexus Ventures invests $4-M in mobile apps developer Genwi

From the Press Release:

GENWI (http://genwi.com), the leader in cloud publishing platforms for Tablets and Smartphones, has raised $4 million in Series A funding in a round led by Nexus Venture Partners (http://nexusvp.com). GENWI’s existing investors,Inventus Capital Partners and Quest Venture Partners, also participated in the round, bringing GENWI’s lifetime funding to $5.1 million including their original $1.1 million seed round raised in 2010.

Offering one of the easiest and yet extremely powerful cloud-based platforms for publishing content on Tablets and Smartphones, GENWI has created and is actively managing over 1,500 apps for thousands of publishers. As opposed to custom building apps for each deviceform factor, GENWI affords publishers the ability to publish once and deliver interactive apps across all smart mobile devices - including iOS, Android, and HTML5.

The GENWI Cloud Publishing Suite offers a mobile optimized, content aggregation and management system,a custom interface layout engine, usage analytics, smart content curation based on analytics, social and ad networks integration, and app distribution from the cloud. Publishers and mobile marketers can now build out their entire mobile strategy on the GENWI platform as opposed to creating piece meal solutions for various devices from multiple services.Resulting live publications in the form of interactive apps offer a visually stunning experience along with real time content delivery and interactivity while affording the publisher a cloud publishing platform with unparalleled scalability and an incredible time to market advantage.

Several major GENWI customers include Vans Shoes, PBS Arizona, PBS Sprout Kids,Moguldom Media (Bossip), and Newser. Acquiring new customers including major media publishers and retailers at an indelibly fast pace, GENWI continues to see its customer base grow while offering one of the fastest solutions to creating a reliable and innovative mobile presence without the complexities or costs of original code development,and low total cost of ownership.

“Our new funding round will be used to build out the infrastructure and an extensive app network to offer more advanced monetization, and distribution features for publishers” said PJ Gurumohan, CEO and Founder of GENWI. “This new round comes from the very best visionary leaders and entrepreneurs with expertise in cloud and infrastructure services combined with publishing industry expertise to help us expand internationally.”A primary focus of the funding efforts will also be a full global expansion of the service, as well as development of multilingual functionality.

“We are thrilled to support GENWI’s impressive efforts in the mobile cloud publishing arena,” said Jishnu Bhattacharjee,of Nexus Venture Partners, who will be joining GenWi’s board of directors। “GENWI’s technology is set to enable and accelerate the transformation thatsmart phones and tablets are bringing in the modes of media consumption”.

About GENWI


GENWI is the leader in cloud publishing for mobile. By allowing publishers to transform online media, marketing, and enterprise content into live, social, and engaging mobile applications from the cloud, GENWI is revolutionizing the publishing industry.

GENWI's comprehensive cloud publishing platform enables rapid design, deployment, and management of visually stunning native or HTML 5 Apps, with no native device OS programming while incorporating rich media capabilities and real-time data. The solution has comprehensive real-time analytics that provide insights into App usage and engagement. Apps can also include various revenue generating capabilities for businesses like ads, coupons, in-App subscriptions etc.
Founded in 2010, GENWI is a privately held firm based in Los Altos, CA. For more information, please visit www.genwi.com

About Nexus Venture Partners

Nexus Venture Partners (http://nexusvp.com) is India’s leading venture capital fund, with offices in Silicon Valley and India. It has $320m under management and an active portfolio of over 30 companies across technology, internet, media, consumer, business services and rural sectors. The Nexus team plays an active role in helping entrepreneurs and management teams build market leading businesses.Some of the companies that Nexus has invested in include Cloud.com (cloud infrastructure, acquired by Citrix), Gluster (Open source cloud storage, acquired by Red Hat), Pubmatic (Publisher Ad revenue optimization), DimDim (Open Source Web Conferencing acquired by Salesforce.com), snapdeal.com (ecommerce), Mapmyindia (Digital Navigation), Netmagic (Managed Services and Cloud), Komli (Online ad network), and Yebhi (E-commerce). Investors in Nexus include leading university endowments, foundations and sovereign funds.To learn more about Nexus Venture Partners, visit: http://nexusvp.com

October 10, 2011

PE firms invest $2.25-B in Q3’11

PE Investments in first 9 months of 2011 surpasses entire of 2010 as deal sizes grow significantly

Private Equity firms invested about $2,249 million across 98 deals during the quarter ended September 2011, according to a study by Venture Intelligence (http://www.ventureintelligence.in), a research service focused on Private Equity and M&A transaction activity in the country. The latest figures take the total PE investments in the first nine months of 2011 to about $8,570 million (across 317 transactions) – significantly higher compared to the about $6,400 million (across 270 transactions) in the same period last year. Also, the value of PE investments year-to-date in 2011 has already surpassed the $8,256 million invested (across 358 transactions) in the entire of 2010, the Venture Intelligence study showed. (Note: These figures exclude PE investments in Real Estate.)

The PE investment amount during Q3’11 was lower than that during the same period last year (which witnessed $2,357 million being invested across 111 deals) and also compared to the immediate previous quarter ($2,911 million across 122 deals). The median investment value in Q3’11, at $10 million, was however higher than both the year-ago period ($9-M) and the immediate previous quarter ($8-M).

There were five PE investments worth over $100 million during Q3’11, with three of them over $200 million. Some of the largest investments during the period included The Blackstone Group-owned Sithe Global Power’s $261 million investment in SKS Chhattisgarh Power Generation; Blackstone’s direct Rs. 500 crore ($111 million) investment in Visa Power and Goldman Sachs’ Rs.1,000 crore (about $204-M) commitment to ReNew Wind Power.

Powered by these mega deals, the Energy industry emerged as the favourite destination for PE capital (in terms of investment amount) during Q3’11, attracting $823-M across 16 transactions. IT & ITES companies came in next attracting $437 million across 29 transactions. The largest deal in the IT & ITES industry was India- and US-based mobile advertising network InMobi’s $200 million investment from SoftBank. This was followed by the $40 million round raised by online group buying service Snapdeal.com from Bessemer Ventures with participation from existing investors IndoUS Ventures and Nexus Ventures. Blackstone invested about $33 million in financial inclusion-focused tech firm FINO.

Interest in infrastructure services firm operating in the roads and water projects helped the Engineering & Construction industry attract $279 million across 8 investments during Q3’11 across companies like Soma Enterprise (from JP Morgan), HCC Concessions (from the Xander Group) and GVR Infra Projects (from IDFC Private Equity).

Exit Activity

Private Equity firms obtained exit routes for their investments in 20 Indian companies during Q3 ’11, including one IPO (that of Tree House Education). This compares to 26 exits (including 3 IPOs) in the same period in 2010 and 17 exits (including 1 IPO) in the immediate previous quarter. Pre-school chain Tree House Education, backed by Matrix Partners India, Omidyar Network and Foundation Capital, pulled off its IPO in an extremely choppy environment raising $25.3 million. Among exits via public market sales, mobile phone operator Idea Cellular witnessed the exit of two of its PE investors - ChrysCapital and TA Associates – who had participated in the company’s nearly $1 billion pre-IPO placement in Oct-06. In an exit via secondary sale, Axis PE sold its stake in water projects firm Vishwa Infrastructures to new investor Olympus Capital for over Rs.200 Crore.

The acquisition of software testing services firm Applabs by US-based IT Services firm CSC provided an exit route Sequoia Capital India (which has been invested in the company since 2004 – then as Westbridge Capital). In another exit via sale to an US-headquartered MNC, edible oil maker Geepee Agri, majority owned by Thailand's GP Group and a portfolio company of Rabo Private Equity’s India Agri Business Fund, was acquired by food processing firm Archers Daniels Midland Company (ADM).

Real Estate

Private Equity-Real Estate firms made 14 investments (amounting to US$388 million across 8 deals with disclosed values) during the quarter ended September 2011. The pace of investments during the quarter was lower than that during the same period last year which witnessed 21 investments (with $744 million being invested across 20 deals with disclosed values) and also lower compared to the immediate previous quarter which witnessed 17 deals (with $533 million being invested across 12 deals). The largest PERE investment announced during Q3’11 was Blackstone’s $200 million investment in Bangalore’s Manyata Embassy Business Park.

The residential segment (including townships) accounted for 64% of the deal volume during the latest quarter. Investments in South India-based ventures accounted for 50% of the investments during Q3 ’11.

"Who's Afraid Of Private Equity?"

Extract from an article by Haigreve Khaitan of corporate law firm Khaitan & Co. in The Economic Times.
Promoters may be able to assess investors' intentions from the manner of their treatment of anti-dilution rights that keep the investors' holding at a pre-agreed level. For example, if an investor holds 100 shares issued at Rs.100 per share, and the company makes a fresh round at Rs.50 per share, the investor with full anti-dilution protection would be entitled to a further 100 shares at no additional cost. If investors do not participate at the lower-price rights issue,it may indicate that they do not have a long-term plan with your company. Promoters could negotiate provisions where the investor loses its anti-dilution protection in such circumstances.

Private Equity investors negotiate expensive affirmative rights and minority protection,via board control rights often not fully used when the company's business and finances are positive. Understand completely overly detailed provisions that may, in effect, shift the focus from minority protection to management participation depending on certain triggers such as sustained losses. If the promoter or company proactively involve the investor in the developments of negative triggers,there could be scope for negotiation on how the investor enforces these rights. Much would depend on the commercial justification of company decisions.

Investor exits are often secured by way of an IPO without taking into account hostile market conditions.Promoters could try to negotiate some liquidity realisation through the IPO in order to ensure a guaranteed payback.Company or promoter defaults in providing the promised IPO exit could lead to investors forcing promoters to purchase their shares at a price determined in advance or later. Our regulators frown upon such structures,classifying them as borrowings. The investor may also make the promoters sell their shares for a third-party buyout.Such drag-along clauses must be considered carefully.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

October 04, 2011

Nexus-backed Gluster to be acquired by Red Hat for $136-M

Edited excerpts from the Press Release:

NYSE-listed Red Hat, Inc., the world's leading provider of open source solutions to the enterprise, has agreed to acquire privately held Gluster, Inc, a leading provider of scale-out, open source storage solutions for standardizing the management of unstructured data, for approximately $136 million in cash. As part of the transaction, Red Hat will also assume unvested Gluster equity outstanding on the closing date and issue certain equity retention incentives. The transaction is expected to close in October, subject to customary closing conditions.

With this acquisition, Red Hat will define a new baseline for how enterprise IT manages the explosion of big data, whether deployed on-premise or spanning into the public cloud. Red Hat is expanding into a critical part of enterprise infrastructure, enabling it to deliver open storage solutions that protect customer investments as they approach the new era of computing.

Founded in 2005, Gluster's goal was to simplify storage using open source software and commodity hardware. The heart of Gluster is GlusterFS, a software-only, scale-out storage system. It allows enterprises to combine large numbers of commodity storage and compute resources into a high-performance, centrally-managed and globally-accessible storage pool. By combining commodity economics with a scale-out approach, customers can deploy abundant storage without compromising on cost, performance and manageability. Gluster has emerged as an innovative open source leader, relied upon by companies such as Pandora, Box.net and Samsung to efficiently manage large volumes of data.

"We are extremely pleased to be joining Red Hat," said AB Periasamy, co-founder and CTO of Gluster. "We believe this is a perfect combination of technologies, strategies and cultures and is a great development for our customers, employees, investors and community. Gluster started off with a goal to be the Red Hat of storage. Now, we are the storage of Red Hat.”

The acquisition is expected to have no material impact to Red Hat’s revenue this fiscal year but should begin to grow next year based on a subscription revenue model.

From the Venture Intelligence PE Deal database:
Gluster raised $8.5 million in its second round of funding from Nexus Ventures in November 2010. It had raised its first round funding from the same VC firm in 2008.

About Nexus Venture Partners

Nexus Venture Partners (www.nexusvp.com) is India's leading venture capital fund, with offices in India and Silicon Valley. It has $320m under management and an active portfolio of over 30 companies across technology, internet, media, consumer, business services and rural sectors. The Nexus team plays an active role in helping entrepreneurs and management teams build market leading businesses. Some of the companies that Nexus has invested in include Cloud.com (acquired by Citrix), Gluster (Open source storage), Pubmatic (Publisher Ad revenue optimization), DimDim (Open Source Web Conferencing acquired by Salesforce.com), snapdeal.com (ecommerce), Mapmyindia (Digital Navigation), Netmagic (Managed Services and Cloud), Komli (Online ad network), Deccan Pharma (Neutraceuticals), Prana (Animation services), Suminter (Organic farming) and Yebhi (E-commerce). Investors in Nexus include leading university endowments, foundations and sovereign funds.

About Gluster
Gluster is a leading provider of open source storage solutions for public, private and hybrid clouds. Over 150 enterprises worldwide have used Gluster in commercial deployments ranging from a few terabytes to multiple petabytes, across the most demanding applications in digital media delivery, healthcare, internet, energy and biotech. Gluster is privately-held and headquartered in Sunnyvale, California. Visit us at www.gluster.com.

September 26, 2011

"Mistakes to Avoid in PE Fund Raising"

Extract from an Economic Times article by Manish Kanchan, Managing Director of SAGE Capital.
Very often we see entrepreneurs consulting with well wishers, old-time chartered accountants or their loyal CFOs during the deal-making process. Usually this is the first time anybody is dealing with private equity transactions and are therefore completely out of their depths. Sometimes, they are also insecure about their own future position in the company.

...Investment bankers are your allies. Choose them based on their track record of having closed similar transactions Ask for references and speak with them. Do not appoint them based on the valuation they promise you. Investment bankers do not sign the cheque. Once appointed, trust them and encourage them to provide you with honest feedback directly. The same applies for lawyers as well.

...The business plan must be realistic with a slight optimistic bias. It should also be linked to past performance. If the business has grown at 15% over last 3 years do not project it to grow at 60% suddenly after the deal closes. The fund managers seek to understand your thought process, how you assess risks, how you deal with competition, from where you will get people to manage the growth. The level of detail, correlation to industry growth rates, and honesty, will win respect and improve the chances of raising money.

... Do not sign the term sheet too readily. The term sheet lists out the key commercial terms and rights and obligations of each party. This is a nonbinding document which is typically subject to legal, financial, commercial due diligence and approval from the investment committee of the fund. This allows the fund to modify its offer (or sometimes walk away). However, clauses relating to exclusivity are binding on the promoter and the company. Exclusivity prevents the company from engaging in discussions with another investor usually for periods ranging from 90 to 120 days.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

Profile of Online Jeweley Retailer CaratLane

Extract from The Economic Times profile of Carat-Lane
Online jewellery retail portal Carat-Lane aims to bypass the hiccups that have laid low a number of e-commerce players, by adopting a two-pronged strategy – building its own delivery network even as it increases the geographical footprint.

... Sacheti, who co-founded the company with Srinivas Gopalan in 2008, expects to service more than 100 cities in India by the end of the current financial year. The company expects to post revenue of . 100 crore for financial year 2011-12, a 50% rise from the previous fiscal's top-line numbers.CaratLane, which specialises in the sale of solitaires and diamonds, is now considering entering different product categories such as watches, to diversify its range, but only in a phased manner.

"We have sold more than 3,000 solitaires in 2010, which has led us to believe that sustainability of jewellery is much better than product categories of lower value," Sacheti said. The margins are better, he added, and the probability of success higher. "Once you aggregate your own inventory, you can catapult to the next phase."


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

September 21, 2011

Super Angels Pitch: Meracareerguide.com

Super Angels Pitch: Live Inbox

Deal Alert: Franklin Templeton PE invests Rs.45-Cr in Symbiotec Pharma

Edited excerpts from the Press Release:

Franklin Templeton Private Equity Strategy, a private equity portfolio advised by Darby Asia Investors (India) Limited, has invested Rs 45 crore in Symbiotec Pharmalab Limited.

Symbiotec is engaged in research, development, manufacturing and marketing of research based Active Pharmaceutical Ingredients (“API”s) for corticosteroids and hormones. It has an extensive product portfolio of over 40 corticosteroids and hormones APIs and supplies its products to leading pharmaceutical companies in India and overseas including marquee names such GSK Pharmaceuticals, Teva, Ranbaxy and Cipla. The funds raised from FTPES will be applied towards backward integration by setting up fermentation facilities which is expected to improve the Company’s competitive positioning and profitability. This also is expected to help the Company to attract customers from highly regulated markets such as US, Europe and Japan.

Systematix Capital Services Pvt. Ltd was the exclusive advisor to Symbiotec for this transaction.

Mr. Anil Satwani, Managing Director, Symbiotec Pharmalab Private Limited, said of the deal “We at Symbiotec, look forward to benefiting from Franklin Templeton’s global experience and achieving the common goal of transforming Symbiotec into an Integrated Steroids Solution provider to the global Pharmaceuticals industry”

Franklin Templeton Private Equity Strategy is a private equity investment product offered to high net worth individuals in India, and was established in 2008 with total capital commitments of Rs 6300 million (US$147 million). FTPES makes selective investments in high growth, mid-sized and unlisted Indian companies.

Darby is the private equity arm of Franklin Templeton Investments, and manages a range of private equity, mezzanine, and infrastructure funds in Asia, Latin America, and Central and Eastern Europe. Darby was founded in 1994 by The Honorable Nicholas F. Brady, who served as U.S. Secretary of the Treasury between 1988 and 1993. In 2003 Darby became a fully owned subsidiary of Franklin Resources, Inc. [NYSE:BEN], a global investment management organization operating as Franklin Templeton Investments.

Franklin Templeton Investments provides global and domestic investment management solutions managed by its Franklin, Templeton, Mutual Series, Fiduciary Trust, Darby and Bissett investment teams. The San Mateo, CA-based company has more than 60 years of investment experience and $716 billion in assets under management as of August 31, 2011.

September 16, 2011

Profile of software products firm CustomerXPs

Economic Times has a profile of the entrepreneurial story of Bangalore-based "Customer Experience Management" Software firm CustomerXPs.
Though the team was in place, it took us over a year to develop the first sample. By January 2008, we started taking feedback from prospective clients and realised that the product was becoming very complex. That's when we started interacting with Sharad Hegde, former Infosys chief technology officer, for his advice on simplifying the product. By mid-2008, he joined our firm as a consultant and also became an angel investor for CustomerXPs. He has invested about $1 million (Rs 4.6 crore) in the company.

Our deadline for earning the first revenue was August 2009, but we missed it because we couldn't close a deal. However, the silver lining was that we were upgrading our product, which was an ongoing process. Despite realising that selling software products is difficult in India — many such companies have been forced to change to software services firms within six months as revenues don't roll in — we were determined that our first inflow of funds should be licensed revenue from a reputed client.

At that time, international markets were a taboo since foreign travel would have increased our costs significantly. As a result, we became more negotiable and, finally, we earned our first revenue from India's largest private sector bank, ICICI Bank. It became our client in March 2010.

In January 2011, we raised our first round of venture capital funding from Singapore-based JAFCO Investment. None of us took a salary, or for that matter, a holiday, for the first three years and were managing on personal savings and investments. The austerity has finally paid off. Today, we employ 60 people and operate from a 5,000 sq ft office at JP Nagar (leased for Rs 1.5 lakh). Currently, we only have ICICI Bank as a client, but we are looking forward to closing deals with about 4-6 more banks by the end of the year.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

September 15, 2011

Off topic: Interaction with Constant Contact

This post is for the benefit of (and comments from) fellow paid content publishers.

Constant Contact, a web-based email newsletter/marketing service that we at Venture Intelligence have been using to send out our paid for Deal Digest Daily newsletters sent us the following message - out of the blue - yesterday:
Response (Kristen D)
Dear Arun,

I am sorry to report that your account, login name: "entureintelligence" (sic), has been flagged for uploading several industry spamtraps along with a host of problematic addresses.

As a result, we will no longer be able to provide Constant Contact services to you.

The marketplace associated with sending email has changed dramatically, and as a result, we have had to adapt our complaint tolerances and list management inspections to meet the current business environment. While we appreciate your consideration, we can not afford the risk and exposure associated with your account. High abuse complaints result in getting our servers blocked by ISPs. We cannot limit the blocks to just your account, so it impacts all of our customers.

I will leave your account accessible until 9/21/2010, so that you may export your current list.

Please be reminded that your opt-outs (unsubscribe requests) via Constant Contact never expire. Federal law requires that you honor all opt-out requests indefinitely, regardless of future mailing platforms, unless you receive a new explicit opt-in request for that address.

Thank you for your attention.

Best Regards,

Constant Contact
Email: support@constantcontact.com
Web: http://www.constantcontact.com
Phone: 866-433-8499 or 339-222-5900


To which I had replied:

Customer (Arun Natarajan) 09/14/2011 11:57 PM

*OURS IS A PAID NEWSLETTER SERVICE - IE, OUR MAILING LIST IS MORE THAN 100% OPT IN. YOU CAN EASILY VERIFY THE SAME FROM OUR WEB SITE AT
http://ventureintelligence.in/newsletters.htm

WE ARE HIGHLY UPSET THAT YOU HAVE PREVENTED US FROM BEING ABLE TO SEND OUT OUR PAID FOR DAILY NEWSLETTER TODAY WITHOUT CHECKING THE BASIC FACTS / GIVING US A WARNING.

PLEASE TAKE A FEW MINUTES TO CHECK THE BASIC FACTS AND LET US KNOW, AT THE EARLIEST, IF YOU WOULD LIKE US TO CONTINUE USING CONSTANTCONTACT.


Kirsten's response to this went thus:
Arun,

Unfortunately, due to the nature of the addresses that were in your list we will not be able to continue service.

Thank you,
Kristen


I have sent them the foll note - without much hope - and have started to look for an alternative provider:

Kirsten,

Can you support "nature of the addresses that were in your list " with examples please? The key point we are making is that every single address on our list is either paid for or 100% opt-in based trial users. So, in our own interest, we would love to remove anyone who might not want to be on our list! Thanks. Arun


Fortunately, there are plenty of services such as ConstantContact, including Benchmark Email, Mail Chimp, etc. I found a useful comparative review here:
http://email-marketing-service-review.toptenreviews.com/


My quick thought from this episode is that it would be useful to have email services which are not focused on "email marketing", but specialize in enabling the sending of email newsletters - especially, paid for ones like ours.

I would be happy to hear any comments/suggestions that you might have at arun@ventureintelligence.in

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

September 13, 2011

Can Indiagames leverage the Disney connection?

Business Standard has an article on Indiagames' future under Walt Disney (which is in the process of taking over Indiagames' current parent, UTV)
Today, Indiagames works with original equipment manufacturers (OEM) as well as telcos like Tata Docomo, Uninor, and Idea. Large accounts like Airtel and Vodafone have grown 24 per cent year-on-year in FY2011. App stores have also fuelled the firm’s growth. T20 fever developed by Indiagames was among the top 10 games in Apple’s App Store.

Indiagames is perhaps the only company that has been successful in creating a business model for games via subscription. A Games on Demand (GoD) model was initiated for PC-gamersand has 80,000 users in 2011 from 30,000 in 2010 and is a solid contributor, generating Rs 8.2 crore of revenue in FY201, up from Rs 2.3 crore in FY2010. A user can download and play unlimited times, up to 300 PC games which are digitally delivered for a monthly subscription of Rs 200 and Rs 100 . It has also entered into the interactive TV games through DTH platforms and is working with Reliance Big TV and Airtel Digital.

...The company will launch its first social game around Shahrukh Khan’s sci-fi movie Ra.One. With this they are also testing the ‘freemium’ model of payment. Here, the primary game is for free but for special features and advance games, users will have to pay up. These accessories like special powers etc will be prices between Rs 5 to 50. Also, the company in its FY11 filing said it will target rural markets.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

Starting Up @ MIT School of Business, Pune

From the Press Release:
Starting Up, ET NOW’s show on India's start-up ecosystem, with an objective to promote and generate awareness on entrepreneurship & entrepreneurial skills in India; visits the MIT School of Business to conduct a one day special workshop titled 'Starting Up @ MIT'. The entire session will be recorded by the MIT Team & the videos will then be uploaded onto their online platform & become a part of the new entrepreneurship syllabus at MIT.

Prominent entrepreneurs like Samir Palnitkar, Founder of Shop Socially.com; Anup Tapadia, Founder of Touchmagix; Abinash Tripathy, Former Indian Head of Zimbra and now Founder of Infinitely Beta will be the main speakers at the workshop along with Sudhir Syal, Anchor & Editor of the show ‘Starting Up’.

The various topics covered during the workshop will include - How to write a business plan, the essence of starting up, evaluating start-up ideas, secret to scaling a business and the art of product innovation. In addition, the workshop would also include a video content on the basics of registering a start-up company and a session where entrepreneurs will be split into teams & encouraged to come up with independent B-plans of their own.

Catch the full episode of ‘Starting Up @ MIT’ on Tuesday, 13th September at 11pm and repeat telecast on Saturday, 17th September at 9pm and Sunday, 18th September at 7.30pm. Only On ET NOW.

September 11, 2011

Deal Alert: Taurus Flexibles ties up with Spain based Cikautxo s. Coop

From the press release:

Taurus Flexibles have announced their strategic association with Spain based Cikautxo s. Coop and Mondragon S. Coop to augment the manufacturing of rubber and plastic hoses for the automotive segment for international and domestic markets. This tie-up is being achieved by the acquisition of 50% stake in Taurus’ wholly owned EOU subsidiary in Pune created from the transfer of assets from the parent group. The joint venture company is called Cikautxo Taurus Flexibles Private Ltd. and has an estimated networth of Rs. 34 crores.

Taurus Flexibles is a Rs. 200 crores reputed domestic manufacturer of automotive tubes and hoses with an impressive track record, while with € 220 million turnover, Cikautxo s. Coop of Spain designs and manufactures parts and assemblies for diverse applications for the automotive industry. The company holds the repute of proving service to leading automobile companies in the world.

Commenting about the deal, Rishi Kshettry, CEO, Cikautxo Taurus Private Ltd, stated “We wanted to raise our profile and enhance awareness of our technological expertise. Both the companies have ingenious approach and technical acumen, which will facilitate augmentation of innovation for both processes and products.” Adding more about the alliance he said, “Cikautxo’s boasts of enviable customer base in India and internationally e.g. VW, Daimler, Ford, Renault, Nissan, GM-Opel, PSA, Behr, Valeo, amongst others and it’s our honour to extend our expertise to some of the best in the automotive industry.”

Mondragon and Cikautxo both are cooperatives which are owned by their employees. Mondragon recently have set up an industrial park in India to provide space to its group companies in the country.

According to Victor Arrizabalaga, CEO of Cikautxo s. Coop, “The strategic alliance with Taurus Flexibles have paved our way into the Indian domestic market, undoubtedly one of the fastest growing auto market in the world. The rational production cost in India and technical capabilities will complement our existing manufacturing bases in Spain, Czech Republic, Slovak Republic, Brazil and China and will enable us to meet the global demand.”

Merisis Capital Advisors, specialists in mergers and acquisitions have been the exclusive advisors for the deal between Taurus Flexibles and Cikautxo s. Coop. Commenting on this arrangement Sumir Verma, Managing Director, Merisis Capital Advisors, said “the deal reflects a growing pragmatism on the part of the Indian vendors to structure a relationship with international vendors and create a win-win situation for both the parties.”

About Taurus Flexibles:

Taurus Flexibles, part of the Taurus Group is one of the leading manufacturers of hoses and fuel lines for passenger cars and commercial vehicles. The parent company Taurus was founded in the year 1971 and was the first hydraulic hose plant in India. Currently the company has five plants at Jamshedpur, two plants at Pune and one in Hosur, Tamil Nadu.

About Cikautxo s. Coop:
Cikautxo s. Coop (http://www.cikautxo.es) founded in 1971 designs and manufactures parts and assemblies in various polymers diverse applications. It is engaged in development and manufacture for the fluid conduction, shock-absorbing and sealing parts for Automotive, domestic appliances and biomedical industries. Cikautxo s. Coop is a member of the Spain based Mondragon; the biggest cooperative group in the world.

About Merisis Capital Advisors:
Merisis Capital Advisors (www.merisis.in) is a boutique investment bank offering independent advisory services to emerging growth and mid market corporate clients, and institutional investors focused on this segment. Merisis focuses on the emerging growth and mid-market segment where the team's experience in finance and industry helps companies plan their growth strategy, grow inorganically through well planned acquisitions and capitalize themselves by partnering institutional investors.

September 07, 2011

Businessworld cover story on Venture Capital

From the cover story profiling 7 leading VC firms: Helion Ventures, Nexus Ventures, IndoUS Ventures, IDG Ventures India, Accel India, Inventus Capital and Canaan Partners.
During 2004-10, venture capitalists invested $3.96 billion in Indian startups. Another $621 million has been invested this year, according to Chennai-based research firm Venture Intelligence. There is an established line of VC firms who have consistently invested through this period. Some are local arms of Silicon Valley firms such as Norwest Venture Partners and Draper Fisher Jurvetson. Others, such as Helion Venture Partners and Inventus Capital Partners, are independent startups themselves. By 2015, total investments will touch $10 billion, projects Bangalore-based VC firm IDG Ventures India.

...The numbers underline a few important facts about the Indian startup economy. First, there is enough innovation at the startup level to encourage risk capital to make bets over a sustained period. Second, if VC investments are advancing towards the $10-billion mark, investors clearly see many more latent pockets of innovation. So far, the money has gone into myriad sectors including e-commerce, consumer services and clean tech. The net will be cast wider into areas such as cloud computing, mobile infrastructure services, healthcare, education and rural businesses.

The mood in the VC industry, as BW found speaking to 15-odd investors, is unmistakably upbeat. Confidence levels are up as several move close to completing a full investing cycle with their debut funds, an event that is itself a milestone. The last major VC outing in India ended in the dotcom bust of 2000-01 and investors retreated from the market nursing huge losses. Much of the renewed confidence has to do with the kind of entrepreneurs leading the current charge of startup activity. “The need to address the customer and the market, and not just focus on the technology or product has become internalised with entrepreneurs,” says Samir Kumar, co-founder and managing director of Bangalore-based Inventus. Another big factor is that most VC firms that sprung up after 2004 have successfully raised second funds or are well on their way. This means the startups that have been funded so far have access to follow-on funding. The dotcom bust saw several startups die because their investors had run out of cash.


Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.




September 05, 2011

Naukri.com's Sanjeev Bikhchandani on the new e-commerce boom

Extracts from the interview appearing in the latest issue of the Indian Angel Network's newsletter:

As far as E-Commerce is concerned, it is becoming a big money game and you will see companies either succeed massively or blow up in style. What is somewhat worrisome is the tendency of some E-Commerce companies to scale up sales even if they are negative margin, the more you sell the more you lose. Investors also need to ask probing questions about revenue recognition practices. There are some smoke and mirrors out there. I expect sanity to return to this space sometime in the next two years. Excessive valuations will be corrected. The smoke will clear and dodgy accounting practices will be recognised for what they are. People will not be selling below variable cost anymore.

...For the most part people are starting off aping successful businesses in the West. You can’t blame the entrepreneurs alone for this, since these are also the models for which funding comes easier because the VC’s feel more comfortable funding stuff that has done well in the US. Having started however, smart teams are morphing the model to suit local conditions and so the Indian flavours start emerging in a couple of years after the first round of funding. Purely Indian models, in general, need to bootstrap longer and deliver more results in order to get Series-A funding. But they may end up winning bigger in the long run.

Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports.

September 04, 2011

ET Now's "Super Angels’ show: Countdown to the Grand Finale begins

From the Press Release:

‘Super Angels’, the ongoing series on ET NOW’s Starting Up – the home for start-ups on Indian television, has successfully completed 14 episodes.14 start-ups have pitched in their business plans to 4 of India’s most influential investors, competing for a spot in the grand finale where the winner gets an opportunity to raise funds between Rs.50 Lakhs & Rs. 2 Crores live on the show.

Speaking about the show and its format, Harshal Shah, Founder and Managing Director of Reliance Ventures said this “The format of the show is very hands-on, impromptu, and educational. It is also informative to entrepreneurs as the process of a formal or informal education in the VC space is not something that most Indian business schools are able to expose their students”.

Vishal Gondal, Founder of Indiagames said that the key difference with the show was with its format, “The format is spread over 6 months rather than the 1-2 months other shows have aired for. The 6 month period is extremely relevant since this is the amount of time it generally takes for an Angel investor to invest in a startup in India. Not only this, it allows us to mentor the start-up over a 6 month period and the entire process is like a journey rather than a competition. I have personally spent atleast 5 hours offline with each of the start-ups that I have met on the show and in one case this also included completely rebranding and renaming one of the startups in the competition.” Apart from the mentoring by the Super Angels on the show, the startups are also mentored by the show’s mentoring partners TiE.

Some of the key suggestions provided by the Super Angels have revolved around branding, product positioning, monetization strategies and customer acquisition. For instance Spatial Ideas have begun focusing on ‘customer acquisition’ based on a suggestion shared with them on the show.

Sharing his views about the show, Umakant Soni of Vimagino said, “Sudhir, his team and the choice of judges on the show have made a difference, in their efforts, helping us gain mileage with the audiences; making it an A class show. It is not for TRP’s but for building great companies that will change the coming times”.

While Mahesh Murthy of the Seed Fund feels that India should have more shows on these lines that provide a platform for the start-up community in India. He also added, “The show deserves to be a half hour show, its more scalable than all competing shows on Indian television, has a more credible jury process and really gives investors like us the maximum chance of investing in a startup. I suspect 2-4 will get an offer for funding on the show.”

Data Highlight: Schneider Electric gets turned on by India

Schneider Electric's June 2011 acquisition of a 74% stake in Luminous Power Technologies, the New Delhi-based provider of inverters, UPS and power storage systems, was the French electrical products maker's sixth Indian acquisition in the last 3 years.

Schneider's aggressive moves in the Indian market is part of a general rise in inbound acquisitions by European companies. While US-based companies continued to be the most keen acquirer of Indian companies during the first 6 months 2011 accounting for 18 of transactions (followed by Japanese companies which acquired 7), H1’11 witnessed 18 Europe-headquartered companies (including 4 from UK, 4 from Germany and 3 from France) shopping for Indian targets.

Data Source: Venture Intelligence M&A Deal Database and Venture Intelligence India M&A Report


September 02, 2011

SEBI Alternative Investment Fund Regulation 2011 – The Basiz Perspective

The following is a note on the SEBI - Alternative Investment Fund Regulation 2011 (AIF) prepared by A V Seshadrinathan ("Sesh"), MD of leading fund accounting KPO Basiz.

An Accounting and Tax perspective

The proposed AIF regulation has clearly demonstrated, that High networth Individuals and Qualified investors in the country are sizeable, have the knowledge to take on risks and are well informed, when investing into alternative investments. The alternative asset class itself, has been recognized as an mainstream investment for certain investors. The regulation at its highest level, seeks to prevent retail investors from straying or being induced to this asset class. Further the regulation also classifies Investment strategies based on objectives of the investment. Therefore, while the regulation caters to monitoring & regulating the liability side of the fund, it also ensures that monies are invested into assets or securities that match the philosophy & strategy, disclosed by the fund manager during the capital raising process. This also makes it easy for the government of the day to target benefits to sections of the economy that need investments.

Key Salient features of the proposed regulation:

> High Net worth Individual defined as a person capable of investing Rs 1 Crore in all investments combined has been defined.

> Minimum subscription would be Rs.1 Crore or 0.01% of the fund raised.

> Tax benefits / incentives available to a particular philosophy strategy or certain sectors of the economy are availed only by those that were intended to.

> Regulation grandfathers DVCF funds into the new regulation. None regulated funds need to register on the regulation coming into effect.

> Funds can be structured as LLP’s. This is a major development as funds globally prefer these structures for ease of operation, tax pass through, limited liability and other benefits. This would also mitigate some of the disadvantage of structuring the fund as a trust mainly to avoid the issues related to an irrevocable trust.

> Regulation 13(2) :

AIF registered under one category cannot change its category. This is in contradiction with regulation 9(2), which says that Strategy can be changed with 75% on investors consent. Defining Strategy and Category is important for clarity.

> Minimum size of the fund needs to be Rs. 20 crore.

> Fund manager needs to contribute at least 5% of the size of fund in hard contributions. This contribution will be locked in till the last redemption is made. This would pave way for sponsored investment managers, backed by outside or solicited capital in the investment manager’s entities themselves.

> Maximum number of investors in the AIF shall be 50. It is not clear, if this includes underlying pooled investors like partnership, trusts or association of persons or the fund entity level only. There is a discrepancy though. It appears that the 50 investor limit applies to companies and LLPs. It does not seem to apply to trusts.

> Winding up methodology needs to be explicitly mentioned in the prospectus.

> The last residual investment, that cannot be disposed in the fund needs to be picked up by the investment manager.

> The board may specify criteria for charging performance fees. This could create uncertainty. Also it would restrict the ability of two parties to a private contract.

> No fund shall have sub-funds underlying. It is not clear however, if the regulation allows the fund of fund as a possibility.

> Minimum tenor of the fund shall be 5 years extendable by 2 years.

> Funds with size greater than Rs.500 crores would need to have a custodian.

> The regulation has categorized strategies into

a) PIPE
b) Debt
c) VCF (maximum of 250 crore)
d) Infrastructure
e) SME
f) Real estate
g) Social Venture funds
h) Strategy
i) PE funds

Of the above, it seems that strategy funds includes all other strategies, not listed separately and therefore offer amply flexibility. These categories can include funds that can invest long/short, derivatives and structured products. It seems that this category may spawn growth of “Hedge funds”. All the categories come with minimum and maximum exposures to issuer, class of securities, exposure to follow-up investment, etc. Board may impose appropriate restrictions on investments in complex structured products, if no investor approval is acquired.

The regulation does cast reporting responsibilities on the fund and investment managers.

Some of the important reporting & disclosure responsibilities are:

1) Risk management & conflicts of interest reporting:

a) Identification, analysis and reporting of systemic risks. This might result in regular risk reports that need to be filed with the SEBI. This will also mean regular review of policies and procedures related to risks. Further adoption of globally accepted reporting & risk management practices may also be required.

b) Reporting on excessive risk strategies that are a result of aggressive performance structure will need to be reported separately.

c) Reporting on conflict of interest. This will necessitate documentation of procedures that will mitigate conflict of interest.

2) Financial reporting to include:

Quarterly and Annual financial statements may need to state or disclose
(i) Description of investment strategy
(ii) Use of leverage
(iii) Redemption policies in normal and exceptional circumstance
(iv) Valuation methodologies
(v) Risk management procedures
(vi) Fees charged by managers shall be disclosed. This includes all types of fees and includes those paid to affiliates of the managers
(vii) Cost of doing the investment transaction and related charges
(viii) Fees charged to portfolio companies by manager or affiliate of the managers
(ix) Custody policies & procedures
(x) Risk reporting in financial reports

The regulation has specified that the following be reported in annual financial statements. The requirements are similar to IFRS 7. They include:

a) Concentration risk
b) Forex risk
c) Leverage risk both liabilities & asset side including those of the portfolio companies
d) Realization risk at the time of exit
e) Strategy deviation risk
f) Reputation risk at portfolio company level. It is however hard to fathom, how this can be measured.
g) Environmental, social & corporate governance risks at fund and portfolio company level. Again hard to fathom how this can be measured.

(xi) Books & records of the funds shall cover
a) Portfolio statements including valuation, valuation policies and procedures.
(b) Deal sheets, buy & sell ledgers
(c) Investor statements describing contribution, allocation and distributions
(d) Portfolio company selections research and analytical methodologies
(e) Books & records of the fund may need to be maintained for 5 years.

(xii) Fund audits need to be completed within 90 days of the year end and financial information of the fund needs to be provided to investors within 90 days of the year end of the fund.

(xiii) Disclosure related to non accounting matters. Breach of the provisions in information memorandum, inquiries or action by regulators and material contingency or liabilities related to the fund shall be disclosed in full.

3) Investment operation reporting & Standard operation procedures for investor

a) Estimation of quarterly projections of capital calls and distributions (including beneficial interest) need to be made & reported.
b) Changes in ownership interest/transfer, rating control to related parties to the fund need to be disclosed.
c) Financial information of underlying portfolio companies need to be provided to investors within 90 days of the fund’s year end to the investors. This means that all underlying portfolio companies need to complete their audit well within 90 days of the year end of the fund.

Tax issues related to the new regulation

This regulation has tax, legal and banking impact. Thus other regulations like the Income tax, RBI, Company Law, regulations will have to be harmonized with changes in this regulation.

For example, LLP’s will now be allowed as investment vehicle structures. However the ROC’s need to accept this change, when the regulations come into force. The Income tax department has already included an LLP within the definition of a “partnership firm”. However partnership structures currently do not have “Pass through status”. They are taxed at partnership level unlike trust structures. Regulated LLP’s structures need to have “Pass through status” if they invest in 10 sectors, that qualify as venture capital similar to trust structure. Thus pass through benefits under section 115U should be available to LLP’s too to ensure level playing field. However MAT has been imposed on LLP’s recently. This would create discrimination for even the regulated LLP’s, that invest in the designated sectors. Regulated Investment LLP’s need to be given exemption from MAT provisions as well. The Income tax department however needs to ensure a level playing field between FVCF and the DVCF, as far as tax treatment on capital gains go. LLP’s are better equipped to provide solutions compared to irrevocable trusts as investment vehicles.

Sesh is the Managing Director of Basiz Fund Service Pvt. Ltd. Basiz is a global fund administrator with focus on India especially the PEVC segment administering more than USD 8 billion in assets. Sesh can be contacted @ Cell : +91 8286008554 ; email: sesha@basizfa.com


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