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Showing posts from August, 2005

Indiabulls on the rampage

Business Today has a fascinating profile of PE-backed stock broking and financial services firm Indiabulls

(A) striking feature of Indiabulls is its ability to raise money. In 2000, it had managed to raise venture capital from Infinity Ventures, Harish Fabiani of Transatlantic, and LN Mittal Internet Ventures, all of whom put in a total of Rs 43 crore. The next rounds happened in 2004 and 2005, when Farallon and Amaranth brought in a total of Rs 310 crore. Now Indiabulls is clearly among the top 100 capitalised companies, with Rs 700 crore in equity capital.

An U-turn at i2?

Sanjiv Sidhu founded supply chain software i2 Technologies seems to have emerged back from the brink, says this BusinessWeek article, providing a lot of credit Michael McGrath, who took over from Sidhu as CEO.

Sidhu moved up to chairman of the maker of supply-chain-management software, and McGrath went into Bob Vila mode. For starters, he stopped picking up the tab for cell phones for the entire staff. Then he cut all corporate travel unless it was billable to clients. And he laid off 13% of employees -- most of whom were in upper management. "In the past, layoffs were all done at the worker level. We had way too many VPs and higher-paid executives," says McGrath.

In a little more than a quarter, McGrath has managed to get i2's stock relisted on the Nasdaq, raise nearly $40 million to shore up its balance sheet, and dramatically cut costs -- by $20 million in the second quarter alone.

...Some of i2's recent tech improvements have been helping companies predict how diffe…

Profile of ChrysCapital's Ashish Dhawan

Business Today has published a detailed profile of ChrysCapital co-founder and Sr. Managing Director Ashish Dhawan, who has managed to successfully transform his firm from an early-stage, Internet services focused investor to a predominantly late-stage (mostly PIPE and non-tech) one within just a few years.
Says a Delhi-based VC who knows Dhawan closely: "If Dhawan hadn't survived the (dotcom) crash and had not managed to raise his second fund, he would have ended up as a middle-level manager in one of the investment banks."

Fact is, Dhawan did not just survive but went on to thrive. With his second fund, he built what could be described as his comeback portfolio. He's picked up stakes in hot new companies like IVRCL (an up-and-coming infrastructure player), Yes Bank and Suzlon Energy. For instance, he paid a measly $5 million (Rs 22 crore) for a 7.5 per cent stake in Yes Bank (it works out to Rs 14 a pop). That investment today is worth $15 million, or Rs 66 crore, th…

Why founder sales are actually a good idea

Venture capitalists never like deals where their money is used to buy the shares owned by founders and other early investors. They like their money to go "into building the company" - ie, towards hiring people, building a product, etc. Unless, that is, they are desparate to get in on the deal.

Gary Rivlin of The New York Times reports that such "founder sales" deals are now becoming more common in the US. Companies like eHarmony, Webroot Software, Fastclick, etc., have witnessed the founders "using venture deals to cash out some of their equity without the bother of a public offering or an acquisition".

If the VCs are so hungry for the deal, why then do the founders want to cash out early? Are they not as confident as the VCs about the success of their businesses?

The reason, as Woodside Fund partner Thomas Shields explains in the NYT article, is because a founder is typically "stock rich but cash poor". Shields feels such a situation is actually …

The players in India's gaming software sector

Business Today has a good article on India's gaming software sector and its players.
Mobile telephony! That's what's driving mass gaming in India. Telecom operators say subscribers are downloading 500,000 games every month from their GPRs or WAP portals (Reliance through its R-World); this is likely to cross 1.5 million by the end of the year. "Mobile phones are making gaming a mass market phenomenon," says Pravin Pinto, GM (Marketing) at LG's CDMA Handset Division. Nasscom estimates that the Indian gaming industry will tot up revenues of $500 million (Rs 2,200 crore at current exchange rates) by 2010. In much the same vein, research agency In-Stat/MDR says the Indian mobile gaming market alone will touch $336 million (Rs 1,478.4 crore) by 2009...

...Says K. Rajesh Rao, CEO, Dhruva Interactive, who worked with Microsoft Gaming Studio for an Xbox game, Forza Motorsport: "Global biggies now seek us out and want to do business with us. It's a nice positio…

How VCs can use Social Networking Tools

LinkedIn, one of the more promising "online social networking" firms, has a nice primer on how venture capitalists can use the service to improve deal flow and get executives and board members for their portfolio companies.

A quick search on LinkedIn for WestBridge Capital shows that pretty much everyone on the Bangalore and Silicon Valley based firm's team are registered with the service. Clearly, Indian VCs are becoming more and more online savvy.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.