The deal size is pegged at $3 million but could not be verified, writes Paramita Chatterjee Infosys co-founder Nandan Nilekani is in advanced talks to invest in a two-year-old Bangalore-based start-up Mubble Networks Private Ltd, in his personal capacity, signaling a strong vote of confidence in the new breed of India's entrepreneurs. Talks are at an advanced stage and the deal is expected to close over the next few days, a person with direct knowledge of the development told BW. Mubble is a mobile first, India centric product in the telecom utility apps space. It is the first app in the world which automatically maintains a live prepaid bill for its users. The company was founded by three IIT engineer friends who have a strong background in marketing, analytics and mobile technology platforms. The Mubble app supports Indian operators across the country and is built for dual SIM phones. It works offline and what’s more, it is also available in all Indian languages – a true ‘made for India’ app! When contacted, Ashwin Ramaswamy, Co-Founder & CEO at Mubble Networks declined to divulge any details pertaining to the transaction. “Thank you for writing to us. We are in advanced stages of talks with various investors, and therefore, I am sorry that I will not be able to answer any of your questions for now,” he said over an email response. Nilekani, however, declined to comment on the story. Another person, an industry executive, pegged the deal size at $3 million. However, this could not be independently verified. The funds that the company is raising will help Mubble recruit talent. Currently the company has 12 employees including the 3 owners. So far, 2015 seems to be the year of startups with young entrepreneurs increasingly churning out winning ideas and attracting huge dollars in funding. In fact, investing in emerging businesses has opened up new entrepreneurial avenues for India Inc's head honchos as well who are now parking their personal wealth in startups. “While for startups, having senior executives on board obviously helps in gaining knowledge and strategic input, for industrialists and corporate honchos it gives an opportunity to bolster entrepreneurship,” said Raja Lahiri, partner at advisory firm Grant Thornton. Recently, Ratan Tata, chairman emeritus of Tata Sons, invested in taxi firm Ola in his personal capacity, while Nilekani was in news for his Rs 100 crore investment along with billionaire investor Rakesh Jhunjhunwala in an entity that owns Café Coffee Day. Also, in the risk capital market, there is growing chatter that venture market is the place to watch out for. In the first half of the current calendar year, as many as 363 venture capital deals were sealed, three times more than the number of private equity deals, which stood at 99, as per data available with Grant Thornton.
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Ventureast is perhaps the oldest fund house in India. It has been around since the mid-nineties, and is in its fourth stage of funding Indian entrepreneurs. They have made a Rs 550-crore bet on Life Sciences and is in the process of pumping in another Rs 600 crore in the sector. The remaining Rs 1600 crore of the fund’s corpus has gone into investments in technology, distribution, agriculture and infrastructure companies. The fund is also betting on clean environment. It has invested in interesting ideas such as Central Parking Services (CPS), a tech enabled parking management company, 24LetterMantra, an organic food company, and Bharat Light and Power, a solar infrastructure management company. Sarath Naru, the Managing Partner of Ventureast, says in an interview with BW|Businessworld's Vishal Krishna the risk taking abilities of Indian entrepreneurs have gone up significantly because of the availability of seed capital. However, Sarath believes that Indian entrepreneurs need to build technology businesses that could solve problems related to consumption; such as connecting hyper local retailers to the supply chain and to the factories with a consumer play. Amidst the investment buzz in India, Sarath believes, the general rule of investing in ideas remains, which he means that only a third of the portfolio companies would become extremely successful companies. Ventureast has until now invested in over 80 companies.Here are the excerpts of the interview. What is the current idea behind investing?Seeing the current state of affairs in the e-tail sector, let me quote from Guy Kawaski. It goes back to the previous internet bubble in 2001. His comment was that "I am praying every day for the next bubble to come because I know now what I am going to do". We have seen bubbles and the entrepreneur in us wants to cut it fine because we do not want to miss out on the opportunity. It’s a repeat of the previous peak and we can be talk about winners and losers. In the end of the day the question remains have people created value? That is the way we look at it. By and large we are always moving forward with value creation. There will be transfer of wealth. From a strategy perspective, how do we look at it? We constantly track companies and we are trying to find the best companies before the foreign funds back a startup. There are businesses which will be generic businesses and market places. Market places will be very difficult to build because of the generic nature of the business. The one with the muscle will win. Its winner takes all market. Market share is not the only variable to success. There are good lessons and bad lessons. Many entrepreneurs can raise Series A and get stuck after that. These guys have to restart their lives. It is the nature of the game that they have got in to. What is the new internet business?Businesses that need capital are generic and on a horizontal platform. It is like land grab. Here the entrepreneur is taking a huge risk. The early investors need to take that risk and have to ask themselves if they have the ability to convince large funds to take a bet on their company. We take small bets. Our thesis is that we need to look at companies that have a lifetime for profitability. The next set of businesses is integrated to the real world, where we see they have competitive advantage in product delivery. A combination of real world and the internet is all we are seeing. You need something more than capital in these business cases. Ventureast is looking at B2B, B2B2C. Full stack businesses that look at real world integration. India is a cash economy and companies need to solve this problem of accepting payments in cash. We must use the internet to scale, but the delivery is a real world problem that companies must solve this. One needs to control the experience. The furniture etailers is something that needs a full stack. If someone can solve the experience then it makes great sense to invest in these customers. Can they customise furniture? This is the real world problem that can be solved. It can be solved by working with designers and manufacturers. Now is the time for such businesses. What kind of businesses that use technology can add value in India?The handyman market is there. About eight years ago we worked with ProHandyman, the entrepreneur had a brilliant customer acquisition model, he had a door to door model of selling where he would tie in with Croma and gets a contract to service consumers. The entrepreneur’s problem was with execution of getting the plumber or a carpenter to the home on time. It was a hub and spoke model in Bangalore and Chennai. At least now the acquisition problem is solved and we need to crack the service part. Handyman service is very protocol driven and technology should track every activity and process. There are consumer services which technology can solve. Take for example Portea, about a third of the consumers need nursing and physiotherapy. The delivery has been done with smartphones. Solving the technology part is easier; it is the cultural part that is difficult. Can these individuals who are professional nurses make it on time to the destination of the consumers and follow processes. Again we come back to the real world delivery problems. We are looking at a company that allows patients to connect with doctors for surgeries. Hospitals have changed their mode of operations, they are providing infrastructure only. The doctors have to pull patients today. If technology can play a role here then it is a good business to look at. We would like to seed such a company, about $1.5 million is going in. Hospitals have built too much capacity and they need to utilise it. These internet companies can help these hospitals get more patients for surgeries. A patient’s family spends more on the first two days of the surgery and the hospitals want to bring the average length of stay down to increase revenues. Portea has signed up with Manipal to continue monitoring the patient after surgeries. The company makes sure that the person goes home at the right time. The insurance companies are happy because it is data and are happy that people are cared at home rather than a hospital. We had several telemedicine companies in the past and not many came through. The hand-held phone has changed the way you can do diagnostics. The device play is meant for specificity and accuracy of data being collected. Scanning pictures and sending it from remote areas. There is a point of care solution for the company that we have invested in. It is an exciting company. What about skill development as a business?The biggest challenge is no one gives value for certificates. Imagine you getting paid the same salary even after having a qualification, although you have better skills. This is difficult to solve because the companies that employ such individuals need to set a clear path for these individuals. The first wave of course was BPOs and call centres. We skilled so many people and there was too much supply. I think education is a space we still have not found a company that makes a different. But there is a lot of interest from entrepreneurs who want to give back to society in terms of skill development. India will continue to have opportunities for disintermediation, can we make people self employed by using technology and finance. There is also a case for startups that are getting in to financing of small businesses in rural regions. This is a service that can use information and services. What about manufacturing, design and retail services?Make in India has two or three elements to it. India cannot compete with China in scale, investors cannot get into companies that are playing the price game and we need to find companies that can be unique in intellectual property. Clearly we have missed the bus in manufacturing. However, Ventureast is betting on design services and have a portfolio company. In retail there is a play for entrepreneurs in build cloud based services to connect FMCG and Kiranas or small stores. We have already met such a company. The ideas that are coming to the table today are certainly better. Life Sciences is an industry that we will bet on going forward.
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An educational technology start-up, founded by three Indians and a German student in a US university, has received a whopping $100,000 funding from a private investor. CampusKnot, the online educational hub founded by three Indian students Rahul Gopal, Hiten Patel and Perceus Mody, and German student Katja Walter at Mississippi State University, has been designed to increase collaboration among faculty and students. The $100,000 funding by an unnamed investor from the Gulf Coast, has set a record for private investment in a student-run start-up at the MSU, Clarion-Ledger newspaper reported. Free to users, the site is a clearinghouse for schedules, assignments and other academic events. It also offers a marketplace for textbooks, including a feature making them searchable by title, subject and author's name. CampusKnot debuted in 2013. Since then, creators spent two years refining their project at MSU's Centre for Entrepreneurship and Innovation in the College of Business. Gopal and his co-founders hope that the CampusKnot eventually will serve as a single site for students to easily reach teachers and classmates, residence halls and student organisations -- plus offer space for faculty to post course syllabi and related academic material. The completed site would also allow students to access automated calendars based on their network groups. Gopal is a senior aerospace engineering major while Patel graduated from MSU in 2013 with a degree in information systems and is pursuing a second degree in marketing. Mody is a senior majoring in medical technology while Walter graduated in May with a degree in art and graphic design. Though still in a testing phase, the company currently is recruiting student leaders and faculty members to form focus groups for a soft launch of the site this fall. "We are not looking to have a job; we are looking at creating jobs and helping to solve educational problems," Patel said.
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Paramita ChatterjeeThe startup space has been bustling with activity with Indian entrepreneurs churning out winning ideas and attracting millions of dollars in funding. In fact, there is growing chatter across the risk capital industry that the venture market is the place to watch out for! “What is exciting today is that this kind of a venture ecosystem did not exist five years ago,” said Mohit Bhatnagar, MD, Sequoia Capital on the sidelines of the Young Entrepreneur Conference & Event (YECE) organised by Businessworld on July 23. “If we as investors can handhold a few promoters and scale them to the next level, the contour of entrepreneurship will change in the years to come. There are great ideas floating in the market now,” he added. Investors who attended the Young Entrepreneur conference evinced interest in a slew of sectors including consumer, biotech, healthcare and software, apart from online and ecommerce within technology that are currently doing the rounds. “A good business can be described as one that can be scaled up rapidly and has robust unit economics in place that can help the company achieve profitability,” said Karan Mohla, executive director, IDG Ventures. In the first half of the current calendar year, the number of private equity and venture capital deals in the country increased to 462 from 285 in the corresponding period in 2014, as pet advisory firm Grant Thornton. In terms of value too, investors pumped in 38 per cent more at $7.1 billon in the January-June period this year. “We are always scouting for exciting business opportunities and are looking to fund in the range of $2-100 million,” said Sanjeev Aggarwal, co-founder and senior MD at Helion Venture Partners. Entrepreneurship in India can be classified into various categories of which these three are most common. One, businesses that ride on content. Here, promoters do not need too much of experience to begin with and therefore, the new breed of India's entrepreneurs who are typically very young and are fresh out of college are foraying in this space. Two, businesses that combine the online and offline models where experience is welcome but people can also start from the scratch. The third category is the outsourcing business where one typically would require prior experience to make a mark. “Our agenda is to explore investment opportunities and build relationships,” said Dev Khare, MD, Lightspeed Ventures India. “There are several India-specific businesses to watch out for and going forward, they are expected to gain traction as they exist nowhere else in the world,” he said. All in all, both private equity and venture capital investments in the country are here to stay. However, there is one factor that fund managers seemed wary about - high valuations riding across sectors. “The valuation game is really tricky. While certain companies are quoting high numbers, there are some who are finding it tough to even startup ,” said Sequoia’s Bhatnagar.
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Startups betting on the dometic forex market worth $18 billion to scale up business, writes Vishal Krishna With Makemytrip, the travel ticketing portal, acquiring a 28 per cent stake in Bangalore-based holiday planning company, HolidayIQ for Rs 93 crore, the travel portal industry is fast heading towards raising large funds. The market size for the travel booking industry is $120 billion in India and the organised players have only 2 per cent market share. According to the Indian Brand Equity Foundation, the forex earned from the domestic travel industry can be as high as $18 billion. This opportunity had already started a customer acquisition war like the one that we are witnessing in the etail business and all the money raised will be spent on hiring large sales teams. They will build market share in acquiring properties to be listed on their portals and create a bidding war of consumers. Surely television channels, Google and Facebook will benefit from all this. But what about the business itself? The funding will create many startups, to set shop, and ultimately drive them towards consolidation or make them shut down. For now the system is all geared up for a massive launch. With rumours floating around that Oyo Rooms is raising Rs 630 crore from Softbank, the industry could trickle down more money. The deal would make startups like iTraveller, Stayzilla, TripHobo, Tripoto, Travel Triangle and ZipRooms to raise more money with existing investors or look for funding. Today a startup, which has raised Rs 10 crore or more, spends Rs 1 lakh per day on Facebook and Google advertising. This would mean that Rs 3.6 crore is spent per year by a small startup to increase customer traction. “We look at bettering customer experience and manage customer repeats that book on the site when they are traveling to smaller towns,” says Yogendra Vasupal, founder of Chennai-based Stayzilla. He adds that increasing traffic volumes on to the site and app is not the end game. Stayzilla raised $20 million from Nexus Ventures and Matrix Partners recently. By not focusing on customer service, the travel industry can distance consumers. Today, like every etail business, there have been customer complaints about the less than average experience after booking from several travel sites. No doubt the money will make them improve processes. But this industry too will become a victim to heavy discounting to increase consumer traffic. In the off season too prices may drop to a point where the consumer benefits with a holiday package. iTraveller’s founder Shiju Radhakrishnan says that there is a need to organise the travel industry and that the discounting model is not the right way to go about it. “You need good data about regions and the properties. So you need to organise the suppliers who provide you this data in India,” says Shiju Radhakrishnan, founder of iTraveller. He adds that India will primarily remain a customer acquisition market, through heavy rotation of television ads, because of the nascent nature of the startup industry. “Consolidation is on the cards. But the opportunity to be independent, as a startup, is large because technology is going to disrupt the travel industry by getting rid of middlemen,” says Radhakrishnan. iTraveller recently closed a round of $1 million from LetsVenture. Ticketing is dominated by Goibibo and Makemytrip and these large portals do not have holiday planning tools that are customised for individuals. These new startups provide discovery, booking, planning and experience tools that become obvious acquisition targets. Let us hope that at least this industry is deep rooted in common sense and that it does not get lost in the story of valuations and wealth creation only for fund houses.
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Sanjay Swamy is a start-up veteran. His friends say that his out-of-box thinking has led him to scale up operations of several businesses. In 2006, when he was the CEO of mCheck, Swamy worked with telecom and banking regulators to help build regulations for mobile commerce. Perhaps, he was perhaps the first to scale up this industry. In 2015, Twitter acquired Bengaluru-based mobile marketing and analytics company ZipDial. And the deal enabled Swamy to entirely focus on start-ups. His investment arm called Angel Prime is a $10 million fund which incubates technology companies and youngsters with ideas that can benefit the mobile Indian. They have invested in 8 companies so far. Speaking to BW | Businessworld's Vishal Krishna, Swamy says the company will close at least six deals per year. Excerpts from the interview:Finally, Sebi has come out with listing norms. At least, it would be easier for entrepreneurs to list in their own country?It is a welcome move. Having a friendly vehicle is very important for investors. There are solid start-ups in India and now with the norms being put out, it's only going to increase investment in India. The numbers are here to stay, just take a look at the smartphone penetration and the number of opportunities that it has presented to build technology that can change lives. China was like this in 2007 and they have seen a massive ramp up of start-ups since. But it is still early days because we need to look at the nuts and bolts of the listing norms. What interests you in ideas today?Today people learn from the past mistakes. There are young entrepreneurs who are willing to fail and are ready to work with new ideas. It is interesting to note that Indian companies are now started by boys and girls who are between 21 and 29 years of age. There are older people who are also becoming start-up founders. The last five years has seen Indian entrepreneurs become bolder because of the penetration of smart phones and the sheer population size presents several business opportunities. I have noticed older people join start-ups because they want to back the idea and cash in on the growth upon an ideas success. Where do we come in? We come in at a very early stage as a fund and provide value whenever needed. What we will not do is to make decisions on behalf of entrepreneurs. But one must remember that we spend months evaluating ideas and we are not a fund that invests in a company because we want to be everywhere. We are focused on technology. By that I mean financial technology, payments, security, education technology and internet of things. The ideas we back we hand hold them.How do you evaluate an entrepreneur?First he should know why he wants money. Then he should know who he is taking money from. We are disappointed at times because we close only 1 in 10 engagements that we make. Some deals do not close because the founders have not evaluated the market that they want to serve. It is sometimes compelling to back the opportunity alone. Before raising a fund an entrepreneur should also validate the idea. The idea should have gone through certain iterations. This makes it easier for a fund to invest in. We have a lot of success with start-ups serving business to business companies. Is there a particular reason for the same?Yes the consumer game requires velocity which is why we notice that companies that succeed have such high valuations. In the B2B industry we have seen successful start-ups because there are clients adopting a technology. It may also be because this business does not require scale. It needs paying customers. But the BBC business requires a large understanding of the customers and consumption behaviour. A start-up in either case must understand their target market.We want to back ideas that will not be copied easily. Today capital is no longer a differentiator. Four or five years ago you could raise money and people would talk about you. Today all funds are looking at fundamentals and unit economics is the key. Also in a start-up more things go wrong than good. The competition today is in acquiring teams that can ramp up an idea. I would say that there are challenges to find a company that can disrupt the market with the least capital. That said I get 1000s of ideas in my mail box. It would be interesting to see what business models will succeed. But we are looking at technology and how it can be scaled for enterprises to win more consumers to clients.
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Mumbai-based crowdfunding platform for social, personal and creative projects, Ketto has raised $700,000 in funding led by Pradyumna Dalmia, deal champion of Calcutta Angels and Sudhir Rao, deal champion of The Chennai Angels & co-founder of IndusAge Partners.The other investors in the round includes - Singapore angel network, Anupam Mittal, Indian Internet Fund, Letsventure, Chennai Angels, Calcutta Angels, Intellecap Impact Investment Network (I3N), Ah Ventures, & Project Guerrilla. With the infused funds, the startup plans to double its technology and business development team with an aim to reach $100m in volumes via crowdfunding. Ketto also plans to expand operations in Singapore, Indonesia, Malaysia, and other South-East Asian countries.Varun Sheth, Co-founder & CEO, Ketto said, “The fresh round of funds will be used to build a world class platform which will facilitate users to raise funds across multiple categories for any project of their choice.”With global crowdfunding market estimated to reach $96 billion by 2025 and Asia being the key growth driver, Ketto is uniquely positioned to amass maximum support for any projects – be it disaster, social, technology, creative or personal.Sudhir Rao, the Chennai Angels and co-founder of IndusAge Partners said, “It is creating a platform where everyone has an equal chance to raise funds for any project: be it social or commercial.”Founded in October, 2012 by Varun Sheth, Bollywood actor Kunal Kapoor and Zaheer Adenwala, Ketto is Asia’s largest crowdfunding platform for social, personal and creative projects in Asia according to crowdsurfer.com. The company has witnessed a growth of 3000% year-on-year basis in terms of volumes, and in the past few months, has been crowdfunding close to a crore monthlyIn the last 12 months, multiple celebrities & corporates have backed various projects by raising funds on Ketto, The list includes names like - Hritik Roshan, Amitabh Bachchan, Anuskha Sharma, Myntra, StarSports, among others. Recently, Ketto has created first-of-its-kind partnership with Lakme Fashion Week - to provide a platform to the seven Gen Next designers to garner funds to launch their label at the upcoming showcase in August, 2015 in Mumbai.(BW Online Bureau)
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Funding to be deployed for multi-city expansion and brand management activitiesBoxMySpace, a Mumbai-based unique storage solution provider which uses technology to enable clutter free homes and office spaces, has raised Rs 1.92 crore from a consortium of investors led by Farooq Oomerbhoy, who was one of the co-founders of the early stage fund Orios Venture Partners. Ritesh Veera and Singapore Angel Networks also participated in the funding round.The funding will be deployed for expanding operations in metros including Pune, Bangalore and Delhi and undertaking key marketing efforts. BoxMySpace also plans to launch other innovative storage solutions in the future and partner with online retailers and SMEs to streamline their need for an efficient storage solution for their goods.Established in January 2015 by Pratyush Jalan, BoxMySpace was formed with an aim to bring the same convenience of cloud storage to the physical goods of a consumer’s home. The consumer can effortlessly avail on-demand storage service for their household goods at their doorstep either through the web or mobile application across Android and iOS platforms for monthly fee starting at Rs 99. BoxMySpace delivers high quality storage boxes to customer’s homes/offices wherein they can pack their belongings in the boxes, thereafter BoxMySpace collects it and stores it safely for them! It also provides spaces for larger storage items through it’s 4x4 and 6x6 packages. BoxMySpace leverages the unused spaces in large warehouses and plugs the gap to provide a technology backed solution to retail customers. It also provides the consumer with their storage dashboard to create a visual catalog of all their stored items and a unique code to each item/box to enable recall within 12 to 24 hours.Commenting on the investment, Farooq A Oomerbhoy, said “We are delighted to partner with BoxMySpace which is poised to lead the innovation forray within the storage industry in India. Shrinking living spaces, dynamic work patterns have resulted in people adopting a transient way of life, necessitating the need for storage solutions. Certain problems which plague consumers but do not consciously warrant attention unless a solution is bought forward for them, (for eg Ola/Uber) and BmS is one of them. Once consumers realise storage is no longer a hassle and expensive, BmS will become their preferred choice. We are working closely with BmS to introduce this solution to not only Indian consumer, but given the scalable nature of the business will be looking to expand in other part of Asia very soon. ”
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The flavour seems to have returned to lending capital to small and medium businesses. Ten years ago private banks like ICICI and HDFC Bank increased their retail lending. In less than two years the global crisis, along with increased defaults in the Indian small business industry, compelled the banks to rein in their lending to the small businesses. Most of the loans, in the early 2009, ended up recovering only 75 per cent of the the total loan value.
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This is the third round of funding for Grofers which has already raised over $45 million, writes Paramita ChatterjeeA clutch of early-stage investment firms -- Sequoia Capital, Tiger Global and Apoletto Asia -- have infused $36 million dollar in Grofers, an online grocery delivery service, founded by Saurabh Kumar and Albinder Dhindsa in Delhi NCR in late 2013.Today, in less than two years, Grofers is present in over 10 cities including Ahmedabad, Hyderabad, Jaipur and Pune apart from the metros.While an email sent to a Grofers executive did not elicit any response, a person familiar with the transaction said the funds raised will help facilitate the Gurgaon-based start-up’s expansion plans. “Going forward, Grofers plans to expand its operations in other geographies and penetrate deeper in groceries and add new consumables categories,” the person added. Daily grocery, bakery items, flowers, fruits & vegetables, meats and baby care products, are among the products that are currently available on Grofers. It is understood that corporate law firm Shardul Amarchand Mangaldas & Co. acted for Grofers.So far, Grofers has partnered with over 400 vendors in Bangalore, Delhi NCR and Mumbaie. This is the third round of funding for the company. The company has already raised over $45 million in two earlier rounds. However, the quantum of stake that the investors picked up could not be ascertained.The funding in Grofers highlights how investors are increasingly betting big on Indian entrepreneurs and their winning ideas. Earlier this year, Gurgaon-based ShopClues raised $100 million from Tiger Global, Helion Venture Partners and Nexus Venture Partners, while Rocket Internet AG along with other investors infused $110 million in global food delivery marketplace Foodpanda.While start-ups in themselves seem to be the current hot favourites of private equity and venture capital investors, it is the online shopping market space that they are betting big on. "Today, the contours of PE/VC investments in the country have changed in India, with investors eyeing a lot more new age, consumer oriented companies for investments,” said Avnish Bajaj, co-founder and managing director of Matrix India, which recently infused less than $7 million in two starts ups, Treebo Hotels - a new age, tech-enabled chain of hotels -and Bangalore based recruitment startup Belong.
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