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November 29, 2012

Deal Alert: Edelman acquires Cream Events

Edelman India has acquired Cream Events, an experiential events company in the luxury and lifestyle sector. Cream Events will continue to trade and operate as an independent brand and separate legal entity. Edelman is an independent communications company with presence in 10 markets in the Asia Pacific region.

November 28, 2012

Deal Alert: BSE to allow firms to SME platform only after site visit

The Bombay Stock Exchange (BSE) has issued new conditions for listing of companies on its SME platform through IPO. These include a visit to the company’s site undertaken by the BSE before granting of approval to use the name of the exchange in the offer document. Additionally, the company should also file a compliance certificate by a Practicing Company Secretary according to the guidance note issued by the Institute of Company Secretaries of India. 

BSE is also replacing the existing guidelines with new guidelines for migration from SME Platform to the main board of the BSE. Under the new eligibility criteria for migration, companies have to be mandatorily listed and traded on the SME Platform for a minimum period of two years.

Deal Alert: Swipe Telecom to raise $20-M

Pune headquartered Swipe Telecom India Pvt Ltd is in talks with two Indian firms and one US-based firm for raising $20 million (Rs.110 crore approx) through private equity route for expansion, branding and innovation of its products which include mainly tablet PCs. 

The company has earlier raised $10 million (Rs.55 crore approx) from Mantra Ventures. The company plans to expand outside India by end of January 2013, entering Ireland and US markets.

Deal Alert: Impact Circle invests in K-12 firm Sudiksha

Impact Circle, a new social ventures focused angel investor network, has made its first investment in Sudiksha Knowledge Solutions Pvt. Ltd., a Hyderabad-based education services provider. Sudiksha is presently owns and manages 18 schools in Andhra Pradesh, 12 are in Hyderabad and 6 in rural Andhra Pradesh. Our 12 schools in Hyderabad are managed by women entrepreneurs. 

Impact Circle, which has the backing of institutional investors such as Ennovent, Switzerland’s Rianta Capital, and the Michael and Susan Dell Foundation, will provide seed capital ranging from $25,000 to $1 million (Rs.14 lakh to Rs.5.5 crore) to very young social ventures. The investments will be either direct equity or compulsory convertible debt investments, and will be for 5-7 years. 

Impact Circle members include senior corporate executives such as Anurag Jain, who led delivery services at Dell; Joydeep Mukherji, a former American Express executive; and Sadeesh Raghavan, former managing director at Accenture, who is also a member of the Indian Angel Network. Impact Circle plans to cap its membership at about 50 by early-2014. The network expects to close two more deals in the healthcare and agricultural information space at the start of 2013. 

Deal Alert: Sequoia invests $3-M in mobile app firm Dexetra: report

Bangalore-based Dexetra, the company behind Iris (SIRI of Android) has raised $3 million from Sequoia Capital. Dexetra had earlier raised funding from One97 Mobility Fund, which is now reported to have partially exited the company.

November 27, 2012

Deal Alert: Flipkart to be probed along with Bharti-Walmart for FDI violations

The Enforcement Directorate will look into the alleged violation of FDI regulations by e-commerce company Flipkart Online Services and cash & carry retail chain Bharti Walmart. The RBI has referred matters related to the alleged circumventing of law by Flipkart to the Enforcement Directorate. Flipkart is under the scanner for allegedly flouting FDI rules which allow e-commerce companies with foreign investment to carry out business-to-business or B2B transactions but not business to consumer or B2C transactions by creating complex structures that may not be permissible. It is alleged that Flipkart has flouted these rules. 

From the Venture Intelligence PE Deal database: Flipkart has raised $180-M from investors including Tiger Global and Accel India.

Deal Alert: Saab, QuEST establishes aero-structure assembly JV

Bangalore-based engineering services firm QuEST Global has set up a 74:26 joint venture with Swedish defence and security company Saab to set up an aero-structure assembly venture. The partners will together invest Rs.55 crore to set up the new entity, to be based in Belgaum in Karnataka. The unit will manufacture specific parts and assemble substantial sections of commercial aircraft such as Boeing 787 Dreamliner and Airbus A320 and A380.

Deal Alert: Y Combinator VC program sizes down funding to $80k

Mountain View, California-based Y Combinator, one of the world’s most successful start-up accelerators, has announced that as part of its ongoing venture capital program, it will now invest $80,000 per startup instead of the earlier $150,000. The revamped program will partner with four venture capitalists — Yuri Milner, Andreessen Horowitz, General Catalyst, and Maverick Capital — who will each invest $20,000 in the program. Investments will be made as convertible notes with no valuation cap and no discount. Since its inception in 2005, the accelerator has funded over 460 start-ups, including Reddit, Clustrix, Wufoo, Scribd, Disqus, Dropbox, Airbnb and Stripe.

Deal Alert: Times Internet acquires online men mag

Times Internet has acquired, a lifestyle portal for men with channels including fashion, technology, health and entertainment. It was founded three years ago by entrepreneur Angad Bhatia. The aim of the acquisition is to further improve the content on MensXP and expose it to a larger audience. The MensXP team will be absorbed into Times Internet. 

Deal Alert: The Hatch incubates online merchandise firm Poster Gully

The Hatch for Startups is incubating Poster Gully, an online store for posters, art prints, key-chains, stickers, badges, sweatshirts and other merchandise of popular bands, brands, schools & colleges. Aseem Sadana, co-founder of Isango, is The Hatch mentor for Poster Gully. Poster Gully was founded by Bharat Sethi and Anuvi Srivastava.

Deal Alert: Med devices firm OneBreath to raise $3-M from Omidyar, others


Bangalore based OneBreath, a medical devices company, founded by A Vijay Simha, is to raise $3 million from a consortium of investors led by eBay founder Pierre Omidyar’s philanthropic firm Omidyar Network. OneBreath is developing low cost portable ventilators scheduled for launch by next year. The company plans to apply for US FDA approval in 2013 and will set up manufacturing facilities in India and China.

Deal Alert: AdNear raises Rs.35-Cr from Canaan, Sequoia

Bangalore-based AdNear, which offers a location-based mobile advertising platform, has raised Rs.35 crore in a first round of funding from VC firms Canaan Partners and Sequoia Capital India. The funds will be used by the start-up to expand its presence across the Asia-Pacific region, including Australia and New Zealand, as well as towards building its team.

November 26, 2012

Deal Alert: Tata Elxsi launches incubator for technology startups

Publicly listed Tata Elxsi has launched Incub@TE, an incubation center program to support entrepreneurs. The initiative is designed to create the next wave of product and service oriented technology start-ups in the areas of mobile, social, local, enterprise, cloud and embedded applications.

Deal Alert: MakeMyTrip acquires majority stake Thailand’s ITC Group for $3.2 M

Nasdaq-listed MakeMyTrip Ltd. has acquired a majority equity interest in Thailand-based ITC Group for $3.2 million. The ITC Group comprises of International Tour Center Co. Ltd., ITC Bangkok Co. Ltd. and ITC South Co. Ltd. MakeMyTrip paid $2.2 million to the existing shareholders for the sale of their shares in the ITC Group and paid $1 million for subscription of new shares in the ITC Group. 

MakeMyTrip will also acquire the remaining shares of the ITC Group from the existing shareholders in cash, payable in four tranches, over an earn-out period ending December 2016. 

From the Venture Intelligence M&A Deal database: MakeMyTrip’s previous acquisitions include Hotel Travel Group (Nov-12), My Guest House Accommodations (Nov-11), Ixigo (Aug-11), Luxury Tours & Travels (Feb-11) and Ticketvala (Feb-10).

Deal Alert: Patni brothers acquire stake in Grameen Capital; IFMR Trust exits

Amit and Arihant Patni, the sons of Patni Computer co-founder Gajendra Patni, have bought a 43.17% stake in Grameen Capital India (GCI) from former investor IFMR Trust. The brothers expect no commercial returns from this investment. GCI is a non-profit social investment bank that has mobilized Rs.700 crore of capital to micro finance institutions and other social enterprises serving the base-of-the-pyramid segment, reaching out to 1 million beneficiaries at last count. It is now looking to set up two new funds - a debt fund for social enterprises and a social equity fund.

Early last year the Patni brothers co-founded VC fund Nirvana Venture Advisors, which focuses on investing in Internet companies in India. Nirvana is still in the fund raising phase and the brothers expect to close it at $60-75 million. 

November 22, 2012

What does India's first Super Angel Rajan Anandan look for?

YourStory has an interesting interview with him on the sidelines of ISB Digital Summit where he keynoted.

Extracts (emphasis mine)
First, I look for interesting ideas in technology that can create an impact.

The second most important thing is the team; except for two companies, all my founders have a technology background. I almost never back a non-tech founder in technology business, because in technology startups you have to iterate really really fast and for that you need a strong understanding of technology. Outsourcing is always a bad idea.

Number 3 is engineering + product expertise.

The Number 4 criterion is I look for commitment to the idea in founders. They must have left their secure jobs, must have faced several setbacks but should have never given up.
Ability to attract top talent is very important. For example, Druva is a perfect example of sales + product + engineering. Right founding team is very important. Look at Capillary; they seem to be having an amazing ability to attract the top talent. The best of people are wanting to work for these founders.
Also, as a founder, you need to know that different skill sets are needed at different stages of the company. And, knowing when to bring in what kind of talent is important. What is the right time to bring in your first sales guy, and first marketing guy, is important.

Finally, persistence matters. It takes 10 years to build companies. It took 13 years to build JustDial, 12 years to build MakeMyTrip and 14 years to build Info Edge. Many people don’t have that kind of stamina, and they get exhausted too soon. I like to back founders who are willing to be at it for years.
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A transactions in India as well as Financials & Valuations of Private Companies in the country. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

November 21, 2012

What holds back the Angels?

Businessworld has an interesting Cover Story focused on Angel Investments - or rather their lack.

The article starts of with data from Venture Intelligence showing how the recognized angel networks and well known individual angel investors have together funded about 50-60 startups last year, which is a tiny fraction of the angel investment activity in in the US and even China.

The article also has an interesting table on the ratio of companies that apply for funding to the angel networks are actually successful in raising capital. In FY12, Chennai Angels received 123 applications and funded 3 companies, while Mumbai Angels received 100+ applications and funded 12. Indian Angel Network’ numbers were eye-popping: It received almost 5,000 applications; met with 50 of those companies and finally funded 11!

Issues faced by the angels:Quality of Startups
The article quotes Hemant Kanakia, a Silicon Valley based angel investor who also invests in India as part of IAN saying that there is a shortage of quality deals in India. “We still see me-too kind of models. There is no real innovation happening,”

Lack of Exits
The other reason for such a shortage of angels, according to Rajesh Sawhney of Global SuperAngels Forum, is that unlike the US where there have been large cashouts, in India a majority of angel investment is still locked up in companies. Out of the 30-odd investments (Sasha Mirchandani) has made in 8-10 years, he has had 10 full and partial exits. InMobi, Greendust and Myntra are a few feathers in his cap. “There have not been too many exits that would have created tonnes and tonnes of wealth to be ploughed back,” says entrepreneur-turned-investor Gaurav Kachru, who has recently started an early-stage fund 5ideas to mentor startups.

Real Estate is a better bet
According to a study by consulting firm BCG, India has at least 190,000 multi-millionaires. But there are only 500 angels. The vast disparity is explained by the lure of real estate for the rich.....Ask them about their love for real estate and the HNIs will tell you that it is a better bet than entrepreneurs because India is yet to see success stories (100x returns) such as Facebook, Google or Twitter, for instance.

...Not to forget the fact that the inflow of new angels may be hampered because most of the second and third generation entrepreneurs in India are traditional businessmen who do not understand the digital or technology space. Given that 80 per cent of the startups are in these areas, they are inhibited from bringing their money into the tech domain.
Regulation & Tax Breaks
Angels demand that the government introduce a set-off on taxes on their investments like in Israel (which allows investors to set off 50 per cent of the investment in a firm against that year’s taxes) and the US (15 per cent break on funding in Colorado to 100 per cent in Hawaii). The Budget 2012 measure to tax angel investments in a company higher than its net worth as revenue (which was rolled back later only for recognised angel networks) is another big deterrant. The cumbersome proces of closing a company is another pain point for these high risk investments.

The article also quotes a lot of entrepreneurs who have tried to raise angel capital - both successfully and unsuccessfully.

Angels are just “Mini VCs”:
“People do not invest in ideas in India unlike the US. A lot of business calculations are done even before writing the first cheque — what is the market size, what will be the valuation in one year, how much revenues you earn, what is the customer base,” says Rana Atheya, founder of Dogspot, a petcare portal. 

“When I approached VCs, they told me the market was small and I need to go to angels. When I contacted angels, they asked me what the VCs were saying,” says (Rana Atheya, founder of Dogspot, a petcare portal). For him, it was a wait-and-watch game till this month when, after a two-year wait, he closed angel funding, with foreign investors, though. 

Too Much Time & Too Less Transparency
Despite a strong network, (Amit Naik, an alumnus of IIM Lucknow and co-founder of  feels that the turnaround time of angels and such networks is “very, very long” and that there is no transparency in how they work. “In a startup, every day is crucial. After applying to some of the angel groups, we did not hear from them for months; we had no idea what was happening to our applications.”

Too much stake demanded for too little money
Archit Gupta, co-founder of ClearTax: “They ask for so many rights and want to gradually steer the business. They forget that the word is angel and not investors,”
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A transactions in India as well as Financials & Valuations of Private Companies in the country. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

November 14, 2012

Clean Energy: The Promise & The Pain

Businessworld has a Cover Story on the topic with special focus on the travails of wind energy in Tamilnadu, hydel energy in Uttarakhand and the emerging rooftop solar opportunity.

Tamil Nadu has an installed capacity of 6,969 MW, or 40 per cent of our total wind energy capacity of 17,352 MW and 28 per cent of the total renewable energy capacity. Wind energy also accounts for 12.64 per cent of the electricity generated in the state (9,763 MU out of 77,218 MU). More than 95 per cent of the country’s wind energy potential is in the coastal states of Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, and Gujarat. And while Karnataka has the largest potential, best wind sites are in Tamil Nadu. Four prominent passes in the state — Palghat, Shencottah, Aralvoimozhi and Kambam —  have average annual wind speeds ranging from 18 km/hr to 25 km/hr. In Karnataka, the average is about 10 km/hr.
Tamil Nadu, however, is power deficit — the average power availability in 2011-12 was around 8,000 MW with demand at 11,000 MW. In fact, the state recently moved the Supreme Court on grounds that the Centre was not providing enough power to it. The deficit results in power cuts for more than 10 hours in most districts and for a minimum of two hours in the cities. In June, though, wind power, which feeds 30 per cent of the state’s peak power demand, aided by strong monsoon winds, brought some relief. But not to the producers.
Spinning mills and Independent Power Producers (IPPs) have not been paid by the Tamil Nadu Electricity Board (TNEB) for the power that they sold. TNEB, which has more than Rs 50,000 crore in accumulated losses, owes Rs 3,500 crore to more than 400 members of the Indian Wind Power Association (IWPA
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A transactions in India as well as Financials & Valuations of Private Companies in the country. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter. Listen to ads; get free talk time

From Businessworld:

Now, Sistema Shyam Teleservices (SSTL), that offers CDMA-based mobile services to 17 million subscribers under the MTS brand, will offer free talk time to subscribers soon, provided they watch a 15-second video advertisement before making a call. The video mobile ad platform—MTS mAd Call—will initially offer this service to MTS subscribers with Android devices. Over the next few months this service will be extended to all devices on the MTS network.
On a given day, the subscriber with data connectivity on the MTS network will have the option of watching four such videos. Should callers choose to watch an ad, each call will fetch them 60 seconds of free talk time. There are no data charges for downloading the advertisement. At the end of the day, the subscriber can accumulate up to 240 seconds (4 minutes) of free talk time with lifetime validity, which can be used to call any mobile or fixed line in the country. 
...As the service evolves, the subscriber will get targeted advertisements based on location, age, usage and sex. MTS is using this innovative platform to connect and engage with its customers. Leonid Musatov, chief marketing and sales officer, MTS India, says: “This initiative will specially create excitement amongst the youth who are by far the biggest users of Android smartphones.” 
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A transactions in India as well as Financials & Valuations of Private Companies in the country. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

Power Crisis Looms as Private Sector's Enthusiasm Wilts

Businessworld has recently covered the crisis in the Indian power sector and the problems facing private sector investments in the sector.

From the Cover Story titled "Burn Ambitions":

If there is an apparent sliver of hope, it’s over discoms — the Cabinet Committee on Economic Affairs’ nod to recast their debt of Rs 1,20,000 crore. Matters had come to head. In the absence of cost-reflective tariffs (a political hot potato), discoms financed the interest on loans through more of the same. The RBI asked banks to apply the brakes on loans to discoms. “We have decided to stop generation, but we cannot afford to take a deferred payment as 80 per cent of our cost (of power) is for buying coal. We pay CIL through a letter of credit and cannot afford this. We can’t compromise,” says NTPC’s Choudhury.

...According to Crisil, nine states — Tamil Nadu, Andhra Pradesh, Rajasthan, Punjab, Haryana, Bihar, Uttar Pradesh, Madhya Pradesh and Jharkhand — account for 85 per cent of discoms’ losses; their combined debt accounts for 80 per cent of all such debt. And these nine states can swing fortunes at the hustings; they send 292 MPs to Parliament, 53.77 per cent of the total.

(Saya Essar Energy’s CEO, Naresh Nayyar) “We do not want to commit capital unless we have more clarity on regulatory approvals.” A senior banker admits to a “moderation in investment plans”. State Bank of India has turned selective — major sanctions in 2011-12 were to Neyveli Lignite Corporation (Rs 2,500 crore) for 1,000 MW and to Meja Urja Nigam (Rs 2,000 crore) for 1,320 MW.

...Balakrishnan says there was good interest from PEs for two years (2009-11). “They have invested around $2-3 billion with another commitment going up to $5 billion. But PE funds have also gone shy (of the sector).”
Interview with Montek Singh Ahluwalia on the immediate and long-term implications of bailout for State Electricity Boards (SEBs)

From the article by Anil Razdan former secretary, Ministry of Power:

Distribution being entirely in the state sector, the restructuring scheme will serve as a reminder to state governments to assume ownership of utilities as the states are required to take over the loans as equity, and securitise the bonds to be issued by the discoms. FIs have been asked to provide a moratorium on loan repayments so as to give the discoms some time to get their act together and avoid penal interest. The move would also require strict discipline on the part of states because they are already guided by the overdraft constraints mandated by the Fiscal Responsibility and Budget Management (FRBM) rules. The states will then have no option but to resort to an increase  in tariffs as they will be obligated to pay interest on the bonds they issue. However, it is better to increase tariffs than to have a power crisis.
Debt apart, the extent of aggregate technical and commercial (AT&C) losses is unacceptable, even if we assume the national figures to be 27 per cent. The figure should be brought down to at least 15 per cent over the next two years and, in cities, this should come down to single digits, as is the norm in the developed world.

...The power minister is reportedly drafting an Electricity Distribution Responsibility Bill for enactment by states. If all these measures to work, fuel supply must be assured to generating companies so that they achieve maximum capacity utilisation. There is also need for consumers to be regularly educated on the economics of the power business. 
Venture Intelligence is the leading provider of data and analysis on private equity, venture capital and M&A transactions in India as well as Financials & Valuations of Private Companies in the country. Click Here to view our products list including the Free Deal Digest Weekly: India's First & Most Exhaustive Transactions Newsletter.

November 12, 2012

QSR or Fine Dining: The Dynamics

Extracts From Business Today:

...the fine and casual dining sector - currently estimated to be around Rs 3,000 crore - has customers eating out of its hands.... With all the big players gung-ho on expansion, fine and casual dining is expected to touch Rs 10,000 crore by 2015.   
 ...Restaurants come in two broad formats - the fine or casual dining chains, and the quick service ones. The fine and casual dining formats are essentially the same, varying only in prices charged: thus restaurants such as those which are part of the Taj Hotels would be classified as 'fine dining' ones, while the likes of Mainland China and Spaghetti Kitchen fall in the casual dining category.

The economics of the quick service restaurants (QSRS) are very different. The success of the latter - such as McDonald's, Domino's or Pizza Hut - is apparent; indeed, Jubilant FoodWorks, which holds the franchise for Domino's, also listed successfully on the stock market in 2010. QSRS have a central kitchen and standardised fare, operate on lower margins but make up on scale, since the cost of setting up outlets is comparatively low. Fine and casual dining restaurants are the ones which have elaborate menus and take pains over garnishing and quality of service, usually serving liquor as well. They are much more capital intensive, with each new restaurant costing between Rs 1 crore and Rs 3 crore..."Typically operating profit margin in the fine dining space range between 25 and 40 per cent, while in the quick service category it is between 15 and 25 per cent," says Lite Bite Foods's Burman.

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

Monetizing Mobile Games

From  a Business Today article:

Some pack in ads, while others like Kejriwal shun them but charge users to download games. Those choosing the latter option also have to decide where to display their games: on operators' sites such as Vodafone Live or Airtel Live or at app stores such as The Nokia Store or Google Play.

"The ad-funded model is not gaining much scale," says Samir Bangara, Managing Director, Digital, Disney UTV. His company charges users to download the premium versions of its games and earned Rs 54.5 crore in revenue for 2010/2011, mobile games being the largest contributor to its top line. But not everyone agrees with him.

Indore-based Twist Mobile, for instance, banks solely on ads for its revenue while keeping all versions of its games free. It has 30 games, of which the most popular is Zulux, with seven million downloads.
 ...The jury is still out on whether telecom operators' sites or app stores make for savvier distribution. There is a huge difference in the charges: the former provide better display but keep back around 70 per cent of the download fee, while app stores charge only 30 per cent. Thus smaller players such as Twist Mobile are reluctant to approach operators.

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

November 08, 2012

Deal Alert: Brandis Manufacturing and Marketing Private Limited raises INR 70 crores from Peepul Capital III LLC

From the Press Release:

Brandis Manufacturing and Marketing Private Limited, a fast emerging player in the Lingerie and the men Active-wear segment, today announced the successful conclusion of a fund raise of up to INR 70crores, in multiple tranches, with Peepul Capital Fund III LLC as the sole investor. Brandis Manufacturing and Marketing Private Limited is in the process of building national presence in the Lingerie and the men Active-wear segments through its brands BEYOUTY and 2GO respectively. 

The women apparel market in India is INR 72,050 crores and the lingerie market contributes to 10.83 % of the total women apparel market in India. The highly fragmented lingerie market is pegged at INR 7,800 crores growing at 12% per annum, with very few consolidated brands. 

“Brandis aims to become a significant player in the fragmented women innerwear segment in the next few years. There is a huge gap in the expectations of women consumers and the brand offerings in the segment. Brandis aims to narrow this gap and climb up the brand preference ladder of the woman consumer through its brand BEYOUTY” said Nischal Puri MD Brandis Manufacturing and Marketing Private Limited

2GO, the second brand owned by Brandis offers a range of men’s active-wear. The Indian consumer buys INR 3000crores worth of active wear in a year and the segment is growing at a healthy rate of 22% per annum. 

“India with a high percentage of youth consumers who are fashion and fitness conscious is an extremely lucrative market for active wear. 2GO aims to be the preferred brand in this category.” said Nischal Puri. 

Brandis addresses a market of INR 8,500 crores between BEYOUTY and 2 GO. Brandis will use the money to expand its operations, establish its production facilities and build its brands. 

Venkat Shankar, Investment Director, Peepul Capital Advisors Private Limited was part of the team that led the investment. “Brandis Manufacturing and Marketing Private Limited is our first growth capital investment in the apparel space and we are very excited by the opportunity to build a stable of strong brands in the Innerwear and Active-wear categories. Our belief is that the space is still very fragmented and there is tremendous opportunity for a player that is able to present the right product-pricing-imagery matrix to the consumer. Brandis is very strongly positioned to execute against this opportunity given the past track record of Nischal Puri and his team.” said Venkat Shankar. 

About Brandis Manufacturing and Marketing Private Limited 

The company was incorporated in 2010 with the aim of launching globally relevant brands in the apparel and accessories space. Brandis is promoted by Nischal Puri, a veteran in the Indian apparel industry. BEYOUTY is the lingerie brand of Brandis Manufacturing and Marketing Private Limited and was launched in May 2011. BEYOUTY is being retailed across 2000 stores nationally and is emerging as one of the most promising brands in the category. Brandis launched 2GO, its men active wear brand in Feb 2012. The brand has national footprint in the short time that it has been in the market. Both BEYOUTY and 2GO are on high growth trajectory and the new investments in the company will enable the company to achieve its growth plans. 

About Peepul Capital 

Peepul Capital LLC is an Institutional Investor that partners with companies and helps them grow fundamentally stronger and better through its extensive operating and entrepreneurial experience. Founded in 2000, Peepul Capital is one of the early entrants into the Private Equity space in India and manages a corpus of approximately USD700 Million of growth-oriented investments that are India-centric. The firm has built a proven track record through a number of proprietary and Institutional investments to date. With extensive operational experience in Sales, Marketing, Operations, Product Development, Finance and Strategy, the firm leverages its “People Skills” to help build strong management teams. Peepul Capital has been a strong believer in the robust domestic consumption story and has, since its inception, invested in over 35 companies at different stages of evolution and spread over varied industries such as Consumer products and Services, Specialized Engineering and Telecom.

November 06, 2012

Strategic Investor Interview with Joydeep Bose of Cisco

The following interview with Joydeep Bose, Senior Director, Corporate Development, Investments and Acquisitions at Cisco appeared in the latest quarterly Venture Intelligence India Venture Capital report.

Venture Intelligence:  Can you start by providing us a quick overview of Cisco’s venture investment activities in India.

Joydeep Bose:
Cisco Investments and M&A group is focused on investing in India’s growing markets in technology areas such as Video networking and social collaboration, Cloud Computing and enabling software. India is a key geography for Cisco both as a market and as a source market for innovation. We have seen a huge investment opportunities in India, especially in the areas of cloud and broadband services, media and entertainment and the traditional Indian industry strongholds such as software and advanced services. We are also seeking faster the adoptions of technologies like LTE and national broadband network in the Asia Pacific and Japan regions. India ranks number one in terms of our focus followed by Korea, Australia and Japan.

We also enable indirect investments by taking LP positions in other funds. These are typically done to enable us to enter a new market segment, enforce a pre-syndication of investors and tap into the expertise of a highly skilled GP teams for specific areas of industry or geography. SAIF and Aavishkaar are a few funds that are active in India at this point in time where Cisco is an LP.

VI: Given the nature of the promoters – A.R.Rehman and Shekar Kapur – there is a lot of buzz and expectation around Qyuki Digital Media. How did Cisco come across this investment and what are you expecting from Qyuki in the near future?

Cisco believes in investing in areas where technology is applied to business and creates unique and compelling use cases for rapid consumption. Qyuki fits in perfectly in the holy grail of technology, branded gold class content and user centric collaboration using a multi modal delivery channel over high speed video enabled networking. Cisco Corporate Development continuously seeks unique new ideas in the market and often helps entrepreneurs ideate, refine and adopt a technology enabled business model before an investment decision is made. Qyuki followed a similar process of early engagement and incubation with the celebrities that you mentioned.

Like all strategic investments, Cisco seeks strategic value and financial return from its entire portfolio. We expect Qyuki to create one of the largest online human networks for branded content centric collaboration in India using Cisco technology. Although it’s still early days but we expect Qyuki to be one of the biggest financial success stories in the subcontinent.

VI: (Not counting A.R.Rehman and Shekar Kapur!), would Cisco invest in "two guys and a powerpoint presentation"? Do you have a minimum revenue requirement? Also, is there any minimum/maximum in terms of the capital that you can commit to a single company?

Cisco is usually not a seed stage investor, unless there are significant “assets” and value in a proposal that makes the idea unique and unparallel. However other than seed, we are stage agnostic in our investment approach. The key criterion is always innovation, intellectual property, early customer/eco-system endorsement and value to Cisco.

As we draw from our balance sheet, we are not limited by any fund size and/or any ticket size. Our investment in India ranges from sub million dollars all the way up to approximately about $40 million so far in one round.

VI: In general, what are the key qualities you look for in an investment? Apart from Qyuki, Cisco’s investments have involved one or more other financial investors.  Is this a requirement or just a preference?

We are no different from typical TMT based tier 1 technology VCs globally. We value the power of the concept and the idea, the uniqueness of the innovation, the early market endorsements, the management team and its ability to scale the business and last but not the least the Cisco strategic angle. All investment targets are thoroughly analyzed for both business and technology fit. We also invest through syndication by working with strong global and regional funds that act as the lead investor in the round notwithstanding there are exceptions and we could also lead a round for highly strategic technology areas.

VI: While most financial VCs have been making a lot of investments around consumer Internet & Mobile companies in India, Cisco does not seem to have participated significantly in those types of investments. Any particular reasons? How, in general, do you attract deal flow?

Cisco invests in unique technology and consumptions models as far as internet and mobility is concerned. We have invested in so called “internet” companies before and would continue to do so. However, the key criterion is innovation; in terms of technology usage, consumption models and relevance to Cisco technology. We find typical consumer internet companies that exploit reach, economy of scale and optimized distribution as their value proposition less attractive from a Cisco relevance point of view. We however are very keen to invest “around” those business models, an example of that being behavioral and consumption analytics, unique advertisement servicing, secured payment technologies etc.

Cisco deal sourcing follows both an inside out and outside in approach. Our investment managers work on specific investment themes and scan the market for startups in those areas. We then take a targeted approach to make connections with the founders of those targets or their existing investors. This is the most effective deal sourcing method for us. We also are connected to the larger eco-system of VCs, Bankers, incubators and industry forums that provide us with deal reach outs and that are the outside in approach.

VI: When it comes to exits, does Cisco have a strategic consideration - like seeking a “first right of refusal” to acquire the company, etc?

We follow a typical VC agreement culture when we make the funding and intend to exit a company in four to six years. I am unable to make any generic comment of specific rights that we seek from our investments.

We recently made our first exit in the country from data centre services provider Netmagic in February (in which we had invested in the company in October 2010).

VI: How does a vocational education company like Global Talent Track fit into your thesis?

Cisco has a long track record of driving IT market growth through investment in the innovation economy. Our investment theme also strives to enable adoption of technology in new and unique usage models. Collaboration is a key enabler for the education segment by creating student, teacher, content pedagogy through unique time and space shifted learning environments.  GTT has been a leader in the finishing and vocational training market in India and APAC and leverages Cisco’s cloud enabled collaborative learning systems to scale and grow rapidly. Our partnership with GTT also helps us deliver our projects in the government sectors that follow Cisco’s inclusive growth theme, as one of the key member of the eco-system.

VI: Cisco has invested in the new fund of well known social venture investor Aaavishkaar. What attracts Cisco to the social space?

Reinforcing its commitment to country transformation and inclusive growth, Cisco invested in Aavishkaar as an LP in their Fund II. Cisco plans to invest in and collaborate with other investors to drive sustainable business models with social impact that utilize the power of the network. Working with Aavishkaar, Cisco aims to take advantage of its expertise and promote technology-enabled inclusive growth in the area of social entrepreneurship. Though the Aavishkaar partnership we have created a coalition of some of the best corporate ventures and multilateral organizations that help us drive our technology for inclusive growth agenda and market expansion charter.