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Showing posts from August, 2016

Chinese investors go head to head with traditional investors in investing in India: Business Standard

A Business Standard article , quotes Venture Intelligence data on investment by Chinese investors in India: According to data from research firm Venture Intelligence   Hillhouse has participated in the $65 million investments in two series in Cardekho and another $30 million investment into Hector Beverages, during 2015 and 2016. Didi Kuaidi , a Chinese transportation network company, has participated in investing into online taxi aggregator Ola in a $500 million investment in September 2015. Investment holding company Tencent , which has subsidiaries in media, entertainment and internet services, has invested into healthcare start up Practo, along with others, in a $90 million investment in August, 2015.  Electronics company Xiaomi has invested along with others in Hungama in April, 2016. In 2016, , China's largest travel site, bought a stake in India's largest travel portal MakeMyTrip for $180 million (around Rs 1,200 crore).  Steadview Capital has

Why GoZoomo shut down & returned VC money and What It Means

A TechInAsia article chronicles GoZoomo's story and its shut down:  The issues faced by the peer-to-peer used car marketplace company were: 1. Poor unit economics due to low conversions for a peer-to-peer used car marketplace - around 20%. “For instance, we are taking pictures, inspecting 100 vehicles, but at the end only 20 of these sell on our platform. Then it becomes very difficult to recover the money we have spent on all the 100 vehicles listed,” explains Arnav. 2. Need for the market to mature - in terms of accepting standardised pricing for used cars by customers In the course of the exit, the company has: 1. Returned over half of the investment amount raised (i.e. money in the bank) to its investors SAIF and DST Global.  2. Employees were given a seven-week severance package and offered help with finding placements elsewhere. “As of today, except six, all have been placed,” Arnav says. On the shut down Alok Goel, SAIF Partners shares: “The startup

Co-founder Quitting? Do you have these Protective Clauses?

"(Ashok) Arora, a B-Tech from IIT-Bombay (a colleague said he walked into the entrance exam unprepared and came out with flying colours), who wrote most of the critical programs for the company those days,  didn’t have the patience and sold his shares in the then unlisted company to the other co-founders for just Rs 25 lakh." - from a Business Standard  article Clearly, this was among the better managed and (in hindsight) most expensive co-founder exits that India has seen. Given that it had happened as far as back in 1989 - when forget templates for startup related processes existed, even startups were few and far between - the sum of Rs.25 Lakh for a struggling startup must have been a challenge for the other founders to generate. According to Paul Graham, Founder of famed Silicon Valley-based accelerator Y Combinator, fights between founders are one of  The 18 mistakes that KILL Startups . He further states that about  20% of the startups YC has funded

Making Indian Entrepreneurship More Desi

Cross posted from The Startup Journey Blog Writing in Founding Fuel , Baba Prasad, CEO of Vivekin Group who teaches entrepreneurship in B-Schools, bemoans the fact that a lot of the students would like to emulate the founders of companies like Facebook and Amazon and do not even bring up names like Narayana Murthy of Infosys or Azim Premji of Wipro, leave alone older names like Laxmanrao Kirloskar or Jamsetji Tata. "So, if business models for Indian entrepreneurs are fashioned in the West, and business heroes are not Indian, the question comes up: What is Indian about the Indian entrepreneur?," he asks. According to the article, the crux of an Indian Entrepreneur is: 1. Balancing profit-making with the burdens it is imposing on society and the benefits it can deliver to society  2. The entrepreneur is solving problems, that are not uniquely Indian, but the scale is Indian.  Contrasting the Western/Capitalist model and a not-too-practical Gandhian/Socialist mod

RBL Bank: PE Backed IPO Analysis

Login into the Venture Intelligence Deal Database  and click on the below links to view transaction and other details: RBL Bank Company Profile & PE Investments in the Company Venture Intelligence  is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

What's Next for Fintech?

Data from the  Venture Intelligence Venture Capital Deals Database  shows that, even in 2015, when E-Commerce/Online Retail was ruling the roost (grabbing over 45% of the investments), Fintech investments had accounted for as much as 15% of the VC investment pie. An Economic Times survey of VCs published last week found Fintech to be the most favoured sector for investments in the next 6 to 12 months. Venture Intelligence data shows that Fintech investment have been picking up after falling for two quarters following the high in Q3'15. Clearly, this is one sector where VCs are becoming more and more comfortable to deploy their "dry powder" (or uninvested capital).  Among the most active VC investors in the sector include Accel India (MoneyView, Quiklo, Scripbox), Sequoia Capital India (Mobikwik, Cleartax) and Kalaari Capital (CreditVidya, Social VC or Impact Investors are also enthusiastic with Aspada Investments picking up stakes in NeoGr

How to Trigger Explosion of the Angel Investment Market in India? Ask for Less!

Prajakt Raut of Applyfi feels more startups need to ask for INR 50 lakh cheques versus wasting precious time trying to raise INR 3 Cr in their first angel round. For investors to be comfortable investing upwards of (INR 3 Cr) as a first cheque in a startup would need the startup to have some amount of organisational maturity and some early-evidence that the concept, market opportunity, value proposition, pricing, business model, marketing programme, sales programme, product/service delivery, etc. are tested and that the results appear to be encouraging. However, most startups tend to seek this larger investment even when they are not yet fully ready with the evidence. Such startups will find it much easier and much faster to close a $74.3K (INR 50 Lakhs) round, which in most cases will be adequate to build a foundation that will allow them to raise a much larger next round. Why Do Most Startups Seek Larger Round For First Round Investing? Perhaps because that’s the perceived ‘

The Colorful Story of Div Turakhia & the Media.Net Exit

On August 23, Dubai and New York-based ad-tech firm announced  its acquisition by Chinese Consortium led by Zhiyong Zhang, the chairman of Beijing Miteno Communication Technology Co. Ltd, in an all-cash transaction valued at about USD 900 million. Promoted by serial entrepreneur Divyank Turakhia, reported revenues of USD 232 million in 2015. With seven offices worldwide, has more than 800 employees, up from 650 in 2015. What is basically does for Yahoo, what Google's Adsense software does for the search giant. Who is Div Turakhia? The press release  provides a short profile: Div Turakhia has had several lucrative exits prior to this deal. In 2014, Endurance International Group (NASDAQ:EIGI) bought four brands that he co-founded with his brother, Bhavin Turakhia, for approximately $160M. Div Turakhia started his first internet business in 1996 at age 14, made his first $1M at 18, first $100M at 23, a

Government Standing Up to Foster Startups: Archana Khosla, Vertices Partners

“The most important thing is this: to sacrifice what you are now for what you can become tomorrow” ― Shannon L. Alder Gone are the days of uncertainty and incertitude on the benefits promised under the Startup India Action Plan, as the Central Government is persistently coming out with answers in the form of circulars and notices, notifying and confirming the benefits proposed therein. The Government has been doing chores to concoct a policy structure aiming to ease the regulatory abode for startups in India. Earlier this year, in the month of January (2016), the aspiring Startup India maneuver was initiated with the Startup India Action Plan (“Action Plan”), revealing perks and ideas to advance innovations and startup ecosystems in India. The Action Plan has proposed to simplify existing complex and long drawn procedures for matters such as company registration, labour law compliances and income tax for a certain number of years for startups.  Subsequently, few of the p

How the fintech sector is gearing up for digital disruption: Article by Vinayak Burman, Vertices Partners

“ By seizing the opportunities that disruption presents and leveraging hard times into greater success through outworking/outinnovating/outthinking and outworking everyone around you, this just might be the richest time of your life so far ” – Robin S. Sharma The term financial technology (fintech) has been adapted to herald the digitalisation of the financial services sector and the emergence of innovative and disruptive technologies within and for financial services. Technological innovations focusing on the financial industry have led to a rapidly growing new fintech ecosystem. The fintech industry has transformed from a sluggish sector to a luminous sector. It is seeing a boom in investment activity as new technology and changing customer behaviour transform financial services. The financial services industry today is more focused on technology innovation than it has been at any other point in its history and hence the country is witnessing a major shift in financial servic

RBI Proposes To Expand The Investment Arms For FPIs: Article by Archana Khosla of Vertices Partners

Following the Union Budget 2016-17, RBI plans to expand the investment ambit for FPIs by allowing them to put capital in unlisted debt securities as well as in securitized debt instruments In a move to accelerate the country's corporate debt market and to attract infusion of global funds into capital markets, the Reserve Bank of India (RBI) has recently proposed to allow Foreign Portfolio Investors (FPIs) to invest in unlisted debt securities and securitised debt instruments. As per extant rules of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000, FPIs are qualified to invest only in listed or to-be-listed debt securities. Investment in unlisted debt securities is permitted only in case of companies engaged in the infrastructure sector. Also, at present, Investment by FPIs in securitised debt instruments is forbidden. In this regard, on 29th February 2016, the Finance Minister of India, Mr. Arun Jaitly

What VCs Do; How Long They Work; On What; etc

Microsoft Ventures head Mukund Mohan  has posted some extracts from an US academic paper on " How Do Venture Capitalists Make Decisions? ". Some highlights:  VC-backed Cos Dominate the IPO Scene Roughly one-half of all true IPOs are VC-backed even though fewer than one quarter of 1% of companies receive venture financing 10% of VC investments are made w/o any introductions!  Over 30% of investments are generated through professional networks. Another 20% are referred by other investors and 8% from a portfolio company. Almost 30% are proactively self-generated. Only 10% come inbound from company management. VCs invest in 2.5% of the companies they consider.   The median firm closes about 4 deals per year. For each deal in which a VC firm eventually invests or closes, the firm considers roughly 151+ potential opportunities VCs want 5x return on their investments.  The average required IRR is 31%. Late-stage and larger VCs require lower IRRs of 28

E-Commerce Malaise: Is GMV or Valuation Expectation the Real Villain?

The Lessons E-Commerce Entrepreneurs & Investors Should Learn from their Microfinance Peers In an article for  Economic Times , Private Equity investor Vivek Singla points why blaming the measurement parameter Gross Merchandise Value (GMV) for the ills of the E-Commerce is not productive. He recommends E-Comm Entrepreneurs and Investors take a leaf out of how the Microfinance industry emerged from its regulatory crisis - by resetting their valuation expectations. For the investors, one of the reasons behind the sharp reversal in sentiment is the build-up in bitterness against the GMV, with many now labelling it as a pure vanity metric...instead of being dismissive about the GMV and e-tailing at large, investors should augment the gross dollar spend with deep dive into the business performance. After all, GMV is an important component of the due diligence checklist, but not the only one.  ...most international GMV based trailing multiples fall below 1×. On the other hand,

Proposed norms for P2P lending: A setback for cash-poor but promising startups? Article by Archana Khosla of Vertices Partners

“The world as we have created it is a process of our thinking. It cannot be changed without changing our thinking.”  -Albert Einstein True to what Einstein said, comes the moment when financial services as a sector in this country sees a new regimen. Peer to peer (P2P) lending can be stated to be a form of crowd-funding that brings individual borrowers and lenders together to raise or lend unsecured loans without a middleman. The P2P lending marketplace is an alliance between technology and finance. It functions through an online platform, which matches the borrowers with the relevant lenders, thereby reducing the traditional banking formalities to a great extent. The P2P platforms do not lend themselves but act as pure facilitators to both the loan-seeker and the loan-giver. The P2P industry is steadily becoming a viable alternative to traditional bank loans and is slowly but surely going to emerge as a competitor to the traditional banking system. Although nascent in India

SP Apparels: PE Backed IPO Analysis

Login into the Venture Intelligence Deal Database and click on the below links to view transaction and other details: NYLIM Jacob Ballas Investment in SP Apparels NYLIM Jacob Ballas Part Exit via IPO in SP Apparels SP Apparels Co. Profile NYLIM Jacob Ballas Investor Profile Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

Mint article on the woes of investors in Franklin Templeton PE Strategy

A Mint article chronicles the returns (or the lack of it) for investors in Franklin Templeton Private Equity Strategy , which was raised from domestic investors in 2008.  According to the article, investors could end up making a return of just 0.26% from the fund which  raised Rs.490 crore from about 1,000 investors (each of whom was required to invest a minimum of Rs.40 lakh).   Extract: Venture Intelligence  is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

KKR India's manufacturing bets pay off: Business Standard

A Business Standard article  quotes Venture Intelligence data on KKR's Investments & Exits in India: (Note: Investors in the $1.25 Billion investment in Bharti Infratel include Investment Corporation of Dubai, AIF Capital, India Equity Partners, Macquarie, Temasek, Goldman Sachs) Click here to read more. Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.

Stellaris may raise $10 million from Software Giant SAP SE: Mint

A Mint article titled Stellaris may raise $10 million from SAP quotes Venture Intelligence data on Venture Capital Investments in 2016: According to data from Venture Intelligence, venture capital investments in the first six months of 2016 were down to $634 million from $958 million in the same period last year. Other Excerpts from the Article: Goyal was the COO of SAP India Pvt. Ltd from January 2010 to December 2012, according to his LinkedIn profile. Overall, he spent almost nine years at SAP. On 3 August, The Economic Times reported that Infosys Ltd has begun talks with Stellaris to invest in its fund. The software services company could invest up to $15 million in the fund, which is raising funds from both local and global investors, the paper reported. Infosys will be investing from its $500 million Infosys Innovation Fund , set apart for early-stage investments, and it will be the second such deal by the company, the report said. In December 2015, it backed Silicon V