It's a difficult fundraising environment right now. Especially when it's a Series B round, the exercise gets even tougher. Unless you have a strong revenue traction and a clear path to profitability, the money will not come by at this stage.
So what really helped the online photography company Canvera Digital Technologies Pvt Ltd raise $6.5 million or Rs 35 crore in a Series B round of funding from a discerning investor like Info Edge (India) Ltd. We quizzed Canvera co-founder Dhiraj Kacker and found these five factors that worked in Canvera's favour.
Strong financial performance
Canvera has done a reasonably good job on the revenue front by recording Rs 21 crore in revenue in 2011-12, up from about Rs 14 crore in 2010-11. The current average monthly revenue run rate is Rs 2.5 crore. However, the business is a little seasonal with January, February and March being the busiest months (it's the wedding season in India) while September, October and November being the lowest in sales. But that is the nature of the trade and the key is – it can be a standalone business. The business is yet to make profit, but Kacker says that it can be profitable by 2013-14.
Unique business model
Canvera has a unique business model. It is primarily bringing internet to photography. It prints photo books, provides design services and also offers hosted software solutions for photographers (the SaaS model). The cheapest photo book comes at Rs 6,000, which can go up to Rs 30,000-Rs 40,000 depending on customisation.
Reasonably large market opportunity
It currently has 11,000 photographers from 300 cities in its network, and is adding about 300 photographers every month. The company is targeting a market of 250,000 professional photographers in the country and that gives it a potential to grow 20 times its current revenue, which is about 400 crore. Also, 60-70 per cent of the business is tied to the wedding market. There are 10-12 million weddings in India every year. Photography, as an industry in India, is linked to weddings, and there are so many consumers now who are participating in photography. So this can be a winner-takes-all kind of market and Canvera is the market leader in this segment.
India is still largely a face-to-face (physical) market. Canvera has about 550 people on the ground across eight cities, out of which 200 are in sales. This is similar to Info Edge, which is essentially an internet company built on a large physical sales organisation. The similarity of the operating model has helped both companies connect well.
"I love working with my team," says Kacker, adding that the company has had almost zero attrition in four years. "We lost just one person from the senior team in all these years." This work culture has been another asset that Kacker could showcase.
(Edited by Sanghamitra Mandal)