The Venture Intelligence Blog

Venture Capitalist Bill Burnham recently argued that it would be futile for start-ups to try and compete with Google, Yahoo and MSN ("GYM") in the core Internet search space. Any start-up trying to displace Google, Yahoo, or even MSN or Ask (or for that matter any VC trying to fund them) should just get in their car (or hop on a plane) and go look at Google’s new server farms at The Dales in Oregon. And if that doesn’t convince them they should head up the Columbia river a bit and check out Microsoft and Yahoo’s digs. The costs to compete in core search , are now simply to high. According to him, search innovation will increasingly be about applications and not about the core infrastructure. In fact, he suggests start-ups build these applications on top of the core infrastructure already created by the larger guys. One can imagine a world in the not to distant future in which an application designer can easily leverage the billions of dollars being spent by Google, Yahoo...

Business Today has a short profile of Chennai-based Rudra Technologies, a company that has come up with an innovative anti-virus software. Imagine a virus that locks up the files on your pc and then demands a ransom for unlocking them. You're better off just imagining-many users in the West actually woke up one fine day with their PCs flashing ransom notes of a few hundred dollars. Players like Symantec, McAfee, AVG and Sophos, who make up the global $8 billion (Rs 36,800 crore) anti-virus market, have been pulling out all stops to deal with such attacks. But success has been limited. That's because "the anti-virus software available today is reactive rather than proactive,'' says N.S. Basker, Managing Director, Rudra Technologies, a Chennai-based maker of anti-virus software. This means there is always a lag between the time a virus is identified and before an anti-virus software patch can be designed; in between millions of PCs are disabled. Arun Natarajan is th...

Business Today has a short profile of Tirupur-based textiles firm Royal Classic Mills and its aquisition led plans to carve a share for itself in the branded apparel segment. To improve margins, Royal Classic decided to venture into branded apparel retailing in 2001. In February 2001, the company launched Classic Polo initially in the tee-shirt segment. Today, it has expanded its portfolio of offerings to include shirts and trousers; sports apparel has just been launched under the same brand, and denim wear is on the anvil. Classic Polo alone is a Rs 35 crore brand at ex-factory prices. The company currently has 23 exclusive outlets and sells through another 1,200 multi-brand outlets across the country. In July 2004, Royal Classic acquired innerwear brand Smash for an undisclosed price. Now the company is on the prowl again looking to acquire brands in the "Rs 15-20 crore range," says Sivaram. "Our intention is to emerge as a major player in the branded apparel wear se...

Businessworld has an article on how disagreements between the Planning Commission and the Department of Road Transport and Highways is holding back India's policy on toll roads. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Businessworld has an article on how the uncertain supply of natural gas is affecting India's power and industry requirements. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Canaan Partners has launched "Entrepreneurial Challenge", a value-added Business Plan contest, in partnership with TiE . "The objective is to identify entrepreneurs who have made a start and can now scale fast with a little bit of help," says Alok Mittal of Canaan. "It has been my experience that most business plan events end on the day the competition ends. By bringing the right partners in place, we will attempt to provide mentorship and capital support to businesses, and try and make the event finals a starting point rather than a culmination." Click Here for more information. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Anurag Gupta and Amit Ranjan have analysis of the various online movie rental start-ups in India. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

As Indian companies forge ahead with mega acquisitions overseas, Forex expert A. V. Rajwade striks a note of caution via his Business Standard column. He provides examples of other cross-border acqusitions - Lenovo's acquisition of IBM's PC business and BenQ's acquisition of Siemens' mobile handset manufacturing plants in Germany - which have not provided positive results for the acquirers. Quite possibly, India’s outward direct investment could exceed the FDI inflow in the current fiscal year. And, we are supposed to be a poor, capital hungry country! Clearly, a huge amount of our risk capital seems to find the climate abroad very attractive, even as intending foreign investors in India continue to be deterred by our labour laws, our bureaucracy and our infrastructure. While lauding the entrepreneurial instincts of the Indian businessmen, I am not quite able to overlook certain recent cases of developing countries taking over businesses abroad. Arun Natarajan is the F...

Businessworld has an article describing how Australian retailer Woolworth has structured a partnership with the Tatas that allows it to tap the Indian consumer durables market without having to enter into a local joint venture or franchisee relationship. Woolworths may not be selling anything directly to Indian consumers, but it will have unhindered access to the Indian market through its partner, Tata group’s Infiniti Retail. This is how it works. Infiniti will set up Croma, a chain of consumer electronics outlets across India. ...Woolworths, on its part, has set up Woolworths India, a sourcing company in India. This company will source and supply all the consumer electronics that will sit on Croma’s shelves. Croma will buy all its merchandise only from Woolworths India and the latter will not sell its products to any other company. “What we have is two companies working jointly as one unit,” says Roger Corbett, independent consultant and former CEO, Woolworths. It will sell to Infin...

Businessworld has an article on the success of qualified institutional placements (QIPs), a new instrument introduced by SEBI for helping Indian companies raise funds through private placements within the country. Going by the current demand and the strong pipeline of issues, QIPs are the latest revolution in the capital markets. Although all issues so far have been straightforward equity issuances, merchant bankers say convertible issues will be on their way. Kotak Mahindra Capital, which handled the two biggest issues in this category, believes QIPs, along with book-building, are the biggest product introductions in the primary markets since 1999. The main reason issuers preferred overseas markets earlier was the tedious and time-consuming process involved with secondary issues in India. Follow-on public offerings (FPOs) and rights issues can take as much as four months because almost all the procedures including documentation and regulatory approval are similar to an initial public...

Extracts from Rajesh Jain (of Indiaworld fame)'s interview to Knowledge@Wharton: Extracts from Jain's interview to Knowledge@Wharton . For me, three words help define the mobile Internet. They are: now, near and new. "Now" is about what is happening right now in real time. Wherever I am, I can find the latest cricket scores or the top news stories because my mobile phone is always with me. "Near" is about location -- it can be as small as a neighborhood or it could be a city. If I'm about to take a flight this evening, could I get an alert on my mobile phone if the flight is delayed? Some of this is starting to happen, but it needs to happen a lot more. It could make a real difference to people's lives. Finally, "new" is about new stuff in which I might be interested. Just as a search engine like Google is a good way to find material that has been published in the past, the mobile phone is a great way to keep in touch with future or increme...

The Mobile VAS sector has emerged as one of the favorite sectors among venture capitalists. However, there are several significant challenges facing the sector - including in the basic business models bring adopted, skewed relationships with operators, etc. In this context, Venture Intelligence Mobile VAS Connect , scheduled for December 12 in Bangalore, presents an ideal platform for leading Venture Capital investors and top executives from Mobile VAS companies to network, discuss and share best practices. Confirmed panelists include top executives from Sequoia Capital India, mportal, Nazara Technologies, Helion Ventures, Paymate, ACL Wireless, Phoneytunes, etc. Who Should Attend? • Venture Capital funds looking to invest in IT and Mobile Services companies • IT and Mobile VAS companies planning to raise VC financing For more information, click here Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded compa...

Looking to raise Venture Capital for developing / marketing your technology product? Then, showcase your product to top quality investors at DEMO @ Mobile VAS Connect December 12, 2006 Bangalore Apply to demo your product to an exclusive audience - consisting of leading Venture Capitalists, Investment Bankers and experienced entrepreneurs - as part of Mobile VAS Connect . For more information, Click Here Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Sequoia Capital has a new look web site that reflects the firm's new aggressive globalization strategy. The main home page at http://www.sequoiacap.com is now a montage of companies and founders the firm has invested in. Right at the top of the page is links to countries where the firm operates - US, China, India and Israel (with their flags to boot) - that lead to visitors to individual country-specific pages. The home page of the India section greets visitors with a "NAMASTE!" at the top. Coming from a firm whose founder reportedly declared less than two years ago that "Sequoia hasn't invested abroad in its 30-plus year history, and it ís unlikely to begin doing so", this certainly says a lot. Also interestingly, Sequoia's new web site has made it a point to emphasize that the firm considers entrepreneurs the more important constituency vis-a-vis its Limited Partners. We cater to two constituencies: the founders and management of private companies w...

Why did Sevin Rosin have to be so public about their decision not to raise a new fund? After all, the reasons cited for the decision - “The traditional venture model seems to be broken,”, "too much money had flooded the venture business and too many companies were being given financing in every conceivable sector", etc. - have been known for quite some time now. (Battery Ventures co-founder Howard Anderson had written a much publicized article saying pretty much the same things in August ). Will Price of Hummer Winblad Venture Partners is clearly not pleased with the way SR Funds handled the issue. In his blog , Will likens the firm's actions to that of a retreating army that poisons wells to spite the victors. Throughout history, retreating armies have poisoned wells, burned crops, and otherwise left the victors with barren lands. Which brings me to Sevin Rosen. Not simply content to quietly shut down after nine funds and several decades of very succesful and significa...

The Internet & Mobile Association of India , along with Search Engine advertising services firm Pinstorm, has come out with a study titled "The State of Search Engine Marketing In India". (The industry has) grown from nowhere to have over 40,000 advertisers targeting Indian web users. That's probably more there are on all TV channels. Consider these numbers 'over 1 billion searches a month, over 300 million searches with ads on them, almost 5 million clicks on ads every month. Search marketing has come of age in India. Some highlights: Rs.230 crores of ad spend on this media is aimed at Indians alone. Of this, about a third, over Rs.70 crores is spent by Indian companies. For an industry that barely got off the ground a couple of years ago, it's a huge leap. There are three types of spending on search : 1. Indian companies spending in India 2. Overseas companies spending in India and 3. Indian companies spending overseas. We've restricted ourselves to th...

Businessworld has an article on how a new breed of scientifically qualified patent agents are making life easier for companies that are looking protect their IP. But India is facing an acute shortage of patent agents and does not have many qualified in the sciences. There are only 928 registered patent agents in the country, but merely 250 are said to be practising actively. Even less are from a science background. That’s too small a number to cater to India’s increasing investments in research. Last year alone, 27,846 patents were published in India. And in the last three years, it is estimated that over 50,000 patent applications were filed and the number is rising. A patent usually takes about 18 months to be published. Firms such as Innovar IP Consulting and Brain League IP Services have hired around 20 IP agents with a technology background, including PhDs and scientists. Both firms handle more than 150 applications each from clients (including many small businesses) every year. ...

Businessworld has an article on the various strategies adoped by leading players in the "Rs. 2,300 crore" Mobile VAS market. What could spoil this party are low entry barriers and a very low share of the total revenues. While we are talking about 8-10 companies, the fact is that there are scores of them out there offering to undercut the next guy. So, margins are already getting hit. Some VAS products such as film songs are already becoming commodities. Therefore, scale, differentiated products and a distinct (read specialised) business model are imperative, a fact most players have already caught on to. Each is finding its own way out. ...That brings us to the second party pooper: revenue share. In Europe and Japan, the content provider gets a large cut of the revenues that a telecom operator charges users. Sometimes, the telecom operator gets as little as10 per cent. In India, the operator keeps the lion’s share: roughly 60 per cent. The rest is split between the mobile ag...

In an article on the gaming market, Businessworld talks about the entry of animation services companies into this sector as well as the predominance of mobile gaming. The prospects of the gaming industry in India has been bolstered by the entry of animation companies like DQ Entertainment, Animation Bridge, Paradox Studios, ColorChips, Toonz Animation and Ittina Studios. Why animation companies like Toonz should enter gaming in a big way is not difficult to understand. For one, it is easy for them to tweak existing resources (employees with skills in animation development) to make capital of a new opportunity. For another, the industry is slated to grow at twice the pace of animation, both in India and globally. ...As mobile mania in India keeps moving north (it is the world’s fastest growing telecom market), consumers have shown a surprisingly high propensity for value-added services like game downloads. Riding this momentum, mobile gaming is expected to constitute 70 per cent of the...

Businessworld has an article featuring the second rung textiles firms in Coimbatore which are now beginning to scale up. Coimbatore is India’s largest cotton spinning hub, contributing nearly half the country’s cotton yarn, and has been dominated by a handful of large family business houses. The oldest in the private sector, Lakshmi Mills, began life almost a century ago. Naturally, the going can be tough for newcomers, especially as textile spinning is a labour- and capital-intensive business with low margins. To be successful, you need scale, something that the startups haven’t got yet. However, they are attempting to plug that gap. Rajave’s expansion will see its capacity double to 24,000 spindles. But Ravindran is aware that even that much is too little. So, he plans to add another 25,000 spindles with compact spinning, which will commence production next year. “The target is to have 100,000 spindles,” he says. These companies have also been bold enough to venture beyond tradition...

Businessworld has a cover story on the Tata Group's global acquisition spree. Click Here for a table of recent overseas acquisitions by the Tatas. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Economic Times has an article on how real estate firms as well as companies with real estate holdings are busy restructuring. The Ashok Piramal group-promoted Peninsula Land is merging its subsidiary Dawn Mills Company in a move aimed at consolidating the group’s real estate businesses under a single entity. While the Ajmeera group-promoted Shree Precoated Steel is in the process of restructuring, which will see the merger of its real estate business with the steel firm, Anant Raj Industries has decided to amalgamate its four subsidiaries with itself. Kolkota-based RDB Industries plans to demerge its real estate business into a separate company — RDB Infrastructure, and merging its three real-estate subsidiaries into the demerged entity. Lok Housing and Constructions is in the process of consolidating its operations by merging its three group companies. The rationale behind de-mergers is the creation of several focused entities varies from case to case. “For instance, a diversified co...

Business Today has a survey of the Indian Business Process Outsourcing (BPO) sector. With its vast pool of well-trained professionals like doctors, engineers, teachers, lawyers, chartered accountants, MBAs to even journalists, India is experiencing a second wind in the BPO space, doing everything from equity research to business and technical analysis to animation to IP filing to accounting advisory services. In other words, the top end of the BPO value chain is the KPO industry. Unlike voice-based work, in KPO the billing rates can be as high as $26 or Rs 1,222 per hour per seat and the margins are also correspondingly higher. In 2005-06, of the $6.3 billion earned by the Indian BPO sector as a whole, $1.2 billion or nearly a fifth of it came from KPO work. India's it Ministry estimates that by 2010, India can tap 15 per cent of the $54 billion (Rs 2,53,800 crore) global KPO opportunity. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and vent...

Business Today has an article on Reliance Industries' ambitious foray into the biotech sector. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

According to the Business Today cover story, the list of businesses include Clean Energy, Healthcare, Mobile, Hospitality, Infotech, Education, Financial Services, Entertainment, ITES and Internet. Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.

Business Today has an article on how major business houses (like the Reliance ADAG Group) as well as start-ups are racing each other to get into the organized pharmaceutical retail business. Apart from Reliance, there is Kishore Biyani's Future Group that is entering this sector, as is Lifeken. Medicine Shoppe flagged off operations a few years ago, and the Apollo Hospitals group has been in this area for the past 10 years. Emerging firms, like Care Hospital of Hyderabad, also have aggressive plans in this space. In early August, Pantaloon Retail India, a part of the Future Group, and Manipal Health Systems, a part of the south India-based Manipal Group, signed a memorandum of understanding (MoU) to form a 50:50 joint venture. The Bangalore-headquartered JV will operate pharmacies (selling medical products) and provide medical services across the country under the 'Manipal Cure & Care' retail brand. The initial investment is pegged at Rs 10 crore. Apollo, for its part,...

Business Today has an article exploring the trend of Indian companies buying out PE-backed firms to quickly ramp up their overseas presence. Says Aditya Sanghi, Country Head-Investment Banking, yes Bank: "The trend is emerging to acquire companies owned by private equity players, as it's easier to do a deal because they don't have any emotional attachment to the business. As long as you manage to give them a decent return, they are willing to exit." There are other reasons too for taking the PE route. As Sanghi puts it: "Unlike inbound acquisition, there are many unknowns in a cross-border deal, such as regulatory approvals. As an entrepreneur you would not want to take on these challenges. Therefore, to avoid such hassle corporates are acquiring through the PE route." That's because the onus of putting the processes in place lies with the PE investor. "Apart from cleaning the balance sheet, operationally they are benchmarked to the best practices,...

Knowledge@Wharton has an interesting interview with HCL Technologies Chairman & CEO Shiv Nadar. If you want to know what will become not just one of our biggest business lines but also among the most profitable, that is our technology business. It will provide the maximum yield to shareholders. That is the kind of work we are doing with companies like Deutsche Bank and Boeing. That won't go away for 50 cents less. HCL has to become a partner, a strategic partner, to our clients. We can't remain just a vendor. Frankly, out of 500 organizations for whom we work, we are bound to be vendors to some 450. If we don't work for them, somebody else will. But to the other 50, we make a real difference. Those 50 firms cannot do without us because we are their strategic partners. That's not a very comfortable statement, but it is true -- they cannot do without us. Does it mean that they are prisoners of HCL? They are not prisoners, but they have stopped doing the work that we...