Here is a technology product startup betting on India's urban consumption story. Snap Networks Pvt Ltd, a two-year-old start-up developing wireless home theatre solution, is hitting the market for raising $3.5 million in venture capital after having mopped up angel funding from Sling Media co-founder Bhupen Shah and Mumbai-based Ghalla Bhansali Group among others. The Bangalore-based firm, which will be launching its 5.1-channel surround home theatre pack priced at around Rs 50,000 by September-end, is looking at a market opportunity of $50 million in the next five years.
The firm, founded by Ashish Aggarwal, a former senior executive at US-based Harman International, has raised $6,50,000 from individual investors including promoters to support R&D and for commercializing the product. The initial plan involves tapping the direct marketing channel rather than the traditional retail route for gaining customer access.
"We are looking at around $3.5 million in fundraising by January, once we establish the initial traction for the product in the market," Ashish Aggarwal, CEO of Snap Networks, told VCCircle.
Snap's pack - branded Violet - has five wireless speakers, a space senor microphone (that creates geometric stability and acoustic coherence), a sub-woofer and transmitter. Ace designer Michael Foley, known for his minimalistic approach, was behind the design concept, while Texas Instruments and Freescale have worked with Snap on this wireless home theatre project.
"The core proposition is hassle-free home theatre given the usual troubles associated with its installation or re-installation. It should be as easy as any plugged in proposition so that even a grandma in any household can work around it," says Aggarwal. The firm is currently looking only at home theatre opportunities though its technology, with patent filings in wireless and digital signal processing, could manage acoustics for smaller conference rooms and office facilities as well.
The firm has roped in a veteran in consumer electronics and durables industry LH Bhatia, who spearheaded BPL Group's initiatives in the 90s. Bhatia is the Chairman of the firm and manages its sales and marketing efforts along with Aggarwal. The core team of six people including Bhatia and Aggarwal forms the management and owns shares, not necessarily as investors though.
Snap Networks is looking at a market opportunity of $50 million in India over the next 4-5 years. "We starting with direct marketing agents in top 10 cities. We will probably have two each in every city. The immediate aim to establish traction with sale of 1,000 packs in the first few months. We could then look at alliance with strategic partners (like DTH operators) and retail chains for deepening the market potential," adds Aggarwal.
Snap Networks, he explains, is not interested in licensing the product even though he has received feelers from several global consumer electronics brands. "We want to build this product independently," Aggarwal argues as he prepares to engage with venture capitalists who have been rather risk averse to product start-ups, especially in India.
But, today, as VCs and angel investors shy away from traditional outsourcing plays, products may be blipping more frequently on their radar. Some of the recent deals in this space have been Sequoia Capital's Rs 60-crore investment in security software products maker Quick Heal Technologies. Perfint Healthcare Pvt Ltd, a Chennai-based medical equipment company, raised $7.2 million in a round led by Norwest Venture Partners, Accel Partners (India) and IDG Ventures in July. Indian Angel Network invested $350K (~ Rs 1.6Cr) in Pune-based software product firm InnovizeTech Software last month.
The management at Snap Networks is also working on a business plan for the North American market as early roadshows in the region have generated good interest in the product, both from retailers as well as investors. The current US market potential is estimated at $120 million but growing at a slower pace compared to India. "The US, obviously, is a more structured market with matured mainstream retail channels available for this product," says Aggarwal. Snap has opened early discussions with retailers like Best Buy for a strategic alliance in the North American market but all that depends on the scale-up model it would pursue in the coming months.
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