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Showing posts from May, 2007

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-05-30-1: Bangalore-based entrepreneur seeks $7 million to set up an MEMS & Micro Sensor Foundry that will cater to applications in sectors like Education, Agriculture and Energy.

07-05-30-2: Delhi-based travel and destination management specializing in corporate incentives and offsites seeks <$1 million.

07-05-30-3: Ranchi, Jharkand-based entrepreneur seeks >$5 million for online tutoring service.

07-05-30-4: Bangalore-based online comparison shopping and classifieds service seeks $1-5 million.

07-05-30-5: Rural TN-based eco friendly products company seeks <$100,000 for manufacturing palm leaf-based ice-cream cups and lids.

For more information about any of these companies, investors - who are subscribers to the Venture Intelligence service - can email the company code to vcmarket@ventureintelligence.in. To learn about our subscription services for investors, please visit our web sit…

Top 10 LP lies

Paul Kedrosky has a top 10 list of Limited Partner (LP)lies.
10: We don't invest in first or second funds, see #1

6: Our diligence is very deep (bottomless unless you are about to close and any of my close LP friends are in)

2: We would really like to be in the second close

1: See #10... we don't invest in first or second funds unless Harvard / MIT / Stanford are already in

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Profile of Just Dial founder

The Mint has a profile of Just Dial's Founder & MD V.S.S. Mani. Just Dial, which is backed by SAIF, provides commercial information over telephone and the Internet.
The original investment has now grown into a company valued at $125 million (Rs521 crore) with a revenue in excess of Rs110 crore. Today, Just Dial receives almost 100,000 calls a day (or 36 million calls a year); it has a directory of two million establishments across 40 Indian cities. Some callers are entrepreneurs looking for suppliers or distributors. Others are customers shopping for a product or service—such as a housewife in New Delhi looking for caterers for a party (Just Dial offers an option where it takes down the email of the person and mails him or her a list of establishments offering the product or service). And still others call when they need a number in a hurry. Devottam Sengupta, a Mumbai-based lawyer, says he calls Just Dial when he is out on the road and has forgotten to make a dinner reservatio…

BS interview with Actis' JM Trivedi

Business Standard has an interview with JM Trivedi, the new head of Actis' Indian operations.
An buyout deals we acquire non-core assets from MNCs/large corporate groups or from families which do not have succession or where the second generation is not interested in running the family business. We partner with entrepreneurial management to grow the business to the next level.

...For growth capital deals, we chalk out the growth sectors first and then the targets. We have a big research team of 18 people in three offices. We do a lot of proactive work like research about the sector and companies before we make our investments.

The healthcare services sector is one of the areas we find interesting for investment. There is huge scope in this sector as the infrastructure is inefficient. The quality of infrastructure is also a problem. The consumer goods sector which is benefiting from favourable demographics and higher disposable surplus also has a huge potential. Many manufacturing sec…

"PE deal sizes set to grow": Goldman Sachs India CEO

Economic Times has an interview with L. Brooks Entwistle, Head of Goldman Sachs India.
So far, private equity deals have been small in nature, but we see larger transactions on the horizon as investors start to partner with Indian corporates to realise global ambitions.

...Acquisition financing is a core part of what we do, and we can provide that financing in a number of ways depending on the client and the situation. We commit our balance sheet, we syndicate financing, provide private equity and underwrite public market financing. Very few firms can do all of these things. By getting this mix right, we are delivering superior client service and by adding more value. It is a part of our commitment as a financier, advisor and investor.

How much has Goldman already invested through the private equity route? A year ago, you had put a figure of $1 billion on possible investments.

The $1 billion we referred to early last year was a 2-3 year target and we are already over half the way there in…

VC Market

The following companies are seeking capital for starting-up / expanding their operations:

07-03-14-1: Chennai-based entrepreneur seeks $1-5 million to launch India’s first online journalism school that will work as an online coach; train technical editors; and build India’s largest social media site for journalism students and professionals.

07-03-14-4: Chennai-based Indian language publishing firm - mostly non-fiction and some fiction - across multiple formats (books, audio books, CD-ROMs, Web, VCDs, DVDs etc.) seeks $1-5 million to expand its operations.

07-03-21-1: Chennai-based gourmet food supplier to high net-worth individuals and cos. seeks $1-5 million


07-03-21-2: Bangalore-based animation, gaming and mobile content developer seeks $1-5 million

07-03-21-3: Hyderabad-based Mobile Solutions firm seeks $1 million


07-04-04-1: Vizag-based provider of Energy Efficiency / energy saving projects for Industry, Power plants, Power distribution companies and municipal corporations seeks over $…

Dotcom IPOs are back - on the AIM that is

PEHub and VentureBeat have reported how loss-making video search web site Blinkx has raised $50 million via an IPO on the London AIM exchange.

PEHub also points to an article on AIM listing by Jeffrey R. Houle a senior partner with law firm Greenberg Traurig LLP. (Related link: See earlier post linking to a downloadable primer on AIM listing by Indian law firm King Stubb & Kasiva.)
Depending on the amount of due diligence required, the admission process to join AIM lasts typically only three to four months. Costs associated with joining include AIM’s admission fees, currently £4,340 ($8,500), as well as commissions and fees for the various required advisors. Generally, fees total less than 10% of the amount raised.

...The AIM model appears to be working. According to Thomson Financial (publisher of VCJ), there were more public offerings on AIM in 2006 than there were at the exchanges of New York and Hong Kong—including a number of IPOs by companies in the environmental technology and…

13-year-old CEO steals show at TiECon'07

VentureBeat has an interesting video interview with the 13-year old Anshul Samar, Founder and CEO of Elementeo, at this year's TiECon. Elementeo has developed a "combat" card game which aims to help make learning Chemistry more interactive and fun. Samar was pitching at TiECon to raise a $100,000 seed round - with an aim to hit $1 million in revenues before he graduates from eight grade in 2008! (The VentureBeat interview was so popular that it crashed the blog! :-)

Here is another TiECon video interview with Samar.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.

Adveq to launch Asia-focused Fund of Funds in '08

AltAssets has an interview with André P Jaeggi, Managing Director of Adveq, a Switzerland-based Fund-of-Funds, in which he talks about the firm's increasing focus on Asia.
While we have always looked at Asia, to date we have had only a very limited amount of capital available for investments in the region. With both the Adveq Europe and the Adveq Technology programmes we have had the option to invest up to ten per cent outside of the core region. This exposure has allowed us on the one hand to get a better understanding of the markets in Asia, and on the other hand to respond to a demand from our clients who have increasingly been asking for more exposure to Asia.

In addition to our direct involvement in Asia we have also had indirect exposure to the region via some of the US managers in our technology fund portfolio.

Our first Asian fund of funds was not widely marketed; it was something we did with our existing investors. The second one, which will launch in 2008, will obviously be…

Why doing R&D in Bangalore is becoming dumb and dumber

At least for start-ups - including VC-backed ones.

For over a year now, entrepreneur friends who are doing R&D for their product companies out of Bangalore have been pointing out how thankless it has become to hire and retain people there. Now, with a well funded start-up like Riya.com pulling the plug on their IDC, Bangalore seems ready to be officially declare a 100% MNCs-only zone.

Riya.com's CEO Munjal Shah has sparked off a very interesting discussion on this topic with his blog post.
Unlike Silicon Valley, however, the employees in India didn’t value stock options as much as folks do in Silicon valley. It was understandable, however, given they had never seen a friend hit it big or seen the Google like wealth effects which occur every 5 years in the Valley. Hence, they argued more for cash compensation. This combined with the fact that we were going after the best in Bangalore (the most impacted city in India) increased our exposure to wage inflation.

Bangalore wages hav…

"Emerging markets PE to fetch 5.4% higher returns over US buyouts": LP Survey

The Emerging Markets Private Equity Association has released the exectuive summary of its 2007 Survey of Limited Partner Interest.

Some highlights of the survey's findings:

• 52% of LPs said that returns from their current emerging markets commitments met or surpassed expectations, a dramatic change from the 25% of LPs who thought similarly in EMPEA’s 2006 Survey. In 2007, only 15% thought returns fell short of expectations, versus 42% who reported such disappointment in 2006.

• LPs expect their current emerging market commitments to produce returns of 22.6%, on average—a 5.4% premium over the 17.2% return expected from their U.S. buyout commitments. 63% of LPs said emerging markets private equity funds would still be delivering substantially higher returns than developed markets in five years’ time.

• 78% of LPs surveyed in 2007 expect that emerging markets will grow as a percentage of their private equity commitments over the next 3–5 years, versus 65% of respondents in 2006, and o…

Air Deccan CEO interview to The Mint

The Mint has an interview with Air Deccan's Founder & CEO, Captain G.R. Gopinath, on his company's plans to raise a large amount of Private Equity funding at a time when the pioneering low-cost airline is mounting losses.
We said very clearly we would be in profit in 2008. We foresaw that, because of a temporary, sudden burst of so many aircraft from so many airlines, there would be some amount of bleeding, especially on the trunk routes. Now we have redeployed our aircraft in a different manner, where 80% of our aircraft are on the non-metro routes, and we think we could be in profit earlier.

...It’s not a question of passengers not wanting to pay. Today, the yield of SpiceJet, which has much smaller operations than ours, is about the same as ours, and our costs are about half of Jet Airways. Four years ago, when Air Deccan was started, there was a cartel between Jet Airways, Indian Airlines and Air Sahara; it cost Rs12,200 to fly between Bangalore and Delhi. Today, if I ge…

Globalization through acquisitions: Pharma cos. show the way

Habil Khorakiwala, Chairman, Wockhardt Group has an article in the Economic Times on how Indian pharmaceuticals are leading the way in creating global operations via the inorganic route.
The transition from being entirely domestic-centric to sprawling multinational corporations has taken merely a decade. Consider some of these facts. During the past couple of years, the Indian pharmaceutical companies were involved in almost two billion dollars worth of outbound M&A transactions, acquiring incremental sales of nearly a billion dollars.

... Since 2000, Indian pharmaceutical companies did 62 global acquisitions, which accounts for 20% of all M&As by Indian corporates. The pharmaceutical sector ranks next to only IT/ BPO sector in the number of transactions, and it has been responsible for setting the pace, starting as early as the nineties

... there is a fundamental difference in the M&A trend in other sectors compared to the pharma sector. In other sectors like steel, alumini…

Do buyout firms need operating partners?

Knowledge@Wharton has an interesting article on whether buyout firms hiring operating partners "with experience running plants and facilities, and rolodexes full of industry contacts" will boost their higher returns.

A "pro" view:
Peter Clare, managing director of The Carlyle Group and another conference panelist, says that with increased competition for deals bidding up valuations, operational improvements are more important than ever for companies hoping to continue to deliver above average returns for their private equity investors.

"We've developed both in-house and loose networks of operations executives who will participate in due diligence and may end up running a company or serving as an executive chairman," Clare says. "Industry expertise helps us set the plan accurately and focuses [us] on what is achievable in the shortest amount of time possible given the competitiveness of our business today. It is fundamental to what we all do. It…

Paco and Witco

V.P.Harris, Managing Director of Chennai-based speciality retailer Witco, sent me a note with some interesting takeaways and reactions to the recent presentation made by retail guru Paco Underhill in Bangalore.

Some Extracts:

Paco: Mirrors – For the younger generation the “mobile” is a fashion accessory and not just a communication device. They need mirrors to check out “the look”

Harris: At Witco, we have found even 40 + Maritian’s (Men) like to check out ‘’their look” with the new port folio in hand. So, mirrors are definitely not for clothing, footwear, cosmetics, jewellery alone.

Paco: Self-Service need not be for self-service stores alone. Almost any store can be designed for partial selfservice.

Harris: At Witco we have added shelf talkers, specs sheets, feature highlights, navigational aids – all in relatively small stores to address this. After all you cannot staff the store based on the needs of some 30 minutes a day when you may have customer’s out numbering the store team. So, t…

Why captive outsourcing centers are "imploding"

Basab Pradhan, former head of sales at Infosys, has his own take on the recent Forrestor Research report on how captive centers of MNCs are underperforming their third-party outsourcing peers.
...The real reason why captives fail is because IT organizations don’t know how to make distributed teams work. Here are a few things you will find in how IT organizations work with captives:

1. They don’t have and don’t realize the need for stronger life cycle processes for distributed development.

2. Organization models put all decision making in headquarters and none in the captive.

3. Dull, repetitive tasks like testing or support that nobody in headquarters wants to do are the first to be shipped out.

4. Average experience levels in captives will be lower. Just the nature of the Indian market. Companies won’t invest in adequate training and then arrive at incorrect conclusions that employees in the captive don’t “get” the business side of things.

5. Small things matter. Like when conference calls…

Social Networking sites: The VC View

Alok Mittal of Canaan Partners and Avnish Bajaj of Matrix Partners India have triggered off an interesting discussion at VentureWoods on Social Networking start-ups in the Indian context.

Extract from Alok's post:
..some social networks will fly in India, IMHO. I believe these will be driven by specific tangible benefits, rather than being “hangouts”. I will afford a couple of examples. The first one is referral based recruitments. The Indian e-recruitment technology is 10 years old. Global sites like linkedin, simplyhired, jobster and so on have demonstrated how social networking can be tied into recruiting very effectively. The Indian model is going to be different from these, and I believe there is a significant market there.

...The second example that I would afford is networks for buying services (I am yet to see a good model around product ecommerce) — services are intangible, and often very fragmented. Think of hiring a printer for printing visiting cards. These selections are…

Gaurav Dalmia on the Real Estate correction

Business Standard has an interview with Gaurav Dalmia, Chairman of Landmark Land Holdings, on the correction in various pockets of the Indian Real Estate market.
Instead of maximising returns from one project, developers were looking at moving from one project to the other. As cash was constantly required, many of them sold their projects too early. I am not sure if the developers believe in their own projects as they should.

If you look at the development of the Indian real estate market, DLF made its money in Gurgaon working there patiently for 20 years. The Hiranandanis made their money in one suburb of Mumbai over 15-20 years. They maximised the value of each project before moving on to another one.

You can make a couple of billion dollars by working at just a few projects. Large projects take time and require solid project management skills. If you are doing large projects, you must be prepared to go through a downturn. The 20 million square feet Canary Wharf project in London was c…

More Middle East money flowing to India

Economic Times article on how more and more middle east based banks and financial institutions are investing in India.
Corporate India will have a new set of deep-pocket investors eyeing investments in both equity as well as debt in India. With oil prices on a high for quite sometime now, investors from the Middle East are increasingly turning their focus on countries like India. Already Rana Talwar’s Sabre Capital, along with Abraaj Capital, has set up a $300-million fund to invest in India.

Now, BankMuscat, the largest bank in Oman, is looking at a whole lot of initiatives, including setting up a private equity fund, an Islamic fund which is Shariah-compliant and would also look at helping Indian corporates to raise money through Sukuk — Islamic bonds.

Till now, a host of small Shariah-compliant funds from the UAE and Saudi Arabia have invested in the Indian markets. These funds do not invest in liquor, tobacco and banking stocks. Also, these funds will have to look at how companies ar…

How will Indian outsourcing cos. impact Open Source software?

Bill Burnham has a post on how Indian IT outsourcing companies are promoting open source software among their enterprise customers and, in the process, also taking away some service revenues away from open source software firms.
...it would appear that Indian outsourcers are one of Open Source's best friends. Not only are they driving adoption of the products into enterprises (both overtly and somewhat covertly), but because everyone is hiring them as "experts", their endorsement of open source platforms is likely to start swaying the minds of a lot of internal IT types ("If it's good enough for the experts, it's good enough for us").

I was pretty much set on this opinion until I talked to an entrepreneur friend of mind who was telling me about his own set-up. He has outsourced all of his IT to India (it's interesting to note that he has also outsourced his CFO to India, his customer service to the Philippines, and his manufacturing to China). For …