India To See Some Action In Early Stage Investing: TiE Bangalore, Mahesh Murthy's Seed Fund, Erasmic Consulting Lead Actors
Wed, 02/01/2006 - 22:50 — Sahad P VThere is some action in the early stage funding in India, according to Red Herring. The Bangalore Chapter of The Indus Entrepreneurs (TiE) has introduced its Entrepreneurship Acceleration Program (EAP) to bring together successful local entrepreneurs with new entrepreneurs to increase their chances of raising institutional funding.
“One of the key reasons for the shortage of high-quality startups in India is that, unlike in Silicon Valley, there isn’t a mature ecosystem comprised of entrepreneurs, mentors, venture capitalists, seed investors, angels, incubators, law firms, accounting firms, banks, and other elements promoting entrepreneurship,” said Sridhar Mitta, president of the TiE Bangalore Chapter. “We want to change that.”
TiE EAP is designed to help companies get through the seed stage of evolution and graduate to a first round of funding from established institutions, such as venture capital firms.
“TiE has designed it in a way that the framework between different parties is standardized and parameterized so that precious time is not wasted in endless negotiations,” said Ashok Soota, a member of the board of trustees of TiE Global. “The funds directly flow from investors to entrepreneurs. The whole process is open and transparent.”
New Early Stage Funds
Another brand-new fund that will come up in 2006 is called the Seed Fund, set up by veteran Indian venture capitalists Mahesh Murthy (who ran the Passion Fund and is currently the CEO of Pinstorm) and Praveen Gandhi (who ran the Infinity Fund). Both of them are die-hard early-stage investors.
“We are looking at raising $10 million,” said Mr. Murthy. “We deliberately want to keep the figure low because early-stage startups in India don’t need more funds. And since we intend to do a lot of hand holding we cannot spread ourselves too thin investing in too many firms.”
Quietly working away without calling themselves a fund are professionals at Erasmic Consulting, a group of four who are already mentoring and handholding three small companies. The group has deployed $400,000 and another $700,000 is ready to be put into a further three selected startups soon.
"Two of the initial three companies are at a stage where they can run independently,” said CTO Subrata Mitra. “This year we will concentrate on the remaining four. We may invest more in these companies if need be." Erasmic has raised funds from friends, mostly Indians in the Valley.
Kleiner Investing in India
John Doerr of KPCB and Ram Sriram of Sherpalo are currently touring India. Doerr said that KPCB was looking at investing in Indian companies and had shortlisted some, but declined to provide more details. [Via Red Herring]
Comments
Hi there,
The problem is with trading volume and analyst coverage, AFTER these small caps go public. Rediff has very low trading volume. At these revenue numbers, getting analyst attention becomes impossible. Read this for more details on this topic:
http://sramanamitra.com/blog/201
Sramana
Okay...Naukri's revenues are expected to touch $22 million this March, and the company is going public only later in the year. Even if we take a conservative 50 per cent growth for Naukri, it will be a $30 million company next year. That's huge revenues in Indian standards.
Please go to SEBI site (www.sebi.gov.in), you can see loads of companies going public with revenues in the range of $5-10 million.
Why can't a small company tap public market money to grow?
By the way, Rediff listed in Nasdaq some five years ago. In 2006, the company may close revenues in the range of $26 million. That's no huge sum. Despite that the company is valued in the range of $500 million.
Naukri is not an unknown entity. It has a huge brand loyalty. People know the company's management. It has good investors. I would love to invest in Naukri as a small public investor.
From Naukri's point of view, the company gets even better visibility, market acceptability etc by listing.
You miss my point ... I don't have a problem with the company being small either ... I have a problem with the fact that they want to *go public this year* with a $10 Million revenue. That doesn't make sense to me. $10M is too little evenue for a public company.
Thanks Sramana, for the comment and the link.
I attended the TiE event in Delhi where Doerr, Shriram and Sanjeev Bikhchandani of Naukri were present. I am not paricularly perturbed by the fact the size of the company is small. If you want to bet on Indian consumer internet space, Naukri could be the best option. It makes hard cash etc.
But Kleiner is not taking any risk in investing in Naukri (it's already a successful model), so the returns can't be that high.
I am also sure they would have invested at a pretty high valuation, unless Bikhchandani wanted them on board just for the name sake. Bikhchandani said at the conference that he didn't want money at all, just the advisorial help from Kleiner.
Either way, it's a learning experiment for both. Kleiner can learn about Indian market without losing money, while Sanjeev can learn working with international class investors like John Doerr and Shriram, and also some help in taking the company global.
Why not Naukri Pakistan, Sri Lanka, Singapore and all?
Not sure why Kleiner takes stake in a small company that wants to go public this year ... Read more analysis at : http://sramanamitra.com/blog/208
June 27, 2006
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