Rutvik Doshi News

Content startups bank on technology to lure investors as new YouTube economy booms

BENGALURU: Start-ups engaged in the business of producing content are hopeful of attracting more investments this year especially if they can showcase technology that promises a massive reach.

The companies expect continuation of the trend that saw digital content platform NewsHunt recently raise $40 million (about Rs 250 crore) from New York-based hedge fund Falcon Edge Capital to fuel its growth. Culture Machine, a new age media company raised $18 million (about Rs 110 crore) from Tiger Global Management and existing investor earlier this month while ScoopWhoop raised Rs 10 crore from Bharti SoftBank in November last year. “The only reason we got funded is because we had technology and content,” said Sameer Pitalwalla, 29-year-old co-founder of Mumbai-based Culture Machine.

Not only does it produce content – its team of 60 has produced two lakh videos so far – but also it identifies trending content and advises brands on the sort of content they should create. It also has analytics and marketing capabilities to help creators, and brands reach out to their audiences at scale through channels like YouTube.

Investors are fast waking up to content version 2.0, tucked away from ecommerce and enterprise start-ups, which is expected to realise its potential as the new YouTube economy flourishes.

“For a long time the industry has ignored content,” said Amit Anand of Jungle Ventures. “We are looking at a few companies actively in India.” Rutvik Doshi, director of Inventus (India) Advisors, which has backed companies such as online bus ticketing platform redBus.in, also said content is going to go big in 2015.

Ping Network, #fame and Qyuki, are a few companies in the same segment as Culture Machine. Then there are firms like Times Internet-backed Vidooly, which has signed on over 1,000 individual YouTube content creators to use its video analytics product to grow on YouTube.

Content can be sliced across print, video and audio media, and across technological capabilities – aggregation, analytics and publishing platforms.

According to Franklin Hatchett, a surge in 4G roll-outs, higher broadband penetration are all fuelling this trend. India ranks fourth in the world in content consumption, according to a report by Ernst & Young. The country has the largest box office attendance and 160 million pay TV households, and it publishes 94,000 newspapers.

To fill the gap in expertise, multi-city GSF accelerator carved out a new vertical for start-ups focused on the digital media industry in December 2014. It has received 40 applications so far from start-ups across India and is evaluating its options.

“We are experimenting, learning and creating our own expertise,” said Rajesh Sawhney, co-founder of GSF. However, most start-ups hit a wall when it comes to making money from content. Unless content goes viral, it is difficult to make money off it. According to a 2013 report titled ‘The Death of the Long Tail: The Superstar Music Economy’, the top 1% artists made 77% of the total revenue in the digital music industry.

“The content business needs to be scalable. Monetisation will come automatically when we can scale up,” said Sawhney of GSF.

Print publishers such as Aadarsh Publishing are also reaping benefits of going all out across different mediums to monetise Purple Turtle, its gender-neutral animated series for kids. “The next big leap will happen when we do a 52-episode series on You-Tube,” said director Manish Rajoria, who is optimistic about his transmedia strategy of earning revenue.

The 26-year-old company in Bhopal, which became the first Indian player to gets its cartoon licensed to 25 countries including China, has sold a million copies and is adding revenue by licensing its IP for bags, books, T-shirts and apps. On the other side of the spectrum are aggregators like two-yearold Spuul, which purchases Indian TV and film content from content providers and makes it available for streaming across platforms such as Airplay on iOS, and Chromecast on Android.

The company is adding users at a rapid pace of 20% every month in India and is eyeing $150 million (about Rs 930 crore) in revenue in the next three years. “The content producers are stoked by the fact that there is another line in the balance sheet,” said cofounder Subin Subaiah, 63, whose company earns revenue through advertisements and premium subscription model.

 

Read more at Economic Times

Early-stage startups should be wary of fund-raising pitfalls

BENGALURU: Entrepreneurs nurturing young companies are liable to strike poor bargains with investors in their quest to raise money, according to startup industry practitioners, highlighting the need for caution about an event that is widely regarded as rite of passage in the life of company founders.

“In a market where investors are autorickshaw drivers, and startups are passengers, the rickshaw is still overcharging them,” said Sharad Sharma, the cofounder of software product think tank iSpirt, on Friday. Sharma was speaking at an ET Roundtable on the subject, ‘Are Investors Taking Too Much for Too Little?’ Niketh Sabbineni, cofounder of Bookpad, maker of a document handling tool that was acquired by Yahoo last September, and Rutvik Doshi, director at Inventus Capital Partners, were the other speakers.

The fund-raising successes of companies such as Flipkart, Snapdeal and Olacabs for valuations in the thousands of crores have created a widespread impression that copious amounts of money are waiting to flow to back Indian entrepreneurs. Overall, entrepreneurs are giving up less of their company for more money, but it is still not ideal, the panelists said.

Sabbineni said that while some companies may get a lot of attention and funding, others, especially those looking to gain a foothold, are in danger of under-selling themselves. “Early-stage companies are still taken for ride,” said the former CEO of Bookpad that was acquired by Yahoo last September. The Bengalurubased company had raised an angel round through convertible debt a month before it was bought over. “We also struggled in the initial stages. It’s a big problem, if you are given a free wireless credit card machine but take a royalty for life, you should ask questions.” said Sabbineni.

Sabbineni, who has become an angel investor after the acquisition, said he chose the convertible debt route for his investments as one could secure funds without settling on a valuation on a company. This is a type of bond that the holder can convert into a specified number of shares or cash of equal value in the next round of funding. Doshi of Inventus Capital Partners said that the relationship between the investor and the startup founder is guided, in large part, by demand and supply. While the amount of money available has increased, so has entrepreneurship multiplied manifold. An important development, he said, would be a big increase in the amount of money Indians are willing to allocate to back startups. “If there are more Indian investors putting in rupee capital, the demand-supply gap would correct itself,” he said.

Inventus has invested in companies such as online bus ticketing firm redbus.in, policybazaar.com and car rental company Savaari.com.

Sharma, a former head of R&D at Yahoo in India, said entrepreneurs must discriminate between ‘quacks’ and ‘investors’. Too many people with too little knowledge of investing are responsible for the imbalance, he pointed out. As for startups, “Entrepreneurs should trust their gut, have emotional certainty but at the same time have intellectual uncertainty.”

Sabbineni of BookPad added a company’s financial health would give it leverage at the time of raising funds. “Work towards becoming cash-flow positive before every round of funding. That puts you in a better position,” he said. An alumnus of IIT-Guwahati who has been an angel investor since he sold his company, Sabbineni said he has been on both sides of the bargain and, therefore, makes it his business to use fairness as a guiding light.

All three were of the opinion that it is vital to encourage greater dialogue and knowledge-sharing between entrepreneurs who can learn from each other. “We need a founders’ union,” said Sharma

 


Reproduced from – http://articles.economictimes.indiatimes.com/2015-02-10/news/59005599_1_bookpad-angel-investor-startups

#Outlook15: What Indian Investors Plan To Do in 2015

As a part of our #Outlook15 series, we asked venture capital firms – Nexus Venture Partners, Blume Ventures, Helion Venture Partners, GrowthStory, LightSpeed Venture Partners and Inventus Capital Partners about their focus areas for 2015, and the challenges that the digital ecosystem needs to address. Answers have been shortened for brevity.

Which according to you were the top developments in the digital (Internet/Mobile) industry in 2014? Why?

 

Suvir Sujan, Nexus Venture Partners

– E- commerce has matured in 2014, Internet users has reached critical mass.

Karthik Reddy, Blume Ventures

– $50 million to $1 billion rounds by the dozen(s) – unprecedented confidence (by no investor who is living in India btw) in the seeming promise of the Internet inflection point being achieved soon.
– Global trends being mirrored here in terms of investing into a path to IPO – which suggests that IPOs and large M&A’s maybe round the corner.

Ashish Gupta, Helion Venture Partners

– The significant adoption of smart phones by large number of people. It is a game changer because it has now produced critical mass of users in India to be able to support many different businesses.

K Ganesh, Portea Medical (GrowthStory)

– Rapid ‘mainstreaming’ of digital. Smart marketers have realized that offline media is a one-way street, a ‘spend-and-pray’ way to try and achieve your goals. However, digital marketing opens up the box with the ability to gather data on a minute-to-minute basis, translate this into insights and knowledge enables deep understanding of customers and markets.

Anshoo Sharma, LightSpeed Venture Partners

– Growth of smartphone base – new smartphone sale are inflecting.

Rutvik Doshi, Inventus Capital Partners

– Coming of age of mobile Internet and consumer facing companies achieving scale. The mobile Internet adoption grew manifold and for the first time several Indians have a device which can be truly called a “personal device.”

– Scale achieved by consumer facing Internet companies. A few achieved the $1B+ valuation mark, which was unheard of. Some of the e-commerce companies are doing far more in revenues and transactions than several offline retailers put together.

 

How has the investor sentiment regarding Indian digital businesses changed from 2013 to 2014? Why?

 

Suvir Sujan, Nexus Venture Partners

– Given the Internet and mobile penetration has hit critical mass in 2014, investors are now bullish.

Karthik Reddy, Blume Ventures

– Dramatic positive shift – large bets in the direction of 300-400 million Internet users (mobile-heavy) expected to come online and spend/discover/consume over the next 2-3 years.
– Deep bets are being made early on the “frontrunners”.

Ashish Gupta, Helion Venture Partners

– The adoption of technology went through an inflection point and caused the investor sentiment to become a lot more positive.

K Ganesh, Portea Medical (GrowthStory)

– Investor sentiment has been positive towards businesses that are leveraging technology to solve major pain points for Indian consumers. This can be businesses that ensure all manner of goods, services and conveniences are made available at a location and in the format of the consumer’s choice.

Anshoo Sharma, LightSpeed Venture Partners

– Changed in a significantly positive way. As number of people coming online through their smartphones grows, it will disrupt existing business models and create new ones. Access to distribution gets democratized and high quality products and services delivered digitally can grow rapidly.

Rutvik Doshi, Inventus Capital Partners

– Prior to 2014, investors were cautious of putting large sums of money into Indian companies because there was always a doubt on the time taken to scale. However, the $1B+ valuation companies in 2014 have proven that it is possible to achieve scale in India.

What is one trend that you hadn’t expected but happened in 2014? What are your observations?

 

Suvir Sujan, Nexus Venture Partners

– Mobile commerce has grown faster than predicted.

Karthik Reddy, Blume Ventures

– Overreach by Series A VCs into seed. The gap in seed players as well as risk+capital appetite being more attractive than Series A has led to this move.

K Ganesh, Portal Medical (GrowthStory)

– Despite the increasing number of Internet users from Tier 2, Tier 3 cities, adoption and usage of social media channels among non-English speakers still lags the English audience. This is likely to change quite rapidly in coming years with more content in local languages and content with a non-metro focus being produced.

Anshoo Sharma, LightSpeed Venture Partners

– Quantum of risk capital that has come in from new sources that weren’t previously active in India.

Rutvik Doshi, Inventus Capital Partners

– The line between desktop browser based Internet and mobile is completely blurred.

– Prior to 2014, we (and many investors) use to classify companies as consumer Internet or mobile separately. They are no longer separate, since every tech enabled company needs to provide both desktop & mobile experience. Even mobile first companies need desktop web experience to complement/augment their products.

– The exponential growth of content based companies was also something which took me by surprise.

Which are the sectors that you intend to focus on in 2015? Why?

 

Ashish Gupta, Helion Venture Partners

– Online services (like jobs, matrimonial, classifieds etc), e-commerce, mobile applications across many areas and enterprise software.

Anshoo Sharma, LightSpeed Venture Partners

– Mobile led growth – transaction based businesses, online to offline, virtual services/experiences, SaaS.

Rutvik Doshi, Inventus Capital Partners

– We will continue to focus on consumer facing tech companies in India.
– We are very bullish on enterprise software companies which address global markets. We have the right talent pool in the country and the cloud based delivery models have made companies’ geographical location redundant.

What are some of the broad trends that you expect to see in the digital industry in 2015?

 

Suvir Sujan, Nexus Venture Partners

– We will see advertising start to mature. It generally follows e-commerce.

Karthik Reddy, Blume Ventures

– Mobile = Internet.
– Everything will be built mobile only / mobile first, else why bother?
– Digital media’s time will come – beyond music and YouTube.

Ashish Gupta, Helion Venture Partners

– Adoption of technology by the domestic enterprises – especially SME.
– Some monetization models for the mobile application companies.

K Ganesh, Portea Medical (GrowthStory)

– Major shift is the mobile usage and apps usage catapulting with consumers accessing products and services through this medium.

What are the key trends you see in Venture Capital in the coming year?

 

Suvir Sujan, Nexus Venture Partners

– There will be a lot of early investments made in Internet/mobile in 2015.

Karthik Reddy, Blume Ventures

– Push for exits and teams/bankers designed to focus on this.
– Larger funds (both series A and the foreign funds) playing aggressive larger bets in Series A (that’s the last frontier of aggression which we haven’t seen).
– More new players emerging in Series B and beyond.
– The “fashion” of Series A VC’s playing large number of Seed cheques will stay alive, shifting from one set of VCs to another until all of them hit their natural limit of management bandwidth.
– More and more seed / superangel funds will be attempted.
– Angel investing by organized groups will deteriorate further and aggregate in other forms.

Ashish Gupta, Helion Venture Partners

– More money coming into India. Some firms will lose people and new firms will start out of it.

– Money will continue to flow even if there is a global hiccup. If there is a hiccup, I think companies will be built with a more sane approach (of not burning money), so I am actually looking forward to a slow down.

K Ganesh, Portal Medical (GrowthStory)

– Lot of new VC money coming in especially VCs coming into India for the first time.
– Acceleration of hedge funds and late stage PE funds / growth stage funds playing in the VC sector in India.
– VCs getting active in seed stage investments by putting small money in very early startups.

Rutvik Doshi, Inventus Capital Partners

– Hedge funds and PE funds will continue to invest large rounds in Indian companies.
– Several VC firms may also raise new funds to support the growing startup ecosystem.

Which are the sectors you’re going to avoid in 2015 and why?

 

Karthik Reddy, Blume Ventures

– By nature of our fund size and scope, we will avoid anything that’s already been funded by the larger VCs.

K Ganesh, Portea Medical (GrowthStory)

– Horizontal E-commerce.
– Replicating already evolved sector with very well funded, large players.
– Me-too plays in Education and healthcare, since it’s very difficult to differentiate and scale.
– Replicating US models for India without localization and changes for country specific factors. For eg AirBnB for India, Facebook for India.

Anshoo Sharma, LightSpeed Venture Partners

– Real estate and capital intensive business.

Rutvik Doshi, Inventus Capital Partners

– We are agnostic to sectors and prefer looking at every opportunity from the fundamentals of the business.

What are some of the challenges in the digital segment that you feel, need to be addressed in 2015? How do you think these challenges can be addressed?

 

Suvir Sujan, Nexus Venture Partners

Consumer Payments continue to be a challenge.

Karthik Reddy, Blume Ventures

– Sustainable long-term Revenue models ahead of exaggerated capital infusions.
– Capital infusions OK if not artificially (and absurdly) stoking supply and demand for the short-term.
– Eventual liquidity events – M&A’s and IPOs – to validate above.
– Domestic regulations – it seems like the lack of domestic capital participation makes them lobby hard to keep status quo while consumers are demanding better and better integrated tech solutions to costs and bottlenecks in India.

Ashish Gupta, Helion Venture Partners

– While the numbers of users is very large in India – their ability to pay meaningful amounts of money is still unproven. So we have adoption being driven at huge expense; but have yet to see whether the economics of most of the online companies will be sustainable.

K Ganesh, Portea Medical (GrowthStory)

– Government in India, both at the Centre and state-level, seems ill-equipped to handle issues related to digital businesses. A case in point is the knee-jerk reaction of authorities to the Uber incident.

– Simplifying of laws across business segments is essential since it is only a matter of time before every sector is impacted by digital. There is no sense in framing regulations on the fly, as and when situations arise as it will lead to investor sentiment getting hit, hardship to consumers and bad PR for the country.

– Digital Bharat should not be just a ‘term’ that’s seen the flavor of the month but should be accompanied by a true appreciation of what is involved and its impact on a society that is digital.

Anshoo Sharma, LightSpeed Venture Partners

– Access to high quality talent pool is a key issue. It is a virtuous but slow cycle – more startup success will lead (and is leading) to better talent availability.

– Payments ecosystem needs to be seamless and allow for micro transactions outside of telcos; Many companies are working towards solving it and slowly making progress on this front.

Rutvik Doshi, Inventus Capital Partners

– Monetization for content based companies is still a challenge in India. The monetization of most of these companies is disproportional to the kind of traffic they get.

Read Original at Medianama

Recruitment Startup Aasaanjobs Raises Seed Round Of Funding Of $1.5m From Inventus Capital & IDG Ventures

Aasaanjobs.com, a recruitment portal for blue collared and entry level white collared workers in India announced that it has raised $1.5M in its seed round, from venture capital funds, IDG Ventures India and Inventus Capital Partners. The investment received will be utilized to expand its existing offerings, hire management and tech professionals and to ramp up technology and product development.

Dinesh Goel, Founder and CEO, Aasaanjobs said, “We are trying to mobilize a large unorganized section of contributors to the Indian economy which is a tough operational challenge. I am happy about the timing of this funding round as we can now ramp up and mobilize even more people, not just in Mumbai.”

Aasaanjobs was set up in late 2013 by IIT Bombay alumni who quit their jobs at The Boston Consulting Group, Deutche Bank and the likes to pursue their goal of improving the lives of blue collared workers in India. Based out of Powai, it is among the many startups founded by IIT graduates to have emerged recently from the region.

Rutvik Doshi, Director, Inventus Capital, said, “I am impressed with aasaanjobs vision and the team they have in place. It’s an exciting idea with a capable core team. I am really looking forward to what these guys will create. Going forward, every year over 1 million workers will enter India’s workforce – and enabling these workers to find the right jobs matching their skills is imperative. This is where aasaanjobs.com fits in.

Ranjith Menon, Senior Vice President, IDG Ventures India, said, “India is at an exciting point in its development journey. Job creation and enhancing employability is what the country really needs right now and this team aspires to help solve this problem – and we want to be a part of it. They are bringing technology into an extremely underpenetrated supply side of the workforce which brings to the table very exciting possibilities.

Aasaanjobs envisions creating a consumer solution where long-term and short-term hiring should be as convenient as ordering products online and this funding is a step towards realizing that vision.

About Aasaanjobs

Aasaanjobs.com is a recruitment company for entry level and mid-level jobs in the country. We are in the process of creating a digital identity for the millions who play such a crucial role in the ever expanding service industry of the country. The platform went live in August 2014. The company is focused on disrupting the extremely frictional recruitment industry by making the process quick, convenient and smooth for all the collaborators. The playfield is a multi-billion dollar domestic market and an even bigger international market which is looking for meaningful consolidation. Such a consolidation would ensure that people are not haggling with sub-standard products but are being offered a delightful one.

To learn more about the company and its offerings, please visit http://www.aasaanjobs.com/

About Inventus Capital Partners

Inventus Capital Partners is a US-India venture firm managed by successful entrepreneurs and industry operating veterans who have backed over 100 entrepreneurs with operations in India and/or Silicon Valley. Inventus backs entrepreneurs first and foremost. The companies financed by Inventus include TELiBrahma, Insta Health, redBus, FundsIndia, Vizury, Sokrati, Cbazaar, Savaari, Power2SME, Policybazaar, eDreams, Unbxd, Avaz and Peel-Works. Inventus is currently investing out of its Fund-II. More information about Inventus is available at www.inventuscap.com

About IDG Ventures India

IDG Ventures India is a leading technology venture capital fund in India. The fund is part of IDG Ventures, a global network of technology venture funds with over $5.5 billion under management with over 220 investee companies and 10 offices across Asia and North America. By combining the IDG platform — an unparalleled combination of global publishing, market research (IDC), and conferences and exhibition resources — with years of hands-on experience in early-stage company building, IDG Ventures India helps its investee companies understand their markets better and achieve leadership position ahead of competition. IDG Ventures has been an early investor in digital consumer companies such as Ctrip, Tencent, Baidu, Netscape, BabyCenter, Sohu, Vancl and VinaGame. In India, IDG Ventures has invested in companies such as Flipkart, Yatra, Newgen, Brainbees (FirstCry.com) Vserv, Manthan Software, Valyoo (Lenskart.com), Ozone Media and Actoserba (Zivame.com). More information about IDG Ventures is available at www.idgvcindia.com