At the end of a riveting speech at the IAMAI Digital Marketing Conference yesterday, when asked by Google India MD Shailesh Rao about the 2-3 things he would like the IAMAI to focus on, Rediff CEO Ajit Balakrishnan suggested the following:
1. A change in the revenue share for the Mobile VAS industry
2. Improvement in the broadband penetration, and
3. Solving the language problem for the Internet
Balakrishnan’s emphasis on VAS and revenue share is quite interesting, but you don’t have to look too far beyond Rediff’s new-found mobile focus to know where he is coming from.
On 3G Licensing, VAS
“There’s absolutely no question that 5 years from now, the main acess of the internet will be mobile.” Towards the end of his talk, Balakrishnan stressed upon the need to engage with the government over 3G licensing. “We have to ensure that some part of it be used for data. I worry that most will be used for voice. If that happens, all the dreams that we have of a mobile based internet will not happen. The revenue share offered must also be reasonable, else it wont make sense. If the current mobile operators build (portals) by themsleves, it won’t go anywhere. They’re best at playing pipes.”
On Government Support For Innovation, Bridging The Language Barrier
(more…)
ValueFirst New Enterprise Associates
ValueFirst Messaging has secured $6 million in a Series B funding round from New Enterprise Associates, just as Medianama had reported in December via independent sources.
In its first round of funding, it had secured a $0.25 million investment from Emergic Ventures.
The $6 million will be used to expand the company’s sales and marketing coverage to 35 cities. The company also plans to double its workforce from the current 200 employees, said its CEO Vishwadeep Bajaj.
ValueFirst will launch voice based services in the first quarter of next fiscal and is moving towards a unified messaging solution offering, Bajaj said. The investment will also go towards beefing up its subsidiaries SpotOn and ValueFirst Connect.
The Mobile VAS firm is also bullishly targeting a client list of 10,000 customers from its current base of 1000.
NEA India’s Executive Director Ben Mathias, Executive Director has said in the press release, “NEA’s direct investments in India are primarily in mid-to-late-stage projects. We look forward to working with India’s best and brightest entrepreneurs in telecom, media, alternative energy, technology-enabled services and IT infrastructure.”
Other recent developments in the Mobile VAS arena include Mobile2Win India’s merger with Altruist, One97’s $30 million investment in growth and MCarbon’s fund raising from Canaan Partners.
Recruitment site techTribe has buckled just two three years since inception, blaming the nascent nature of Indian Internet scene, and the fact that the referral model didn’t automate as desired. Rohit Agarwal, founder of techTribe, has told VCCircle that niche Internet firms will not succeed on the Indian web: “Unless it’s a service that is a must have, it doesn’t work in Indian web.”
The sites business model was based on fees paid by companies posting jobs on the techTribe network which are referred by users, as well as sponsorships of communities. It has half a million users and 30 large communities but has found it difficult to scale up and make money.
(more…)
Ashish Gupta of Helion Venture Partners is giving a great talk - something of a masterclass - at Headstart.in on execution in a startup and how to deal with many of the execution and organizational issues. The first part:
Ideas are easy, execution is hard.
Those of us in the tech space look at Information Technology companies - we value IP. Ideas are among the smallest part of building a company. Lots of folk thought of eBay before eBay…but the reality is that some guys are still thinking about it. The real protection of the idea comes out of execution of the idea, and not the idea itself.
Elements of execution
Sales & Marketing: Outside-in vs inside-out
Pay attention to outbound functions - sales and marketing. One of reasons these guys talk bullshit is because tech usually works with 90% known. The sales guy is asked at the beginning of the quarter how much revenue is going to get - he doesn’t know who their customers are. They’re expected to deliver stuff that they don’t know about. As you go closer and closer to customer, more gets known. You need to paint something RED or BLUE.
Q - don’t sales guys promise things that they can’t deliver?
So do engineers promise performance that they cant deliver. A lot of that is the process issue. Companies do not spend enough time in creating the right literature, so the client ends up assuming what they’re buying.
Not enough people look at why companies will not buy things. They don’t spend enough time listening to the customer. They don’t let the customer talk about what is their problem is to begin with. We tend to imagine this beautiful thing that we have, and try to convince them about our vision. The money is in the ugliness of the customers needs. The engineering and exception handling in a product is the crud, while the beautiful code is just 30%.
Simple stuff as a premium. No partner is interested unless you can show them money. On the basis of that, you will have partners and channels. When you take the simple stuff out, actually making it stick is more difficult. Your customer has a smaller attention span than your grandmother - she is more interested in your success than he is. You need to listen to them about why it will not work, and need to spend addressing their issues.
(more…)
Sandeep Murthy of KPCB & Sherpalo Ventures, in response to Sloka Telecom CEO Sujai Karampuri’s comments on the apathy of Venture Capitalists towards technology componies:
Interesting discussion… here’s how I look at our business:
As in all businesses, VCs will look to find ways to mitigate the risks involved in generating returns… a starting point for this is a need to understand the market that the entrepreneur is addressing… in understanding this market there needs to be an alignment of vision between the entrepreneur and the VC that the market has a need, the opportunity exists to disrupt in that market and that the chosen path is the best manner in which to disrupt. This is a large part of what the VC / entrepreneur dance is all about.
I agree that Excel spreadsheets are not the metric for decision making. Excel spreadsheets provide insight into the entrepreneur’s underlying assumptions… what are the revenue drivers, what are the cost drivers, at what pace does the entrepreneur believe the market grow, what are the views on the long term margins in this business, if everything turns out as projected. This in turn gives insight into the factors that the entrepreneur believes are necessary for success. It is not an “end all be all” of understanding the opportunity, nor is it the sole means to learn about an industry; it is a tool that helps align views on what must happen in the world to make the business a success. In addition to the drivers of the Excel model, customer references and validation play an important role in providing comfort that there is market for the product and insight into the pain points… we spend a lot of time speaking to people in the industry in an effort to understand the market and the opportunity.
The reason “Me-Toos” are attractive is that the market is understood, the execution challenges are clear, so with tweaks (sometimes minor, sometimes major) there is a belief that the risks in these businesses are manageable.
One way to make the dance between VCs and entrepreneurs easier is to engage with VCs that understand your space… find people that know the industry you operate in (i.e. if you are building a telecom solution, see if you can find the firm, or even better, the partner at the firm who knows about the telecom vertical)… if you find the right person that understands the industry, you will no longer have to worry about helping them mitigate the general industry risk and perhaps they have enough understanding to dig into the core of the product differentiation and have the requisite contacts to be able to get the market validation.
On the topic of Entrepreneurs as VCs; I agree that more entrepreneurs should go and start businesses rather than become VCs, but the reason many entrepreneurs find themselves valued in the venture community is that they provide comfort that post investing in the business the VC can help beyond just the money… here again this is about risk mitigation… knowing that you can be a part of helping with the end outcome gives some comfort while investing in new areas.
This is a great discussion and I applaud Sujai for taking the time to voice his opinions and frustrations… hopefully through ongoing dialogue we can find a way to make the process of matching money with innovative ideas as frictionless as possible.
*
Rajeev Mantri of Navam Capital also weighs in with his comments:
I agree with most of Sujai Karampuri’s diagnosis. VCs in India, especially most of the big names, should call themselves private equity rather than venture capital investors.
They usually play it safe by investing in things that have worked - copycats of successful US portals, or service-based outsourcing companies that are basically cost or labour arbitrage plays. The only innovation involved is in human resource management.
But the fact is there is little product innovation in India, even at major corporates in IT or pharma, whether it’s Infosys or Ranbaxy. You can probably count innovative Indian CEOs on one hand: I can only think of Ratan Tata and Kishore Biyani.
Moreover, when you can generate returns by investing in real estate and retail, why bother with innovation? In India, many sectors are so nascent that they see technology-style growth. Hence, there’s no need for Indian VCs to invest in disruptive innovators, which are probably far riskier. You probably can’t make 10x returns in the US by investing in retail and education startups, but you can in India.
I’ve also heard from many entrepreneurs that VCs in India simply have too much money to invest for the typical seed or early-stage company - starting up with Rs 50 crore in the bank is not a good idea because it destroys the startup and innovation culture at a new venture and kills entrepreneurial hunger, according to one entrepreneur-turned-VC I know.
Note: If any VC would like to respond to this, whether publically or anonymously, do get in touch with me at nikhil@medianama.com or +919810310053 (SMS)
Where Venture Capitalists Are Failing In India - Sujai Karampuri, CEO of Sloka Telecom
Much spleen vented at Venture Capitalists by Sujai Karampuri, CEO of Sloka Telecom at Headstart.in, being held in Bangalore:
“Venture Capital refers to taking risks, fund ideas coming from people who don’t have their own money, but are first or second generation entrepreneurs…and funding ideas that can disrupt, make things better through innovation and technology. If you look at the most VC investments in the last 2 years, they are staying away from technology companies, and funding Me-Too companies, replicas of Ebay, Netflix, Facebook, Amazon, Travelocity, Monster.
It appears to have something to do with a safety factor. What happens to a technology company company? The usual reaction is “You Must Be Bluffing”? We have the worlds smallest and cheapest telecom base station. We’ve done this through technology, and yet for the last four years, we remain unfunded by Indian VCs.
Excel sheets do not capture technology. They’re the safety net. In five minutes or 10 minutes, I cannot explain the whole spectrum of the wireless industry to a VC, and then tell where I have the advantage. Tech entrepreneurs and VCs are different - Entrepreneurs have a higher risk appetite; they cannot remove all the risk. A company is limited by the vision of their leaders. What happens when you meet VCs who want you to do small things, be careful.
(more…)
Update: ValueFirst is listed in NEAs portfolio of companies, as a current investment.
You’re reading it here first: MediaNama has learned from reliable sources that Mobile VAS company ValueFirst has raised around $5 Million from New Enterprise Associates (NEA). ValueFirst is primarily an enterprise mobility company which had entered the direct-to-consumer space earlier this year with the launch of SMSMEON services via their subsidiary SpotOn Media. They’re best known for their SMS related enterprise services.
ValueFirst sources have confirmed that NEA has invested in the company, but not the amount of investment. We’ve contacted CEO Vishwadeep Bajaj for more details.
In October, Bajaj had told MediaNama that the company was a couple of weeks from announcing a round of between $5-8 Million of investment. Bajaj claimed revenues of $10 million for Valuefirst last fiscal, and said the company has targets of $25 million this fiscal. He had mentioned that they intend to invest the money into internal processes and IT systems. ValueFirst has an international presense in the Middle East, UK, Nepal, Bhutan and Pakistan, and intends to expand into developing markets where Internet penetration is low, and mobile base is significant.
The investment comes at a time when Mobile has emerged as one of the segments that hasn’t been as badly affected by the economic downturn as others; whether Mobile VAS is equally robust, is anybodys guess. We’lll get indications from the third quarter results, due in January.
Interestingly, ValueFirst is the second company from Rajesh Jain’s Emergic Ecosystem to have raised money from NEA - the first was Novatium, a low cost computing company based in Chennai.
