VCCircle

Indian School of Business in Hyderabad is running a Venture Capitalist Development Programme. It's an intense six day program which intends to develop future venture capitalists.

Participants: Professionals seeking to make a career shift to VC; Analyst and Associates at VC/PE firms; CPAs and Lawyers servicing VC/PE firms and their clients; Professionals in commercial banks, insurance companies and other similar fund-of-fund organizations, who manage or advise investment into VC/PE funds.m

Faculty: John Mullins, Gerry George (Both professors at London Business School)

Dates: March 23-28, 2007, ISB

Fee: Rs 50,000 (after partial scholarship to all. The actual course fee is Rs 150,000 and and Rs 100,000 is subsidised by Wadhwani Foundation). It's a residential programe and the cost of boarding and lodging for six days are covered in the fee. There are a few need-based full scholarships too.

The programme is organised by the Wadhwani Centre for Entrepreneurship Developent and the Center for Executive Education at the ISB, in cooperation with the Wadhwani Foundation and the National Entrepreneurship Network.

Indian travel portal Cleartrip.com has got second round funding of $8 million, according to a report in VentureWire. DAG Ventures has led the round and is joined by the return backer Sherpalo Ventures. It's not clear if Kleiner Perkins, which alongwith Sherpalo had invested $5 million in the first round early this year, has participated in the current round. [Via ContentSutra.com]

Travelguru recently announced $15 million in series B VC funding from Battery Ventures and the existing backer Sequoia Capital India. MakeMyTrip has also tied up more than $10 million in funding from Helion Venture Partners, Sierra Ventures and SIAF Partners.

On Wednesday, Matrix Partners India announced its second investment since they launched their fund in August (its first investment was $7 million in online DVD rental company Seventymm.com). The $150 million fund put in Rs 25 crore or $5.5 million in Moods Hospitality Pvt Ltd, the parent company of Chinese fast food chain Yo! China. Yo! China currently has 20 outlets in Delhi and National Capital Region (Noida, Gurgaon and Ghaziabad), besides , Chandigarh, Dehradun, Pune, Bangalore, Mangalore and Hyderabad. The company plans to grow 10 times to 200 outlets in 3-4 years and also grow in revenues to some Rs 400 crore from Rs 40 crore currently.

I caught up with Avnish Bajaj, Founding Managing Director of Matrix Partners India, to discuss the investment, and also other ideas he has up his sleeves. Good news is Matrix is set to announce two more investments in December. (In the picture: Avnish Bajaj, left, and Ashish Kapur, MD, Moods Hospitality)

Your investment in Chinese fast food company Yo! China was a surprise since your first investment was in an online DVD rental company. The sectors are as varied as it can get?

It’s just a perception. When we launched the fund we had said that we would be a multi-stage, multi-sector venture fund. We are not focused on a particular sector. We also haven't said that we will invest only in technology. We can put in money in any sectors ranging from travel, food and beverages, hospitality, media and entertainment, financial services, consumer internet and mobile. So we are looking at across the sectors with an aim to tap the rise in Indian consumption. We will invest anywhere from $500,000 to $10 million.

If we need to invest more than that, say $20 million, then that is also possible in partnership with our global partner Matrix Partners of the US.

What is your investment thesis for Yo! China?

Traditionally VCs have invested in innovation. For instance, funds like Kleiner Perkins are looking at investing in new innovations from clean energy, in biotech and also the internet. We are also focused on innovative business ideas in India.

We see Yo! China as innovative since they are targeting a popular food segment (Chinese food is the second most popular cuisine in India according to a Business World survey) in a highly efficient and process driven manner. Amongst the target audience of youth, Chinese food is the number one choice.

There is a clear gap in the market with a lack of quality fast service food outlets. There is no single national player in the business. Yo! China intends to become that with some 200 outlets over the next five years from the current 20 outlets.

Also we invest in businesses with some IP. The IP Yo! China has is that it has a central base kitchen in Gurgaon from where the sauces and other ingredients for all the outlets (even the outstation outlets) are flown in. There is innovation in the supply chain, the ambience, the customer delight etc. The mantra is “process”.

Isn’t food retail a bit capital intensive for a VC fund?

Our view is that if you are innovative, your costs will be low. We invest in low-to-medium capital intensive businesses. We will not invest in infrastructure, manufacturing, and real estate businesses which are highly capital intensive.

Our view is that if you are a first mover, it’s highly advantageous since you create a higher barrier for entry. However, there are concerns regarding real estate, whether you get it cheaper or not. But there are challenges in every business.

What is up with Matrix going forward?

You will see two more deals closing from our side before the year ends. The dealflow has been good considering we set up shop only a few months ago. That said, VC funding is a cyclical business.

Where do you see opportunities, for instance in financial services business?

There are opportunities in every sector. In financial services, we looked at a credit bureau company. But we decided to let it pass since India still does not have adequate risk management systems. We will look at innovative business models in credit or spending in the financial services sector.

Here are two deals in the digital and media space. Bollywood films distributor Eros International has picked up an undisclosed stake in ANYTIME, a Singapore-based video-on-demand channel. Eros and ANYTIME will form a joint-venture, which will be majority owned by Eros. This JV will deliver Hollywood movies on-Demand across digital platforms in India. They will also develop a Bollywood Video on-Demand channel that will be delivered across Asia Pacific. London-based Eros is promoted by Kishore Lulla, who also had a stake in B4U channel. [Via Contentsutra]

In another deal, Salora Group, part of the Rs 1,500 crore Jiwarajka family, has made an undisclosed invesment in a multilingual mobile content company Enable M. Salora - which is currently involved in the manufacture of colour TVs and dry cells through international JVs - has a fund to make investments in early stage ventures. [Via ContentSutra]

It's official. Indian online travel company Travelguru has received second round funding of $15 million from Battery Ventures and Sequoia Capital India.

This is the first investment in the "Indian consumer internet space" by Battery Ventures. The investment from Battery side was led by General Partner Mark Sherman. KP Balaraj, Managing Director, led the investment from Sequoia Capital India.

Travelguru is a hotel and airline ticketing consolidator in the B2C space. The site claims to service about 70,000 customers a month.

Indian online travel space is set to get hotter again with companies going in for second round of funding. MakeMyTrip is set to announce about $10-12 million funidng from Helion Venture Partners, Sierra Ventures and also from the return backer SAIF Partners. Cleartrip is also planning its second round (about $10 million) early next year.

Matrix Partners India has announced its second investment in India. The $150-million venture fund has invested Rs 25 crore ($5.5 million) in Moods Hospitality Pvt Ltd, the parent company of Chinese fast food chain Yo! China. The stake dilution is not disclosed. Yo! China currently has 20 outlets in Delhi and National Capital Region (Noida, Gurgaon and Ghaziabad), besides , Chandigarh, Dehradun, Pune, Bangalore, Mangalore and Hyderabad.

Avnish Bajaj, Founding Managing Director of Matrix Partners India, has joined the Board of Directors of Yo! China. Matrix had recently invested $7 million in online DVD rental company Seventymm.com. The Yo! China investment is part of Matrix's focus on the consumer sector.

Bajaj said, "Yo! China is addressing a significant opportunity since Chinese food is the 2nd most popular cuisine in India and so far has not had anyone catering to the vast fast food opportunity." Ashish Kapur, co-Founder & Managing Director, Yo! China said, "This financial backing will further accelerate our national expansion plans of opening 200 outlets in the next 3-4 years...We have recently won the bids to have our presence in Delhi and Mumbai airports and plan to extend our brand into multiple formats where we can capture anytime-anywhere availability for the customer."

Matrix's India focus includes internet, mobile, financial services, media & entertainment, food & beverage, hospitality, healthcare, travel & leisure sectors. Matrix is founded by Avnish Bajaj (founder of Baazee.com) and Rishi Navani.

In the past, Malaysia's Navis Partners and UK-based GEM India Advisors were active in food service companies. Navis bought out Delhi-fast food chain Nirula's, and also picked up 74 per cent in Sanjay Narang's Mars Restaurants. GEM India Advisors picked up 26 per cent stake in Mark Pi chain, another Chinese food chain. They are essentially private equity deals. But VCs are also acting more like them now with investments in less riskier businesses like food retail. Sequoia had recently invested $20 million in Cafe Coffee Day, a coffee retail company.

Past deals in the same space

Navis Picks Up 74% In Sanjay Narang's Mars Restaurants

GEM India Picks Up 26% In Mark Pi Chain

Navis Capital Partners Acquires Delhi Fast Food Chain Nirula's

GEM India Advisors Acquires 26% In Gurgaon's Bakers Circle

Sequoia Capital Invests $20 Million In Amalgamated Bean Coffee Trading

Some state governments like Kerala and Karnataka have set up venture funds. Now it's the turn of Marxist-ruled West Bengal. The state government is setting up a fund which will invest in companies in the IT and related services. It's not clear the size of the fund except for that the government has "sanctioned a small budget" for it. "We have a small budgeted amount for the VC fund. But we are in the process of augmenting the initial corpus," Siddharth, secretary, department of IT, West Bengal, is quoted as saying by The Times of India.

They are also looking at a tie-up, for instance the government is in talks with SIDBI Venture Capital for participating in the fund.

Since the Left-supported unions are talking of unionising BPO workforce, I am not sure whether scalable BPOs and ITES companies can come up in West Bengal or in Kerala, the two Marxist-ruled states in India.

Online travel portal Travelguru is likely to raise $15 million in its second round of funding, according to a report in The Economic Times. Battery Ventures is reportedly leading the round with $8-10 million, and it will be joined by the existing investor Sequoia Capital India with the rest of the capital. An announcement is expected only next week or so.

Tarvelguru, a Harvard Business School project, got the first round of funding from Seqouia Capital India early last year. The company had received $10 million in its first round of funding.

The tarvel portals, which needs cash to do marketing and advertising, are refurbishing their cash kitty. MakeMyTrip, the market leader in this space, recently raised its second round of venture funding of $10-12 million from Helion Ventures, Sierra Ventures and also the existing investor SAIF Partners. ClearTrip.com, funded by Kleiner Perkins and Sherpalo, and Yatra.in, backed by Reliance Capital, TV18 and Norwest Venture Funds, may see another round of cash infusion. [Via ContentSutra]

I just saw this on NDTV Profit. The market buzz is that venture capital fund Sequoia Capital India may invest in Geodesic, a publicy listed technology company. There are no further details. So treat this as market buzz till both the parties confirm the deal. In another note, if the deal goes through this could be the first PIPE deal for Sequoia in India.

The company, started in 1999, is widely known for its universal instant messaging system (www.mundu.com), which combine AIM, Google Talk, ICQ, MSN, Mundu and Yahoo across the Internet, wireless devices and platforms. Geodesic has several products for new media like Mundu web content aggregator, ADePT, which is a self service ad management system, and so on.

Geodesic's sales in 2005-06 were Rs 95.91 crore, and net profits were Rs.41.67 crore, according to the company website. It also makes projections for the next year (06-07) - sales at Rs 160 – Rs 170 crores and net profits in the range of Rs 65–70 crore.

In 2005, Geodesic acquired three companies - PicoPeta Simputers, Hong Kong-based Engage Solutions, and a stake in Clangula IT of Sweden. The company had angel funding from Mahesh Murthy's Passion Fund.

Despite the buzz, the Geodesic stock lost 4.46 per cent on National Stock Exchange today to close at Rs 217.40

One way to spot a good investment opportunity will be to follow some smart venture capitalists making eary stage investments. If you are trailing Vinod Khosla, half your due diligence is done. Moser Baer's Deepak Puri (right) seems to have done that. His new solar energy cells subsidiary Moser Baer Photo Voltaic (MBPV) has acquired a minorty stake in Silicon Valley-based Stion Corporation, which develops photovoltaic cell technologies. The terms are not disclosed. The company, earlier called NStructures, had in July raised $3.15 million from Khosla Ventures and Braemar Energy of a planned $6.3 million first round of funding.

This is the third investment in alternative/energy startups by MBPV, which is a new subsidiary formed by the world's fourth largest CD and DVD maker. The company had earlier invested in two startups - Solaria and also in SolFocus.

In Solaria, MBPV alongwith a consortium of investors invested $22 million. In another deal, MBPV invested $7 million in a series A funding in SolFocus, a Palo Alto-based concentration photo voltaic company.

Moser Baer, which is currently in a cyclical, commoditised optical storage devices business, seems to struck a good business opportunity in photovoltaic industry. The global photovoltaic market is fast growing, and the industry sales are expected to grow over six times to $40 billion by 2010, according to a report. The demand is also price elastic. As the costs of PV electricity slide to conventional levels, it could exponentially expand this market, says the report. So watch this company.