Update: In an inteview with MediaNama, Rajiv Hiranandani said that the combined entity expects to close this fiscal year with a combined revenue of Rs. 200 crores, not Rs. 350 crores as has been quoted elsewhere. Excerpts from that interview coming up shortly.
Original Story:
Mobile2Win (India) has inked a deal to merge with the Altruist, reports Economic Times, the combined entity claiming to form the fourth largest mobile VAS company in India by revenue – with Mobile2Win revenues at Rs. 35 crore and Altruists at Rs. 165 crore in FY08.
Frankly, the deal doesn’t come as much of a surprise: the grapevine on Mobile2Win is that they’ve been looking for a buyer for quite some time, though this, interestingly, is a share swap deal. Do keep in mind that in 2006, Disney had bought Mobile2Win (China).
About Altruist
Altruist Technologies, founded in 2005 by Dheeraj Aggarwal, has 12 offices in India according to its website, and provides “Voice and Web Based Value Added Services, Business Process Outsourcing , Information Technology and Interactive Communication solutions to Carrier, WASP, ISP, CSP and Corporate clients”. Among it’s “future websites”, Altruist lists jobsonphone.com, shaadionphone.com and indiamobilechat.com.
The Deal: Investors Getting A Bigger Playing Field?
While the details of the share-swap deal have not been disclosed, it appears that Mobile2Win investors Norwest Venture Partners, Nexus India Capital, Softbank China and Silicon Valley Bank will get shares in Altruist, while Altruist co-founders, brothers Dheeraj and Anuj Aggarwal will get a stake in Mobile2Win. So is this deal more about the investors getting a bigger playing field?
In 2006, Nexus India Capital and Norwest Venture Partners had announced an investment of $15 million in Mobile2Win. Former Disney country Manager Rajat Jain, who had joined Mobile2Win in 2007, will join the Altruist board. Note that shortly after Jain joined M2W, Tushar Shah, another Disney India exec joined the company.
The Number 4 Spot…Or Is It Number 1?
Claims are, well, claims. Given that Mobile2Win has primarily been operating in the mobile marketing space, we wonder whether their revenues have been impacted by the 2008-09 downturn. Dheeraj Aggarwal expects the Altruist-Mobile2Win combine expects to close FY09 with aggregated revenues of Rs. 350 crores. (Updated Above) Someone should remind them that OnMobile, the largest player in the MVAS space in India has averaged revenues of Rs. 84.5 crores in the lastthree quarters, and by maintaining that average, should close the year at approximately Rs. 340 crores for FY09. So now does the Altruist-Mobile2Win combine claim the number 1 spot, at an expected Rs. 350 crores? Maybe Altruist and Mobile2Win would like to share their P&L statements with us (at nikhil@medianama.com).
Other large VAS players include Bharti Telesoft (Airtel Group), Cellebrum Technologies (Spice Group), IMI Mobile and One97 Communications.
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20 Comments until now.
This is actually a good match. Altruist does tons of voice based VAS (including powernig dubious voice chat services that borderline S** chats) while M2W has always been data app strong. Good for them.
As per M2W IM, they expected to close Mar 09 with $4.3M. Actual performance was below plan till Dec 08. There is no way they will do 35 Cr this year. Nor did anyone put $15M in M2W at any point. I doubt that M2W investors will be getting much in this deal. Dheeraj is too smart to pay anything meaningful for a company that is practically dead or so I hope!
RealityCheck: Just wondering – is there any way that you can substantiate the statement that M2W is practically dead? I know they kept quiet about initiatives for a year and a half . I spoke to some industry execs and got some operator related data on M2W – it's hearsay, but it doesn't as bad as you make it appear. They've been pushing their SMS services quite a bit, I'm told.
I think hungama's revenue should be lot more than 197 or imi. Post Onmobile they should be the number 2.
I'll take your version! What exactly is the difference between "being quiet for a year and a half" and "practically dead"? YEAR AND A HALF Nikhil – Smell the roses…
I heard that M2W investor (read nexus/ sandeep singhal) onwed more than 50% of the company and had decided not to invest any more money because they were not going anywhere. They have been making the rounds of investors for a while now. I got to know from a friend that they talked to Yahoo India for an acquisition but could not convince the Yahoo team on what M2W is about.
M2W topline is around 4-5cr and that too was not growing much. From the mobile marketing perspective, they don't much. They do have some SMS play which obviously is dying. I also got to know from some insiders of M2W that Rajiv did not really got along with Rajat & Tushar who came together as a team from Disney (which is an altogether a different discussion on why would someone hire Rajat with a media background to run M2W – what were you thinking Sandeep?). Guess such a thing is bound to happen when the founder is kicked down to handle the petty pieces of the company and no one notices his existence.
I have been told that investors owned about 80% of the company. GK, one of the main founders, also was marginalized and quit sometime back.
I've been told everything from 30% to 60%. Maybe we shouldn't believe everything we hear :)
Sorry 'Ris' or whoever you are – you jump to conclusions ! M2w was a company with multiple investors and the original team members – Rajiv and GK very encouraging new investors to come in and retire us (Siemens and contests2win) just because we weren't financial investors anymore.
Here is cherry on the cake- ICICI Venture and Nexus are investors in contests2win.com so post this sale and more importantly our sale of Mobile2win China to Disney in China, we declared and paid out a 1250% dividend at contests2win and paid out REAL money to investors.
I can assure you that Nexus and ICICI as well as ALL THE ESOP share holders of c2w were very very happy with the cash that came their way.
I also totally disagree with your concept of 'holding on' forever – building a great company is a relay race – you run your part and hand the baton over. If there are co-founders and key team members, then entrepreneurs have all the rights to 'take the money and run'
Look at the large strategic sales in Telecom, Pharma, even the recent Ad Gel Pens to Bic – all point in the same direction.
So, Ris, which companies did you create and sell in the end?
This deal just exemplifies the point about timing and exits. In 2006 February, contests2win.com and Siemens Mobile – 60% owners of mobile2win (it was a c2w-Siemens- Softbank venture) were approached by Norwest and Nexus India to acquire our 60% at a valuation that gave us 600% IRR on our original investments.
We closed out an all cash deal in May 2006 and while it was heart wrenching for a founder (me) to let go, the money was just too much of a temptation to resist.
I guess we couldn't have got luckier.
Now, the interesting bit – contests2win group also signed a 3 year non compete for not operating in the mobile space directly and going via m2w – this expires in the next 2 months. So we begin our mobile business all over again :-)
I guess its all about my favourite Song – Take the Money and Run
Alok, i don't buy the take the money and run song. it lacks foresight and stinks of temp opportunism. we all build companies that we hold close to our hearts we believe in them put our heart and limited funding into it because there is a long term vision there, I have always prided myself in nurturing the best talent out there and being a good leader above all.. what about the teams that have helped you along the way that many times do not get that golden payout at the end.. I would seriously think 100 times before making any investments in your companies just going by your last statement it means you create dud companies whose valuations are out of whack.. Norwest / nexus / intel or whoever is stupid enough to invest in this guys company you need to hold him accountable so the next time alok puts his company on the block you investors are going to tie a large part of his payout on company performance…. and then we do my favorite song . The first person to run, is a chicken shit… i love the way this guy uses any opportunity to talk about the money he has made, i BET if he spent half that effort on his companies he would make 10 times as much
Ris, I agree with Alok here. A true business man today is not measured just by how much money he makes his investors or what car he drives, efficient benchmarks perhaps in another day and age. Today, the mere fact that the promoter manages to put together a unit which finds itself worthy of interest and investment from large cap firms like Norwest / Nexus in itself attaches the tag of being a "success" to the promoter.
The real challenge to the promoter thereafter lies in how he manages to take that money + the tag earned and grows that further for a new set of investors and a new bunch of team members – no harm in rewarding a new set of people after having made a previous set happy.
The approach can differ, for some its all about valuation and money and for others its all about building, there is no right way. I think M2W never had a really scalable business model. The company never had a robust tech backend (spanning sms, voice and wap) so they just couldnt make things happen (remember, this was the time when IMI/OnMobile were built and much before One97 etc.). They just didnt have a tech focus.
They went about getting whatever business they could (crowning glory moment – running Sony/Indian Idol voting), leasing out their short code to advertisers and try and build some scale through marketing consulting (Rajiv excelled in this and worked really hard).
contd…
The Disney purchase in China was a lucky break (being in the right place at the right time, Disney was trying to use Mobile to enter/expand in China as investments in traditional media were frozen. The ticket item was not to high to try, so they did. It didnt work from what I hear so wonder what its doing for them now). I think the deal puts tech at the heart and hopefully M2W will start beating again.
Btw, Alok, congratulations on your ability to make money both for yourself and your investors. I hope the next time you exit a company you make it strong enough so that it grows from where you leave it and doesnt just die once you sell it. And before you challenge me, I am a wimp and like to stay anonymous.
MoByte, I appreciate your view point and also agree with the points made. I am trying very hard to make the rest of my 3 companies rocket stars :-)
Do you know reason why M2W merged with Altruist? Reason: M2W worked with leading brands and operates with all telcos but Altruist is active only northern India.
They will get chance to work with brands and pan India presence.
i will join mobile2win after complete my b.tech course from shreer banke bihari group of institution from meerut.
i think M2W actually died in year 2005 ( around december). in 2006 they have focussed on media clients for which they have not been able to generate great revenue ( reason money collection from the operator is very poor). then they jumped in mobile game development in which already big players like hungama, indiagames & mauj are there. they are ready to offer mobile games at a lower price.
i think AMT is a much smarter player than M2W.
altruist is going to die in very soon. their servicing is very poor & they are only focussing india where market will be now capatured by big players like OnMobile, IMI mobile & tanla
sleezy chat is not going to give them long term revenue. i respect alok a lot, but i think he has not advised them for not joining hands with altruist
M2W is now purely focussing on operator products like sms based subcription etc.
let's see how long …?
I am agree with Raj and same thing owners of Altruist told me.