Venture capital investments saw a revival in 2011, with e-commerce taking off in a big way. Of the top five deals in the venture space, four happened in the e-commerce space as these companies started investing in marketing and supply chain logistics. Mobile value-added services and technology companies also continued to attract venture funds.
The year 2011 also saw increasing emergence of nearly half a dozen seed-stage funds which are looking to raise $20 million-$25 million to plug the gap between angel funding and series A round. On the backdrop of a few successful exits in Indian VC space, Limited Partners are now increasingly looking at this asset class. Here are the top five VC deals of 2011, according to VCCedge, the financial research arm of VCCircle.
Canaan Partners-Happiest Minds Technologies: The largest deal in the venture capital space came when Happiest Minds Technologies Pvt Ltd, an IT solutions and services start-up founded by former MindTree Ltd chairman and co-founder Ashok Soota, raised $45 million (Rs 229 crore) in its first round of funding, led by Canaan Partners. Intel Capital, Soota and other founders of Happiest Minds also invested in the round. The deal would make the five-month-old company one of the most highly capitalised start-ups in the Indian technology landscape. The deal was one of the most sought after, with reports suggesting that firms like the Carlyle Group, IDG Ventures, Walden International and Sequoia Capital were in the fray for the deal.
Soota had quit MindTree in April 2011 and launched his own start-up in August. Happiest Minds focuses on IT services, research & development, software product engineering, remote infra, testing and consulting.
Bessemer Venture Partners-Snapdeal.com: India’s largest group buying portal Snapdeal.com (owned by Jasper Infotech Pvt Ltd) raised $40 million in series B funding, led by Bessemer Venture Partners, along with existing investors Nexus Venture Partners and Indo-US Venture Partners. The investment came barely six months after the company had announced a $12 million series A round from Nexus and Indo-US Venture Partners in January 2011. With $52 million in its kitty, Snapdeal has raised most VC funding in 2011. Incidentally, Snapdeal claims to have used only up to 20 per cent of the capital raised. Also, unlike other e-commerce ventures, Snapdeal doesn’t own inventory and hence, does not block so much of cash.
According to Kunal Bahl, founder and CEO of Snapdeal, the company has 11 million registered users and about one in eight online users ‘browse and buy.’ The company has expanded into product sales nearly three months ago and now claims to be the largest e-tailer of lifestyle products.
Norwest & Intel Capital-Fashionandyou.com: Fashionandyou.com, a private shopping site for luxury brands and designer apparel & accessories (owned by Awari Technologies Pvt Ltd), has raised $40 million (Rs 200 crore) in a second round of funding, led by Norwest Venture Partners and Intel Capital. Sequoia Capital India and Nokia Growth also participated in the fundraising. The company is co-founded by former Yahoo! India sales director Pearl Uppal and Harish Bahl, founder and chairman of Smile Group.
One of the largest investments in the Indian e-tailing space, the deal came less than a year after the luxury e-commerce portal raised a first round of institutional capital from Sequoia. The total amount of private capital, raised by the company, stands at $50 million. Fashionandyou.com partners with high fashion and luxury brands across fashion apparel, designer wear, accessories, footwear, watches, jewellery, fragrances and home décor segments, among others, and holds private sales events for renowned Indian and global brands where prices are slashed up to 80 per cent.
NEA-Naaptol: Naaptol Online Shopping Pvt Ltd, owner of the shopping site Naaptol.com, raised $25 million from New Enterprise Associates (NEA). Earlier investors Canaan Partners and Silicon Valley Bank also participated in the round that ended in August 2011. The deal was NEA’s first direct investment in an Indian e-commerce start-up.
The funds will be used to fuel Naaptol’s massive hiring plans and also to scale up the company’s Internet business, supply chain and inventory. Naaptol currently works with 50 vendors and has three lakh products listed on its e-commerce sites. It has launched a private sales site called Naaptol Club and forayed into television space with an investment of Rs 60 crore. The company continues to experiment with more online models and may launch new properties going forth.
SAIF Partners-TV18 Home Shopping: TV18 Home Shopping Network Ltd, a teleshopping channel in India from the Network18 Group, raised $20.25 million (Rs 100 crore) from its existing investors SAIF Partners, Network18 and GS Shopping. The funds are being used for investments in logistics, warehousing and technology. The company, which runs a dedicated teleshopping channel called HomeShop18, is expecting to hit Rs 1,000 crore in total sales value.
In 2008, Capital 18 Fund, a private investment vehicle from the Network18 Group, acquired 75 per cent stake in the company for $21 million which made it a 75:25 joint venture with SAIF Partners and valued the firm at $28 million. In 2009, HomeShop18 roped in GS Home Shopping Inc. as a strategic investor, which, along with Network18 Media & Investments Ltd, infused $23.5 million into the company.