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April 29, 2014

Deal Alert: Fabindia MD William Bissell invests Rs.12-Cr in education ERP firm Foradian Tech

William Bissell, managing director of ethnic retail firm Fabindia, has invested $2 million (over Rs. 12 crore) in education technology start-up Foradian Technologies. Foradian provides cloud-based enterprise resource planning solutions to educational institutions. The product, Fedena, is available in both free and paid models and is used by over 40,000 institutions in over 100 countries in Latin America, Africa and Asia. About 2,000 institutions are its paid users. The company, which has a team of over 30 employees, intends to use the funds for further product development and to expand geographical reach. Foradian is profitable and aims to earn $3 million (over Rs. 18 crore) revenue this fiscal year. It was founded in 2009 as a web development firm based out of the north Kerala district of Kasargod, before moving to Bangalore in 2012. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 28, 2014

Fund Alert: Sandeep Murthy-led tech VC fund Lightbox aims to raise $90-M

Lightbox, a new venture fund focused on technology investments in India, aims to raise about Rs. 540 crore ($90 million). Lightbox is being set up by a team of five, including Sandeep Murthy — the former India head of global investor Ram Shriram’s venture fund Sherpalo — and Prashanth Mehta, former CEO of digital advertising technology provider Komli Media. The fund has raised initial capital of about Rs. 150 crore from a global institutional investor. Besides Mumbai-based Murthy and Mehta, the other three partners at Lightbox are entrepreneurs Sid Talwar, Sunny Rao and Jeremy Wenokur. 

The new fund will look to raise funds from both domestic as well as international institutions. The fund will make only about eight investments from the first fund, putting in between $8-10 million in each company. Lightbox will invest in startups focused on e-commerce and mobile as well as those focused on education, healthcare and finance.

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Vantage Circle raises round from Raghu Bathina, others

Delhi-based Bargain Technologies, which owns and operates Vantage Circle, an online privilege platform for corporate employees, has raised Rs 1.2 crore ($198,048) from investors including former Citrix Systems senior director Raghu Bathina, a member of the Hyderabad Angels group. The company will use the funding to expand its market presence and offer clients more innovative solutions. 

Founded in 2011 by Partha Neog, K. C. Ramakrishna and Anjan Pathak, Vantage Circtly provides privileges from brands such as Samsung, Tata Motors, redBus, Cleartrip, Tata Sky, Toyota, Croma and Apollo Pharmacy. It claims more than 300,000 corporate employees on its platform. The platform claims a click through rate of 8-10 % and an email open rate of 30%. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Eventjini raises funding from HNI

Eventjini, the organizer-focused event marketing and ticketing company, has closed another round of funding from an anonymous group of investors based in Chennai. S.M.A.R.T Advisors acted as the exclusive financial advisors to Eventjini.

The company’s plans include a mobile strategy and a technology push to solve problems of event organizers like counterfeit tickets. The company claims to have marketed more than 450 events in the last year. 

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Tiger Global, Blume, angels invest Rs.54-Cr in retail warehouse automation firm Grey Orange

Gurgaon-based Grey Orange Robotics, a start-up which builds robots that help online retailers automate their warehouses, has raised Rs.54 crore funding from New York-based investment firm Tiger Global and early-stage investor Blume Ventures. Two angel investors Raju Reddy and Dileep Nath also participated in the funding round.

Founded by two graduates from the Birla Institute of Technology and Science (BITS) in Pilani in 2009 - Samay Kohli, 27 and Akash Gupta, 24 - the company will use the funds to hire talent, increase research and development and expand in markets such as Singapore, Dubai and Germany.  

From the Venture Intelligence PE Deal database: In Jan-13, Blume along with Bits Spark Angels, The Hatch, GSF Accelerator founder Rajesh Sawhney and former Google executive Samir Sood invested Rs.2.5 crore in Grey Organge. (Subscribers to the database can login to view the valuation, deal structuring and other transaction details.)

Source: Economic Times

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 27, 2014

Deal Alert: SIDBI’s Samridhi Fund invests in Rite Water

Samridhi Fund, the social impact fund managed by SIDBI Venture, has invested in Rite Water Solutions (India) Pvt Ltd which specializes in potable water and water quality improvement solutions. Rite Water has set up over 120 community water centers with water treatment plants in quality affected-villages and currently provides contamination-free safe drinking water to more than 200,000 villagers every day. The company has implemented projects in Maharashtra, Madhya Pradesh, Chhattisgarh and Bihar and focuses on providing potable water solutions to rural villages affected by water quality problems like fluoride, nitrate, arsenic, salinity and bacteriological contamination. Think Capital was the exclusive financial advisor to Rite Water for the transaction. 

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 24, 2014

Deal Alert: Inventus, Mumbai Angels, others invest $550-K in appmaker for autistic children Avaz

Chennai-based Invention Labs that has developed Avaz AAC, a speech therapy app for autistic children, has raised $550,000 in seed funding led by Inventus Capital and Mumbai Angels. Google India MD Rajan Anandan and Sierra Atlantic founder Raju Reddy are among other investors participating in this round of funding. The funding will be used to expand Avaz into new geographies and also flesh out additional features. Avaz is a picture-based communication tool that helps autistic children use their picture identification skill to create picture messages, which are then spoken out by a speech engine. 

Source: Tech Crunch
 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Omnivore invests in agri-equipment rental firm MITRA

Omnivore Partners has invested in Nashik-based technology startup MITRA which develops farm mechanisation solutions for horticulturists. The company expects to use the money to expand its research and enhance marketing spend. The two-year-old company had earlier raised seed funding from angel investors and Unilazer Ventures. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Sequoia to invest Rs.28-Cr in supplier management software firm SirionLabs

Sequoia Capital India has invested INR 28 crores in Gurgaon-based enterprise software maker SirionLabs which develops technology aimed at improving the efficiency of outsourcing contracts. The funding will be used to deepen research and increase market and product development plans. Shailendra Singh, Managing Director at Sequoia Capital India, will join the board of Sirion Labs. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 22, 2014

Deal Alert: Amazon sets up small biz accelerator

US-based e-commerce firm Amazon’s India unit has set up a small business accelerator with teams spread across major cities to help more merchants get online. Like its rivals Flipkart and Snapdeal, The SMB Accelerator helps sellers set up an account, manage inventory and payments and also teaches business analytics. The global retailer which began its Indian operations last June with 100 sellers in 2 categories has now expanded to more than 4,000 sellers across 21 categories. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Social media tools firm Frrole raises $245-K from Sharad Sharma, Rajan Anandan, others

Bangalore-based big data start-up Frrole, which specializes in Twitter-based analytics, has raised $245,000 in angel funding from investors including Sharad Sharma (former head of Yahoo! R&D centre in India), Google’s India MD Rajan Anandan and Eka Software founder Manav Garg.

Frrole raised this capital on LetsVenture, a crowd funding platform launched last year to help Indian startups find angel investors from across the globe. Frrole analyses over 10 million tweets daily to offer insights about users. For television channels and political parties aiming to get the pulse of what’s buzzing on Twitter, insights from Frrole cost about $100 per month per data stream.

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 21, 2014

Deal Alert: Cloud-based SME services provider ZapStitch raises capital from Anupam Mittal, others

Bangalore-based cloud data integration platform ZapStitch has secured seed round from Anupam Mittal (founder of People Group) and other angel investors. ZapStitch was founded by Satya Padmanabham (co-founder of YourBus.in which was recently acquired by ibibo Group). ZapStitch currently integrates four Cloud business apps - Shopify, QuickBooks Online, BigCommerce, Magento. The startup is now working with 125 SMBs in North America, Australia and UK.

Source: Nextbigwhat.com

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: CommonFloor acquires student rentals listing firm Flat.to

Real estate portal CommonFloor has acquired Flat.to, a site that helps students and bachelors find accommodation. The deal included both cash and stock components. Founded by Gaurav Munjal, Flat.to will continue to operate as an independent site with its 15-member team. The firm earns revenues through subscriptions earned from brokers and operates in over six cities, with over 7000 listings. 

From the Deal Digest archive (July 9, 2013): Flat.to raised angel funding funding from Aakrit Vaish 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 20, 2014

Deal Alert: Start-up database firm Tracxn raises angel funding

Tracxn, a start-up that offers information and analytical data about private companies to investors, has raised angel funding. Founded by technology and investment banking professionals Abhishek Goyal and Neha Singh, Tracxn is headquartered in Palo Alto, California with delivery being done out of India . The company builds technology to track all information around private companies and has expert analysts to organize the information and draw insights from it. The key offerings include feeds and start-up database. The company has 20-member team. 

Source: inc42.com
 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 16, 2014

Deal Alert: Nexus Venture Partners invests in Function Space, Social Learning Network for Science

Function Space (http://functionspace.org/), a leading and fast growing collaboration and learning network for students, researchers and enthusiasts in Mathematics, Physics, and other sciences, announced today that it has closed funding from Nexus Venture Partners. The funding will help the company expand content, develop engaging tools, and aggressively expand its contributor and user base. Current users include students from top universities, high school, engineering undergraduates and researchers in advanced commercial labs. 

“Function Space serves a crying need to make Mathematics and Sciences fun and engaging. We are thrilled to work with the founding team that is committed to exposing the beauty and usefulness of STEM (Science, Technology and Mathematics) to experts and non-experts alike”, said Naren Gupta, Co-founder & Managing Director, Nexus Venture Partners. “We hope to see a platform, where advanced researchers can discuss advanced topics and enthusiasts can be exposed to a collection of traditional as well as emerging knowledge in STEM”. 

Building on this momentum, Function Space will use the financing to scale its online platform and expand its global outreach. The funding will also be used to build a stronger foundation of collaboration tools appropriate for the Science communities and to attract additional experts to the site. Function Space, already offers a strong community consisting of users from over 190 countries, including students, professors and researchers from MIT, Stanford, University of California, Berkeley and Los Angeles campuses, Indian Institute of Technology campuses, Indian Institute of Science and other prestigious institutions. 

Function Space was founded last year by Adit Gupta, Sakshi Majmudar and Sumit Maniyar with the idea of creating a complete ecosystem for learning higher science online. The team has strong backgrounds in technology and design. 

Adit Gupta, Founder of Function Space, said, “Nexus Venture Partners shared our vision of building a one-stop solution for science. Their strong team coupled with Indo-US presence gives Function Space a major opportunity for rapid global expansion.”

Sandeep Singhal, Co-founder & MD, Nexus Venture Partners will be joining the Board at Function Space. 

About Function Space:

Function Space is a social learning network for science with complete ecosystem (articles, video lectures, problem solving, discussions, and networking) for participants from academia to corporate research. We intend to bridge the gap between academic curriculum and skill based requirements of workplace. 

About Nexus Venture Partners

Nexus Venture Partners is India’s leading venture capital fund, with offices in India and Silicon Valley. Nexus team consists of entrepreneurs who have founded and scaled large global companies. The team has invested in a variety of companies leading to numerous successful public offerings and M&A transactions. Nexus has over $700mn under management with an active portfolio of over 50 companies across Technology, Internet, Media, Consumer, and Business Services sectors. The Nexus team plays an active role in helping entrepreneurs and management teams build market leading businesses. 

Nexus partner companies include Cloud.com (acquired by Citrix), Gluster (acquired by Red Hat), Komli, Pubmatic, DimDim (acquired by Salesforce), Snapdeal.com, Netmagic (acquired by NTT Com), Indix, Druva, housing.com. 

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Deal Alert: Bessemer to lead $10-M round for TaxiForSure

Bangalore-based cab aggregator service TaxiForSure is raising $10 million in investments led by Bessemer Venture Partners. Existing Accel Partners, Helion Venture Partners and Blume Ventures also participated in the latest investment round. The second round of institutional funding would be used for attracting talent into the team, expanding across India, including tier II and tier III cities, and engaging customers on mobile app. 

 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 09, 2014

Deal Alert: Unitus Seed Fund invests in dental chain Smile Merchants

Seed-stage impact investor Unitus Seed Fund has led an equity investment in Smile Merchants, a chain of dental clinics focused on providing affordable dental care services. A brand of Free3 Healthcare Pvt. Ltd., Smile Merchants is a chain of dental clinics targeting tier-2 and 3 cities, towns and villages. Co-founded in 2012 by Dr. Rushi Trivedi, Dr. Alpesh Chaudhari and Dr. C.M. Pandey, Smile Merchants has scaled to four clinics in and around Bhiwandi, a city near Mumbai. It operates on a 3-tier hub-and-spoke model - with hub clinics in tier-2 and 3 cities, mini-hubs in smaller towns, and low cost spoke clinics in villages.  

Unitus Capital was the financial advisor and Impact Law Ventures was the legal advisor to Unitus Seed Fund. 

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Legal Corner by Trilegal: India’s New M&A Guidelines Dampen Hopes of Market Consolidation

The guidelines for telecom mergers and acquisitions are being touted as a harbinger of market consolidation in India. But a closer reading suggests they leave a lot to be desired. 

In the weeks preceding its official release in February 2014, the mergers and acquisitions guidelines for telecommunications services (M&AGuidelines) were projected as beingvital totheprocess of consolidation in India’ssaturated telecom market, which featuresthirteen operators across twenty-two telecom circles. But shoddy drafting,insufficient incentives and latent ambiguities in the guidelines maydeter telecom companies from exploring any immediate partnerships. 

In particular, telecom operators have been put off by the requirement to pay, at the time of a merger or acquisition,the market-determined rates for any spectrum obtainedthrough the erstwhile 'first-come-first- served' system. Under this system, a fixed 'entry fee'was collected by the government from each operator for a given amount of spectrum (4.4 Mhzfor GSM and 2.5 Mhzfor CDMA)which was bundled with the relevant telecom license. Post-2008, operators were forced to bid for spectrum in a highly competitive open auction. In light of this policy change, the Guidelines state that any spectrum that a target company(i.e. the company being acquired)has obtained by paying only the entry fee, will have to be revalued on the basis of the latest auction-derived price. The differential fee (i.e. the difference between the entry fee paid and the auction-derived price for that spectrum) must be paid to the government upon merging. 

With respect to the payment of the differential fee, the M&A Guidelines impose this obligation only on the spectrum held by the target entity. This would seem to imply that if the acquiring entity has not paid for spectrum at market rates, there would be no requirement to rectify therevenue shortfallfor spectrumthat it holds. That apart, there is some confusion on the lock-in period applicable to shares of the resultantentity, pursuant to a merger or acquisition. It is not clear from the language of the M&A Guidelines whether the lock-in timer will restart from the date of the mergeror if it is a continuation of the three year period, starting from the date of the auction. 

Besides the differential fee, the government has also prescribed payment of a one-time feefor any spectrumheld by an operator over and above the spectrum that was administratively allocated along with the license. Given the disputes over the payment of this fee, the Guidelines state that the merged entity will need to submit a bank guarantee for the amount claimed by the government,pending a final decision by the courts on whether the fee is payable by operators. 

The M&A Guidelines have also made it tougher for bigger incumbent operators, such as Bharti Airtel and Vodafone, to merge amongst themselves. The cap on market share for the resultant entity, in terms of revenue and subscriber base, has been fixed at 50 percent in any given band.If the merged entity breaches this limit, it will have to remediate it within a year’s time. However, there is sufficient leeway for the bigger operators to merge their operations with smaller operators, while remaining within the market cap. 

While the M&A guidelines are a welcome addition to the Indian telecom regulatory framework, it falls short of being the catalyst for consolidation that industry stakeholders had anticipated. But the future is not entirely bleak. The Telecom Regulatory Authority of India recently recommended that spectrum trading should be permitted, which would allow operators to buy and sell airwaves according to their needs. In the context of mergers and acquisitions, liberal spectrum trading norms may allow investors to value an operator’s business separately from its spectrum, paving the way for bigger operators to acquire smaller operators and new entrants to exit the industry based on such assessments. 

Authors: This article has been authored by Kosturi Ghosh, who is a partner and Amlan Mohanty, who is an associate at the Bangalore office of Trilegal. Kosturi heads the corporate practice group in Bangalore and her area of expertise is private equity and venture capital investments. 

Disclaimer: The contents of this article are intended for informational purposes only and do not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. 

April 08, 2014

Deal Alert: Ah! Ventures, VentureNursery Angels, Calcutta Angels invest in crowdfunding service Catapooolt

ah! Angels,Calcutta Angels, VentureNursery Angels and some leading industry professionals have made a seed investment in crowdfunding and community engagement platform Catapoolt. CLUB ah!, helped facilitate this deal between Calcutta Angels, VentureNursery Angels and its own angel network, ah! Ventures. 

A graduate of VentureNursery’s Season 3 program, Catapoolt is now endeavouring to leverage the power of Crowdfunding in unique project categories including sports, politics, social enterprises and start-ups apart from creative projects.

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 07, 2014

Sun keeps media in the dark on the Ranbaxy deal

"Sun Pharma bought Ranbaxy for $4 Billion? Holy Shit!" It was clear that this Private Equity fund manager hadn't heard of the deal as of 9.30 am on Monday, April 7. "It's indeed the top story in the Venture Intelligence Deal Digest Daily Newsletter that is just being sent out," said yours truly. No journalist had managed to squeeze in anything about the deal as of Monday morning. Thankfully, a colleague noticed the BSE release filed by Sun Pharma before we went to press. And it was clear that our newsletter was the first instance that a lot of subscribers were hearing about the mega transaction.

Given that both the buyer and seller are publicly traded, this is exactly how it should be - ie, the stock exchanges should be the first to hear about the deal. Contrast this with the number of times another transaction involving a listed company - the buyout of hydel assets of Jaypee Group's by Abu Dhabi's Taqa - got reported in the media before the official deal announcement. So much so, when the deal was officially announced it was news to nobody. Such leaking seems endemic among most infrastructure sector company transactions. The Sun-Ranbaxy deal has clearly shown the even mega transactions can be kept quiet until closure. Hope the infra companies learn how.

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 03, 2014

Why LPs don't care about lowering the 2-and-20 Private Equity Fund Fee Structure

Private Equity International (PEI) has used Bain Capital's new fund raising to provide an interesting take on why the decades old Private Equity fund fee structure of "2 and 20" (2% of the fund size as annual fees and 20% "carry" or profit share) has barely come down despite the financial crisis and why LPs ultimately don't care enough about them.  Extract from the article titled "Bain and the great fee debate":
For years, Bain has been one of the few outliers to the prevailing 2-and-20 model, charging 2-and-30 instead  - and with some success, given that it raised five funds this way. This time round, however, it decided to offer LPs three options: a 1.5 percent management fee with 20 percent carry and a 7 percent preferred return, a 1 percent management fee with 30 percent carry and a 7 percent preferred return, or a 0.5 percent management fee with 30 percent carry and no preferred return.

Since LPs have long complained that management fees are too high, especially for the bigger funds (it was the most commonly cited sticking point in negotiations in our Perspectives investor survey last year), you’d expect them to go for the second or third option. But our LP source suggested that in practice, most investors would go for option one – because it’s “closest to market terms”. If he’s right, the net outcome may well be that one of the industry's only outliers ends up looking a lot more like everybody else.

...Indeed, however much investors grumble about fees, it doesn’t seem to affect their investment decisions all that much. And as long as LPs are not voting with their feet, GPs have little incentive to do anything about it. As Ed Hall, a partner at King & Wood Mallesons SJ Berwin, told us recently: “Investors don't generally select a fund because it has lower-than-market fees, so GPs don't generally have anything to gain by lowering [them].” At the moment, good funds can get away with charging pretty much what they want, while investors are unlikely to back weak funds just because they get a good deal on fees. So it’s hard to see the status quo changing any time soon.

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Will Dr.Rajan wake up to the Exodus of SaaS Startups?

As an email addict, I'm only happy to have my credit card get charged automatically by Google (for extra storage) and Boomerang (a cute little Gmail management tool) - both US-based companies who (understandably for them, unfortunately for me) bill me in US Dollars. I wish we at Venture Intelligence could charge our customers the same way for accessing our database services. But thanks to the RBI, it looks like we can't - unless we re-incorporate in Singapore or Delaware, USA. As today's Economic Times article indicates, this combined with the 0% Capital Gains tax (on sale of shares in private companies) in Singapore just makes the proposition almost a no brainer and explains why so many of the venture capital-backed SaaS/Cloud-based businesses are rushing out.
Software product companies are also stymied by a RBI mandate - meant to protect credit card users- that prevent companies from debiting money without the customer approving every transaction. Enterprise software maker FreshDesk recognised this roadblock early and chose to register the company in the United States right from inception in 2010. Its development operations are in Chennai. The company now has over 18,000 clients, including Pearson and Unicef. "This mandate defeats the entire business model," said 38-yearold cofounder Girish Mathrubootham who did not want to lose customers who would have found the process tiresome.

But data analytics startup Profoundis wasn't so lucky. "Our retention rates went down to 30% as opposed to an industry standard of 80%. We were forced to register in Delaware last month," said Jofin Joseph, the 25-year-old cofounder of Profoundis which expects to earn revenue of about Rs2 crore next fiscal. The relatively low chances of big-ticket exits for investors who back India-based companies are also proving to be a deterrent for many startups.

"All things being equal, lawyers prefer to recommend a New York or Singapore-based startup over an Indian company to the clients looking for an acquisition," said Vaibhav Parikh, a partner at law firm Nishith Desai Associates. To address this perception issue, GamePlan, an Indore-based company which makes software for the construction sector, also incorporated a separate venture in Delaware, United States, called True Intelligence Technologies.
Tsk tsk.

Now that the rupee is appreciating (remember the day Dr.Raghuram Rajan took over?), interest rate hikes have been paused and the long talked about new banking licenses announced, hopefully Dr.Rajan will turn his attention to the small tweak that will alleviate the plight (flight?) of  startups (including that of poor old VI, of course) from the country. (The capital gains tax of course will have to wait for the next Next FinMin.)

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 02, 2014

Deal Alert: ElasticBox Secures $9M In Funding led by Nexus Venture Partners

ElasticBox, the company that enables developers and enterprises to create, deploy and manage applications quickly and easily, is announcing that it has closed a nine million dollar Series A funding round. The Series A investment comes from Nexus Venture Partners and Intel Capital, who also participated in the company's seed funding round with a16z seed and Sierra Ventures. 

“The cloud has fundamentally improved how people access and use infrastructure. But developing cloud based applications is still a lengthy, expensive and broken process that is stuck in the dark ages, like way back in the days of bare metal,” said CEO and co-founder of ElasticBox, Ravi Srivatsav. “ElasticBox empowers the developer with preconfigured Boxes that they can mix and match to create applications - similar to the way a DJ blends beats and samples to create new music. It brings Dr. Dre-like creativity to enterprise application development.”

ElasticBox has introduced a modular way to develop applications in the cloud through a new approach, using Boxes. Boxes are encapsulated, fully configured components of your application architecture that can be combined to create and run applications in the cloud. 

Here is a look at what you can do on the ElasticBox platform:
  • Create Boxes or choose from a library or a catalog of publicly available boxes (like NGINX, Python, MongoDB, Hadoop, Ruby, etc.)
  • Stack and reuse Boxes to quickly and easily create multi-tier applications. 
  • Tweak Boxes to customize for any particular need.
  • Share Boxes for collaboration and quick deployment. 
  • Move your applications anywhere. Companies can develop applications in one cloud, test in another and then deploy in another cloud -- liberating applications from being locked into a single cloud.
  • Update a Box and sync to any application that uses that Box. No need to update the applications individually. '
 “There have been two pivotal moments in enterprise infrastructure development: the creation and implementation of the virtual machine, and the rise of cloud services,” said Jishnu Bhattacharjee, Managing Director at Nexus Venture Partners. “ElasticBox is now overhauling enterprise application development, deployment and management within this cloud in what we think is the biggest step in cloud innovation since VMware and Amazon Web Services. We are thrilled to have partnered with an exceptional team to help build this category-defining company.” 

“ElasticBox’s pioneering work removes the complexity and cost associated with developing, deploying and managing apps in the cloud and truly delivers the promise of cloud elasticity to enterprises,” said Arvind Sodhani, president of Intel Capital and executive vice president of Intel Corp. “We look forward to helping Ravi and team accelerate their growth with enterprises around the world.” 

The rise of business applications

It may not be commonly known, but most enterprises – of all industries, from Finance, to Pharma, to Coffee – develop hundreds or thousands of applications internally to support business processes and create competitive advantage. ElasticBox empowers these enterprises to build better applications faster, which then helps them innovate more quickly. Netflix is one such company. "ElasticBox has provided us with the technology that we had been looking for, but had never found a great solution," said VP of IT Operations at Netflix, Mike D. Kail. "With ElasticBox we are able to both create custom Boxes as well as leverage their preconfigured Boxes to deploy our internal applications, which allows us to focus on innovation instead of orchestration." 

About ElasticBox 

Founded in 2011, ElasticBox streamlines the development, deployment, and management of applications for any cloud. ElasticBox is pioneering a simplified, modular, service-based application development structure, where fully configured components of application architecture are encapsulated as “Boxes” and made available as a service. Boxes are reusable, and fully mobile across cloud environments. To create a multi-tier application architecture, simply “stack” these Boxes. The result? Application development, deployment, and management for the cloud are now seamless.

ElasticBox’s investors include: Nexus Venture Partners, Intel Capital, a16z seed and Sierra Ventures. 

About Nexus Venture Partners

Nexus Venture Partners (www.nexusvp.com) is India’s most successful venture capital fund, with offices in Silicon Valley and India. Nexus’ team consists of entrepreneurs who have founded and scaled large global companies. The team has invested in a variety of companies leading to numerous successful public offerings and M&A transactions. It has over $600M under management with an active portfolio of over 50 companies across Technology, Internet, Media, Consumer and Business Services sectors. The Nexus team plays an active role in helping entrepreneurs and management teams build market-leading businesses. Nexus investments include Cloud.com (acquired by Citrix), Gluster (acquired by Red Hat), Pubmatic, DimDim (acquired by Salesforce), Kaltura, Druva, Aryaka,Snapdeal.com and Netmagic (acquired by NTT). 

About Intel Capital

Intel Capital, Intel's global investment and M&A organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software, and services targeting enterprise, mobility, consumer Internet, digital media and semiconductor manufacturing. Since 1991, Intel Capital has invested more than US$11 billion in over 1,339 companies in 55 countries. In that timeframe, 206 portfolio companies have gone public on various exchanges around the world and 344 were acquired or participated in a merger. In 2013, Intel Capital invested US$333 million in 146 investments with approximately 49 percent of funds invested outside North America. For more information on Intel Capital and its differentiated advantages, visit www.intelcapital.com or follow @Intelcapital. 

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

April 01, 2014

External environmental challenges faced by startups in India

Entrepreneurs like Sanjiv Bikhchandani of Naukri, Murugavel Janakiraman of Matrimony, the Bansals of Flipkart;  VSS Mani  of Justdial, etc. deserve massive admiration. What they have achieved is more like conquering Everest. Good to know that once they have climbed the peak, the environment also helps protect "their" turf. From a blog post by Dev Khare of Lightspeed Ventures (emphasis mine):
Many of India's successful startups have navigated a maze of challenges, creating leading brands and sustaining for long periods of time. Correspondingly, it is much harder in India, relative to the US/Europe, for competition to unseat leading brands.

...
Startups need large markets (Rs 2500cr+ or $500 million+) to get large and succeed.  This is hard to find in India, perhaps due to early consumer demand, unorganized markets, regional differences or foreign substitutes.  For example, digital advertising is a roughly $400 million annual business here, with mobile at 10% of that. To access and maintain growth, almost every new startup here needs to increase their focus on creating and evangelizing their category versus just focusing on their own startup's growth.
Some examples of overcoming this challenge include:
  • spending large amounts of capital to create a category (eg ecommerce, OTA, wireless telecom).
  • expanding into adjacent markets (eg Info Edge, which expanded from jobs into matrimonials, real-estate, education etc.).
  • building or piloting in India and transplanting to the US (eg Zoho)
  • aggregating several emerging markets outside India, perhaps before proceeding to Western Europe and the US (eg InMobi, iFlex, Subex).
  • attacking a large spend base (eg Micromax for hardware, Cafe Coffee Day for coffee/tea/snacks, BillDesk for bill payment).
Many brands in India are created from execution reliability at scale rather than product differentiation.  Brands  in India are disproportionately more valuable as they represent a trusted provider of products or services - think about the enduring value of the Tata brand in multiple unrelated categories.  As one consequence, I believe more startups should think about brand-building here in India relative to if they were in the US.

Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Infra sector investments by SWFs & Pensions; IT deals buoy Q1’14 PE investments to $2.3 B

Deal Value almost doubles compared to year ago; Flat compared to Oct-Dec’13 quarter

Private Equity firms invested about $2,273 million across 89 deals during the quarter ended March 2014, according to early data from Venture Intelligence (http://www.ventureintelligence.in), a research service focused on private company financials, transactions and valuations in India. The investment amount was almost twice that invested in the same period last year ($1,179 million across 103 transactions) and marginally higher than that invested during the immediate previous quarter ($2,221 million being invested across 86 transactions). Note: The above figures do not include PE investments in Real Estate.
 
There were five PE investments worth $100 million or more (with three above $200 million) during Q1’14 compared to just one such transaction in the same period last year and seven during the immediate previous quarter, the Venture Intelligence analysis showed.

The top two PE transactions during Q1’14 involved Canadian and Middle Eastern investors teaming up to invest into infrastructure operating companies in India.
Canadian pension funds - Canada Pension Plan Investment Board (CPPIB) and Caisse de depot et placement du Quebec (CDPQ) - teamed up with Omani sovereign wealth fund State General Reserve Fund (SGRF) agreed to invest a total of Rs.2,000 crore in L&T IDPL, the infrastructure development arm of engineering major Larsen & Toubro. The second largest PE deal during Q1'14 featured Canadian pension fund PSP Investments (along with IDFC PE) partnering Abu Dhabi's National Energy Company (Taqa) to buy out two hydel power plants operated by Jaiprakash Power Ventures in the state of Himachal Pradesh. (PSP and IDFC will put up a total of Rs.1,960 crore for their 39% and 10% stake respectively, while Taqa will own 51%.)

The next four largest transactions were from the IT & ITES industry including the $260 million buyout of the Aditya Birla Group’s BPO unit Minacs by CX Partners and Capital Square Partners; the $143 million fifth round raised by e-commerce firm Snapdeal.com (led by strategic investor eBay along with existing VC investors) and General Atlantic’s $100 million commitment to healthcare software firm Citius IT. eBay again teamed up with existing PE/VC investors  to provide $90 million in follow-on financing to online classified services firm Quikr. While IT & ITES companies accounted for $895 million, Energy and Engg. & Construction companies vaulted to the second and third favourite spots attracting $414 million and $324 million respectively, the Venture Intelligence data showed.

Venture Capital type investments accounted 51 deals (or 57% of the investments in volume terms) during Q1’14. Late Stage companies accounted for 14% of the PE investments, while listed company investments accounted for 12%.
 
Venture Intelligence is the leading provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.