Ideas|Products|Startups|VCs

Groffr, the only group buying portal of high value items like real estate, cars, home loans etc is about to close a funding round. It is learnt that the group buying space seems to be only gaining momentum. We have learnt that Groffr is about to raise capital from a prominent Angel Network and another institutional fund. The details are not known but sources say it’s close to a million dollar. The funds are largely going to be used for expansion purposes. Since this is not from company sources we can’t confirm it with certainty.

In another development Groffr got an offer for one of the biggest internet company in India for a complete buy out which was in tune of $4-5M. Groffr founders Sandeep Reddy and Vikhyat Srivastava  declined this tempting offer, Certainly they want to play bigger game in this $1B real estate brokerage market.

Transactions over Groffr platform has been very healthy, around 115 crores transaction has been done and they have saved around 21Cr for their customers. Groffr monthly net revenue has been growing steadily.

Groffr is a a year old Mumbai based startup founded by Vikhyat Srivastav and Sandeep Reddy, both IIMK graduate and worked earlier with PE real estate funds. The group aggregates people interested in a particular property and negotiates with the developers for a discounted price for everyone. Groffr employs 20 people in three cities – Mumbai, Hyderabad and Bangalore.

Given the recent volatility in the sector, it makes sense for the real estate developers and car dealers also as they are able to sell a good chunk of their high value inventory in one shot. It’s a win-win situation for both the parties. Buyers get a good bargain while developers are able to sell a lot of flats in one go while saving on marketing cost.

-Hitesh, vcBytes.com

BigshoeBazaar pvt ltd which runs online shoe store Yebhi.com has raised $2.2M from Nexus Venture Partners. This investment was closed in late decemeber 2010. As per Nitin Agarwal, cofounder of BigshoeBazaar talks are at advanced stage for closing another round of funding. You can checkout Nitin’s interview as part of “Walk the Talk with an Entrepreneur” here.

BigshoeBazaar primarily runs a B2C portal Yebhi.com formerly known as Bigshoebazaar.com which sell footwear mainly and now it has added few more categories like Clothing, jewelery and accessories.

Bigshoebazaar runs a wholesale network across the country targeted at small retailers in Tier2 and Tier3 cities to source Global brands like Adidas, Nike etc. which in general don’t have access to such brands.

Bigshoebazaar has also started franchisee business, where it offers shoe retailers to use it brand and retailers source the footwear from the company. Funds will be primarily used to expand the wholesale network and franchisees.

Lets Look at the monthly traction of Yebhi.com –

Personally I have been a regular user of Yebhi.com and bought multiple footwear for my family. They very prompt in servicing the clients, products are of best quality, return policy is highly user friendly.

Certainly they have strike the right mantra to crack this space. If you have used Bigshoebazaar services do share your views.

-Hitesh, vcBytes.com

Vizury Interactive, an online advertising network has raised investments from early stage VC firm Ojas Venture Partners, deal size hasn’t been disclosed.

Vizury is a technology start-up in the internet advertising space. We help advertisers achieve optimal Return on Advertising Investment(RoAI) for their internet advertising campaigns through a proprietary technology platform.

Vizury Interactive was founded in 2008 by an IIT-IIM alumni team led by Chetan Kulkarni with strong business & technology experience in the internet advertising space across international markets.

Vizury flagship platform is called as Visitor Relationship Management (VRM) which empowers advertisers to engage their website drop-off users in a 1:1 marketing conversation, resulting in both measurable and tangible value, as well as contributing to intangible branding impact. The 1:1 marketing conversation is enabled through thousands of highly personalized rich media ads that are powered by statistical modeling of user behavior, dynamic message generation module and response optimization system

Vizury key USPs are – Behavioral Re-targeting, 1:1 Dynamic Message Generation & Delivery Engine, Response Optimization, Deliver Incremental ROI and Intangible Branding Impact.

-Hitesh, vcBytes.com

Inkfruit, an online apparel retailer has raised $3M in series A round from SAIF Partners. The amount raised will be used to expand its product offering and to expand its retail outlets.

Founded in 2007 by IITians- Kashyap Dalal and Navneet Rai, Inkfruit.com is an community-centered online apparel store which allows buyers to design their own T-shirts, mugs and posters with the help of artists.

At Inkfurit, t-shirt designs are submitted and voted for by a community. The design that receives most votes ‘wins’, gets printed and is put for sale. The member whose design is selected gets paid a winning amount.

Inkfruit essentially follows Threadless model in India which is understood to be a billion-dollar, Inkfruit directly competes with companies like iLogo, Scopial in India. After successful IPO of MakeMyTrip, SAIF partners is highly bullish on Internet ventures, though $3M is relatively small investment for them but they are supporting the vision of the company.

SAIF Partners has about $4 billion of assets under management has invested  $20 million in  Catmoss Retail Ltd,  $25 million in Network 18 Media &Investments Ltd,  $10 million in Amoha Education Pvt. Ltd, TV 18 Home shopping network Ltd and $115 million in National Stock Exchange of India among other investments.

Lets look at the monthly traction at Inkfruit-:

Startups are high risk high gain game and more often startups fail, 98% of startups fail and close down. But why do they fail, lets look at the prominent reasons behind its failure -:

1. The idea is poorly executed. Sometimes the idea is great but the execution process makes it fail.

2. A lot of ideas fail to cover a market size. Sometimes there is no market at all. Such ideas are bound to fail. It is important to make the product or the service useful to the consumers.

3. Leveraging costs could do the damage. It is better to keep most of the costs in the variable mode.

4. Making profit or breaking even immediately after the start should not be the goal. Making a good foundation should be. Moreover, making profit could wait at least for a year.

5. Sometimes the idea is already in the market. If there is no innovative or competitive advantage, the startups could face severe challenge.

6. At times, too much passion or enthusiasm could mean downfall. Without scale, it is not prudent to compete with industry leaders.

7. Sometimes the idea does not have space to grow-it suffocates itself when the matter of scaling up comes up. So, entrepreneurs need to make sure that they do not pick up a niche that has no or very little growth potential.

8. Pricing strategy is very important. As mentioned earlier, at the beginning, entrepreneurs should try to limit the profit that they are looking to earn from products or services. Making a trusting customer-base is more important for startups.

9. As the idea moves forward, sometimes the founding team breaks up. This is a terrible time for any startup-make sure that the founding team remains intact.

10. Sometimes, with initial success, a rapid growth is achieved. Entrepreneurs should remember that with growth, scenario could change very widely and this could mean blockage and lot of pressure on the founders. Controlled growth should be the idea approach.

- Hitesh, vcBytes.com

Letsbuy, a New Delhi based e-commerce company founded by Hitesh Dhingra and Amanpreet Bajaj  in mid 2009 has raised an investment of $6M in series A round from Helion Venture Partners, Accel Partners and Tiger Global.

LetsBuy.com is an online retailer of consumer electronics, telecommunication products, laptops and computers peripherals, they deliver goods through out India. Earlier Hitesh Dhingra was the co-founder and Business Head of online advertising firm Quasar Media Pvt Ltd and Tyroo Media.

“LetsBuy.com in on the fast-growth path and the VC funding from the leaders in the space will only spur us on. The funds would be deployed in strengthening customer service, technology and supply chain processes,” said Dhingra, Founder & CEO, LetsBuy.com.

“India has witnessed tremendous growth in e-commerce and Letsbuy has been part of that growth. The team has the vision to have identified a very compelling opportunity and the execution skills to deliver to it,” said Ashish Gupta, Managing Director, Helion Venture Partners.

“The LetsBuy.com team has the vision and the business acumen to identify opportunities and make them stepping stones towards growth. In the process they present the best offerings to their customers and meet the goals chalked out by the partner investors. The strategy and plans match those valued by the Accel Partners team,” said Prashanth Prakash, Partner, Accel Partners.

If you compare the online traction of Infibeam, Futurebazaar and Letsbuy, letsbuy is catching up with Futurebazaar

Interestingly Letsbuy compete with Flipkart (also a portfolio company of tiger global and Accel Partners) in category like ‘Mobiles’.

I am impressed with wide range of payment options available for users at Letsbuy for order fulfillment, except for payment through mobile they have covered everything -

e-commerce space in India is very big enough to sustain and grow multiple payers. Online retailer with superior customer service, competitive pricing and quick delivery time will be successful.

-Hitesh, vcBytes.com

Understanding dilution is critically important for an entrepreneur who has cofounders or who plans on raising venture capital money to help grow their startup.

Dilution refers to a decrease in the ownership position of a company. Equity is a primary criteria in venture capital investment and is the heart of venture capital. The concept of dilution is a major factor to consider in deciding upon a financing strategy. By definition, bringing in an equity investor means that that the new party will be taking part ownership of the company.

Concept of dilution was the backbone of very popular movie “Social Network” which dealt with equity among founders, friends and VCs.

Lets try to understand the concept from the scratch –

-Hitesh, vcBytes.com

What is Pre-money valuation? Pre-money valuation refers to the valuation of the company before an investor injects capital into the company. The post-money valuation of a company refers to the valuation of the company after an investor has injected capital into the company. Therefore, the post-money valuation of a company is always equal to the pre-money valuation plus the amount of capital injected by the investor.

In equation form -

1. Post-money valuation = Pre-money valuation + Investment amount

2. Purchase price per share = Pre-money valuation / Number of fully-diluted shares before investment

3. Number of new shares issued to investor = Investment amount / Purchase price per share

Example:

Corbyn Tech Ltd. currently has 5,000,000 common shares held by its founders, being 100% equity of the company.

It is agreed between Corbyn Tech Ltd. and Investor A that in the forthcoming Series A round, 1,000,000 common shares will be set aside for ESOP.

Therefore, the number of fully-diluted shares of Corbyn Tech Ltd. before the Series A round is 5,000,000 + 1,000,000 = 6,000,000.
Pre-money valuation:
Before financing, Investor A gives Corbyn Tech Ltd. a valuation of US$5,000,000.

Therefore, the pre-money valuation of Corbyn Tech Ltd. is US$5,000,000.
Purchase price per share:

Each share is valued at $5,000,000 / 6,000,000 = $0.83 (calculated on a fully-diluted basis).

-Guest Post by Ananth, Ananth is a Senior Analyst with a leading PE firm based out of Mumbai

Intel Capital has acquired shares in Omnesys Technologies, a Bangalore-based provider of software for securities trading and order-management systems through strategic investments.

Terms of the transaction were not disclosed.

This investment marks Intel Capital’s eighth deals, which are potentially worth up to $45 million, in India during 2010. The deals reflect the strong entrepreneurial culture and the spirit of innovation that exists in India today, Intel said in a statement.

Arvind Sodhani, president of Intel Capital and executive vice-president of Intel, said, “Intel Capital’s acquisition of shares in Omnesys Technologies reflects the growing adoption of sophisticated, high-end compute platforms and reaffirms our commitment towards fostering innovation among entrepreneurs in India. Intel Capital hopes to assist Omnesys in their global expansion.”

Intel Capital hopes that this investment relationship will create opportunities for Omnesys to connect with potential customers, and take its product to securities markets around the world.

Shrikant Pandit, founder and CEO of Omnesys Technologies, said, “We see our association with Intel Capital as an important step in our growth plans to access global markets. This marks an important milestone for Omnesys as we aim to strengthen our position in India and in markets overseas.”

Omnesys Technologies provides low-latency, high-performance trading systems, which are used by institutional and algorithmic trading desks.

“Intel’s technology has great potential to help transform fast-growing markets, such as India’s financial industry. Our investment in Omnesys shows Intel’sinterest in supporting the increasing sophistication of financial markets in India,” said Navin Shenoy, vice-president and general manager, Asia-Pacific, at Intel.

-Hitesh, vcBytes.com

Nexus Venture Partners, an early stage venture capital fund, announced today that it is launching a seed stage program called “Nexus Seed” which will help build a stronger entrepreneur ecosystem in India.

Nexus Venture Partners will use the Nexus Seed program to identify and fund high potential entrepreneurs who are building technology and Internet companies. Through this initiative, Nexus will invest Rs. 20 lakhs to 2 crores ($50k-$500k) each in up to 50 companies over the next 5 years. Entrepreneurs are encouraged to submit a summary of their plans to plan@nexusvp.com .

Nexus Venture Partners is the leading venture capital fund in India with total fund size of $320 million. Apart from investing in early to early growth companies, Nexus has also been incubating and investing in seed stage companies since 2006. These include Sedemac, Scalarc, Vdopia and several others. Many of these companies have gone on to raise further financing and build leadership positions in their markets.

Speaking about the seed program, Dr Naren Gupta, Managing Director of Nexus Venture Partners said, “We are excited to launch this platform to identify and assist entrepreneurs passionate about building leading companies to serve Indian or global markets. This will enable selected entrepreneurs to get access to expert help as well as seed stage capital which they can use to refine the concept and reduce some of the early stage risks.”

Deepti, vcBytes.com