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November 28, 2015

Businessworld article on Startup Acquisitions

Businessworld has an article based on Venture Intelligence data on VC-backed startups acquiring their peers.

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 Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.

November 24, 2015

Why won't NSE & BSE eat their own dog food - aka become listed entities themselves?

The Firm show on CNBC-TV18 has a report enquiring into why the leading Indian stock exchanges - BSE and NSE - haven't gone public themselves - especially after raising Private Equity capital with a clear understanding that such investors would seek profitable exits within a few years. With no revert from SEBI on clearances for the exchange IPOs, the PE investors in these exchanges have written to the Finance Minister and speak openly about their frustration.

View the report video here and text version here.

Extracts:
Sohil Chand, MD, NVP India:
“I think what is important is to see what has happened to the multiple and the Rs 3,950 represents a multiple of only 14 times trailing earnings. When we look at comparable stock exchanges, the listed stock exchanges whether it is Hong Kong or Singapore or other comparable markets, they traded 30 times forward earnings. So, in our estimate the NSE right now, the private markets are undervaluing it by 50 percent.”
...“The listed stock exchange model is one that is well established throughout the world. Every major developed country in the world whether it is the US, UK or Japan, China, Hong Kong, Singapore, Germany they all have listed stock exchanges. The country’s which don’t have listed stock exchanges are countries like Saudi Arabia, Argentina. I think we need to decide which category we want India to be viewed in.”  
 Rahul Mehta, Director, Argonaut Private Equity:
“We are long-term investors, at the same time we are not necessarily running a charity. So, we invest under very strict procedures, under procedures where we know when our money is going to coming back to us and what kind of expected returns we have. We can certainly live with regular business risk and that is something we live with everyday but what we cannot understand is risk that comes out of regulations changing.”   
...Chitra Ramkrishna, MD & CEO, NSE
“For any company that lists on NSE, I offer a value proposition of liquidity, index, derivatives, etc. I genuinely believe that this is tremendous benefit that I can offer the securities that are listed on NSE. It is only natural that my shareholders want to see the same benefit for the NSE shares.”
Would you like a break down of Private Equity investments in BSE and NSE? Head over to the 
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November 22, 2015

VC-backed Startups Solving Exit Problem?

Economic Times has an infographic based on Venture Intelligence data on the phenomenon of VC-backed startups acquiring their peers.


The Venture Intelligence infographic on the same phenomenon:



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 Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.

November 10, 2015

How Many E-Tailers Will Remain Standing by Diwali 2016?

Alok Goyal of SAIF Partners (and prior to that CEO of FreeCharge and redBus) writes in Economic Times:
According to various industry sources, the total burn rate across the top 10 ecommerce players appears to be ~$9 million per day...If we were to assume a year-on-year growth of 150%, by next Diwali, the top 10 companies would need about $22 million per day to sustain business with the current unit economics. That means companies will burn about $6 billion to sustain the current trend until next Diwali.  
There are hardly any investors out there who can support that pace of cash burn. 
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 Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.

November 08, 2015

TinyOwl Tamasha Triggers Advise Avalanche

A lot of pontification is flying around for TinyOwl, the food ordering startup that's landed in big trouble - much like the other young IIT Bombay alumni founded startup Housing.com. (Prior to the latest "layoffs triggered hostage crisis" at the company, one had noticed TinyOwl - apart from its remarkable back-to-back funding announcements - mainly for a tweet on how, between cash backs from it and Paytm, one could get paid to eat!)

Arvind K. Singhal, Chairman and MD of retail consulting firm Technopak, has used the goings on at TinyOwl, to ring the death-knell for startups across categories. "These incidents highlight some bitter realities about the Indian startup ecosystem, which have so far been overshadowed by the multi-billion dollar valuations of a handful of companies, and the multi-million dollar funding rounds they have done. I believe that such ugly incidents are in store for several other companies in India’s fledgling startup ecosystem. In fact, these problems may well emerge in the much-celebrated e-commerce space in the future, I expect at least one major online marketplace player to shut down or severely rationalise its operations within the next 24 months. That could lead to tens of thousands of employees getting directly impacted." he writes in the Quartz.

VC investor Pankaj Jain of 500 Startups has countered Singhal in a MediaNama post saying:
"...the Indian startup scene is far broader and diverse than this one small sector. The food and grocery delivery vertical has been overfunded. Some of the companies closing rounds forced me to scratch my head and ask, “what am I not getting?” That’s Ok. You know why? There are amazing entrepreneurs and developers, and designers and financial wizards building solid businesses. And guess what, it’s not going to stop. What else isn’t going to stop? The funding of great companies but also of companies that aren’t run very well.
...At 500 Startups, we’re not going to slow down our investing in India. In fact, I love all this talk of doom and gloom. Why? It’s going to send wannabe founders, angels (who figured they can make more money investing in startups than real-estate) and the glory seekers running for the hills. This means less noise, serious founders pushing the limits of creative destruction because they will have to do more with less, and investors, in it for the long haul, getting access to great founders building real companies."
The TinyOwl episode has also served to inspire NextBigWhat to follow up its Diwali call for "startups and investors to clean up their mess" with an idea for an on-demand service that will fly in bouncers to defend startup founders!

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 Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.

November 07, 2015

CanBank Venture Capital Fund to manage Government of India's Electronics Development Fund

From the Press Release:

As part of  Digital India Agenda, Government of India it  is envisaged to develop the Electronic System Design & Manufacturing (ESDM) and IT Sector to achieve net zero imports by 2020. As part of this initiative, Department of Electronics & Information Technology (DeitY), Ministry of  Communication and Information  Technology, Government of India has appointed CanBank Venture Capital Fund Limited (CVCFL)  as Fund Manager to house and manage  the Electronics Development Fund (EDF).

EDF as a “Fund-of-Fund” shall participate in “Daughter Funds” which in turn will provide risk capital to companies developing new technologies in the area of Electronics, Nano Electronics & Information Technology. The corpus of the EDF could be up to Rs.2,200 crore  to be committed  in select Daughter Funds by March 31, 2017.  CVCFL organized a pre- launch event -Symposium on Electronics Development Fund in Mumbai (on November 5, 2015) for announcing the EDF to Angel/VC/PE Funds and Electronics  and IT Industry.

Mr. J.S.Deepak, IAS, Secretary, DeitY during his Inaugural Address at the Symposium on Electronics Development Fund, highlighted the initiatives of Government of India in promoting manufacturing in the Electronics Sector.  He said that  demand for electronics is estimated to be USD400 billion by 2020.  The Government is focused on reducing reliance on imports in this sector by promoting indigenous manufacturing.  EDF is one such step in this direction. The  EDF model will enable capital from the government to be channelized  to needy start ups and manufacturing units  by professional fund managers in an autonomous manner.

As  Keynote Speaker, Dr. Ajay Kumar, IAS, Additional Secretary, DeitY, informed the much awaited Policy on Electronic Development  finally has taken shape.  In this regard, the GOI  is pleased to partner with CVCFL for implementing EDF.  “The ultimate goal of EDF is to reduce the country’s ballooning import bill on account of increasing  demand for electronic devices and technology. The capital from EDF can be deployed across the entire value chain and ecosystem of ESDM including companies focused on Fabless Semiconductors, R&D, and materials technologies for electronic devices “, he said. He emphasized that in tune with the call given by the Hon’ble Prime Minister, Design in India will be given an impetus through EDF.


(Left to Right): Mr. Harideesh Kumar B, Executive Director, Canara Bank; Mr. Rakesh Sharma, MD & CEO, Canara Bank; Mr. J.S. Deepak (IAS), Secretary, Department of Electronics & Information Technology (DeitY); Dr. Ajay Kumar (IAS), Additional Secretary, DeitY; and Mr.S.Thiruvadi, Managing Director, Canbank Venture Capital Fund Limited 

Mr. Rakesh Sharma, MD& CEO of Canara Bank presided over the programme.  He said, “Canara Bank will be a partner in the initiative of DeitY in promoting ESDM Sector through its subsidiary Canbank Venture Capital Fund who are fund managers of EDF. The Bank will also  lend  support to the Electronics and ESDM sector  through debt in this initiative”.

Mr. S.Thiruvadi, Managing Director, CVCFL said EDF,   would especially seek to encourage investments in ventures in the ESDM and related sectors that normal commercial investors would shy away from, owing to higher risks involved. Spelling out the process of how the daughter funds would be evaluated, he added that EDF would be open to invest in funds floated by both Indian and foreign fund managers, as long as the daughter fund’s corpus is dedicated to investments in India.
Mr. Harideesh Kumar B, Executive Director of Canara Bank participated in the programme and laid out the initiatives of CVCFL in venture capital segment so far.

The symposium also witnessed thought provoking and interactive panel discussions involving leading academician Prof. Navakantha Bhat, IISc, Venture Capital investors (including Dr. Hemant Kanakia from  Walden International, Mr. Ajay Lakhotia from Imprint Ventures and Mr.Chinnu Senthilkumar from Exfinity Ventures), entrepreneurs and senior executives from the ESDM sector (including Hariom Rai, Founder, Lava International; Narendra Narayanan, MD, Vinyas Innovation  Technologies; Ramesh Hebbar, DGM, Larsen & Toubro; Mr. A. Gururaj, MD, Vittal Innovation City and Mr. Raja Manickam, Co-founder, Tessolve) and advisory firms (including Mr.Sridhar Venkiteswaran, ED, Avalon Consulting and Mr.S.Bhanuchandran, Founder, Strategic Business Consultant).

Venture Intelligence, the leading provider of data and analytics on Private Equity, Venture Capital and M&A transaction activity in India, was the event partner.

November 03, 2015

Why Uber is Not Going to Stop Anyone (in India) from Owning A Car Anytime Soon

Deepak Shenoy of Capital Mind has an interesting post on MediaNama titled "The Economics of Using Uber in India". Extracts:
Uber advertises its lowest fare in Bangalore at Rs. 7 per km charge but that is utter bull. For an average 10 km ride in the city, it costs much more:
a Rs. 35 base charge that has no free usage, which would be Rs. 3.5 per km.
Rs. 7 per kilometer run
Rs. 1 per minute as a driver fee. For an average of 3 minutes per kilometer this comes to Rs. 3 per km.
These add up to Rs. 13.5 per kilometer. That’s how much you pay for an auto as well.
...The annual costs of a car are tiny nowadays (Rs. 1 per kilometer, assuming Rs. 12,000 service costs for Rs. 12,000 driven). So if my car gives me 12 kms to a liter of petrol, i’m still paying just Rs. 5.5 per km for petrol and Rs. 1 for parking.
Add to this the convenience of owning a car, the ability to get groceries from hypermarkets that can’t or won’t deliver, the ability to drive your kids to a location just 2 minutes away because walking will kill you (welcome to Bangalore, just don’t walk anywhere). And the underappreciated advantage of being able to just up and leave at 6 am to smell the fresh air in the western ghats.
And then, Uber cars are not available when you want them – wait times are upwards of 10 minutes most of the time, unless you’re in a favoured location. Then, there are spikes – if it rains, Uber goes to 1.5x “surge” pricing. All this will not vanish because drivers too have their economics which ensures such practices (long wait times, surge pricing) will continue. 
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 Sign Up for the FREE Weekly Edition of the Deal Digest: India's First & Most Exhaustive Transactions Newsletter.