10 Startup Business

BT SPECIAL: 1O Start-Ups to Watch1O Start-Ups to Watch
A new annual listing of promising young ventures.

By some estimates, venture capital (VC) firms will invest nearly a billion dollars in India this calendar year. That's almost double of what they did last year. Predictably, that has got venture ideas to come crawling out of homes, offices, educational institutions, and laboratories. Here's the thing, though. While ideas are dime a dozen, only a select few are getting funded. Typically, these are start-ups focussed on internet, wireless (read: mobile phones), or domestic consumer services. Worse, there's almost no money available for seed funding; most of the VCs only want to fund firms that have demonstrated that a market exists for their offerings and are looking for growth capital. Yet, there's no dearth of start-ups that have not just survived crushing odds, but gone on to differentiate themselves either with a unique business proposition or rapid growth. Starting this year, Business Today will list 10 such ventures every year, based on the assessment of top VCs, industry specialists, and BT's own team of writers and editors. Turn the page for this year's 10.
24X7 LEARNING SOLUTIONSVirtual University
NAME OF COMPANY: 24x7 Learning SolutionsYEAR OF FOUNDING: 2001FOUNDERS: Karthik K.S. & Anil ChikkaraAREA OF OPERATION: E-learningFUNDING: KITVEN and Anil Garg; to raise $10 million over two yearsREVENUE: $3 million SIZE OF TARGET MARKET: Globally $28 billion; In India, Rs 350 croreKEY COMPETITORS: IBM, Sum Total, Gurukul Online, NIIT, Aptech and Blue Apple
Sitting pretty: Karthik's firm claims to have trained 5 lakh executives
There are dozens of players in the global e-learning market. But if you want to meet the biggest Indian player in the market for corporate e-learning solutions, you'll have to pay a visit to Karthik K.S. and Anil Chikkara. Headquartered in the heart of Bangalore, 24x7 is one of the oldest e-learning companies (it made IT to Red Herring 100 Asia list last year), with customers such as the Aditya Birla Group, Murugappa Group, Accenture and Wipro. "Four or five years ago, e-learning was unheard of and our first meeting with a VC lasted all of three minutes," recounts Karthik, founder and CEO, who partnered with his classmate at the National Institute of Technology, Anil Chikkara, to launch 24x7 in 2001.
Now, of course, it's a different story. With every company in every industry scrambling to reskill their executives on the job, e-learning is booming. 24x7 alone claims to have trained more than 5 lakh executives. However, Karthik admits that there are few barriers to entry in this space, and "there is scope for three or four big players" in the market. Already, 24x7 Learning has some hefty competition in the form of IBM (which vends its own packages), besides Aptech and Blue Apple in India. Therefore, Karthik doesn't rule out the possibility of 24x7 becoming an acquisition target. "We will focus on building, running, and managing a virtual university for our clients," says Karthik, who already has angel and venture investors in the company, but plans to raise another $10 million over the next couple of years. 24x7 took four years to make its million dollars in revenues, but only five to hit the $3-million mark. Perhaps that should get some VCs excited.
-Rahul Sachitanand
ADVENTITYNot Just Another KPO
NAME OF COMPANY: AdventityYEAR OF FOUNDING: July 2003; Commenced operations in January 2004 FOUNDERS: Kumar Subramanian, Ulhas Deshpande, Niket Patankar, Jagdish Iyer and Vivek AroraAREA OF OPERATION: BPO/ KPOFUNDING: Undisclosed 'steel and plastics' group in India ($10.5 million), Norwest Venture Partners ($20 million)REVENUE: Roughly $25 millionSIZE OF TARGET MARKET: $17 billion (just the KPO bit)KEY COMPETITORS: Amba Research and B2K Corporation
Racing ahead: Deshpande (L) and Arora are aiming for $40-50 million in revenues this year
On its third birthday, Mumbai-headquartered KPO/BPO firm Adventity earned itself a nice gift. In mid-January, it bagged $20 million in second round of funding from us-based VC firm Norwest Venture Partners (NVP). For good reason. Adventity's rise has been meteoric. The company has raced to a headcount of 2,200 spread across India, North America and Europe. "By the end of the year, we hope to have 3,500 people, and by 2008, 5,000," says Vivek Arora, Director & co-founder, Adventity. Last year it had revenues of about $25 million, but hopes to do $40-50 million this year.
A brainchild of five Indian professionals with stints in banking, technology and consulting, Adventity was seed funded ($10.5 million) by a prominent 'steel and plastics industrial' group in India and focuses on research and analytics for global I-banks and asset management companies, besides other BPO-type outsourced services for the global financial services industry. "We plan to extend our mortgage-oriented services to the UK and Australian markets in the near future," says Ulhas Deshpande, coo and one of the co-founders of Adventity. To break into this space, the company acquired us-based home mortgage company Texas Mortgage Company in a deal valued at $2-3 million, and is looking for more acquisitions, besides an IPO in 2008 or early 2009.
-T.V. Mahalingam
DRISHTEEEnterprise with Vision
NAME OF COMPANY: Drishtee Development & Communication LimitedYEAR OF FOUNDING: 2000FOUNDERS: Satyan Mishra, Nitin Gachhayat and Shailesh ThakurAREA OF OPERATION: Provides ICT (information, communication & technology) services to rural IndiaFUNDING: Acumen holds a 25 per cent stake for which they paid $1 millionREVENUE: Rs 3.87 crore for 2005-06SIZE OF TARGET MARKET: Currently caters to 300,000 customers. Target market is whole of rural India, which is 650 million peopleKEY COMPETITORS: ITC's e-choupal
Far-seeing: Mishra's mission is to take ICT to rural areas
Satyan Mishra has a simple way of describing what his technology start-up does, and which is to "connect village by village". The Managing Director of Drishtee Development and Communication runs an outfit that brings the internet to villagers. Drishtee's modus operandi is simple: It has telekiosks, called Drishtee Soochanalaya, that deliver information and services to rural folks-things like agricultural data, health insurance, and rates of agricultural commodities in the market. "It is important to do something for the villages and I realised there was a commercial proposition as well," says Mishra, who hails from Bihar.
The kiosk is franchised by a rural entrepreneur, who charges the services provided. Typically, between Rs 10 and Rs 25 per transaction. "We have 1,300 kiosks at present and the target is to have 10,000 by the end of fy09," says Mishra, an alumnus of the Delhi School of Economics, and who recently got a flattering review in BusinessWeek, thanks to one of Drishtee's investors, the Acumen Fund, a non-profit global fund led by Jacqueline Novogratz.
Understandably, there are challenges along the way. "The lack of availability of structured finance, power problem, connectivity issues and a lack of high-quality data are some issues," says Mishra, who, unlike Novogratz, runs a for-profit venture. Drishtee closed 2005-06 with revenues of Rs 3.87 crore and hopes to do Rs 4.4 crore in 2006-07. Says Mishra: "Clocking an average growth of 120 per cent per annum over the next five years should not be much of a problem, but there could be a bit of a struggle beyond that." He hopes to solve the problems in the way of ICT in rural India by 2012. "If the concerns remain by then, I will be a disappointed man," he says. That'll be unfortunate, not just for Mishra but rural India.
-Krishna Gopalan
GURUJI.COMBaidu Wannabe
NAME OF COMPANY: Guruji.comYEAR OF FOUNDING: 2006FOUNDERS: Anurag Dod and Gaurav MishraAREA OF OPERATION: SearchFUNDING: $7 million, SequoiaREVENUE: N.A.SIZE OF TARGET MARKET: $20 million*KEY COMPETITORS: 123India.com, Justdial.com, Khoj.com*Current search market for search queries originating from India
Search and you will find: Dod (left) and Mishra are thinking local
With search giants such as Google, Yahoo and Microsoft already battling it out in cyberspace for market dominance, you would think that an Indian challenger stood no chance. And you would be right. "We are not competing head on with these global giants. We are an Indian search engine and our USP would be delivering the right Indian content," says Anurag Dod, CEO and co-founder, Guruji.com, a home-brewn internet search engine.
Dod and his co-founder classmate from IIT Delhi, Gaurav Mishra, are right. An estimated 90 per cent of searches on the internet is for local information. In India, about 30 million searches are done every day and because of targeted advertising, they yield revenues of roughly Rs 100 crore a year. Khoj and 123india.com were some other local search engines, but Dod says that "they acted more like web directories. We are pure search". That means Guruji.com's search results are compiled by an algorithm that crawls the web and fetches content relevant to the Indian market.
Dod is hoping to replicate the success of other local search engines such as Baidu in China and Daud in South Korea. "At present, our intention is to attract and build traffic. We expect revenues to start flowing in a year from now," says Dod. Sequoia, which has made a big investment in Guruji, must be hoping so too.
-Venkatesha Babu
JIGRAHAKWaiting for a Yes
NAME OF COMPANY: JiGrahakYEAR OF FOUNDING: 2003FOUNDER: Sourabh JainAREA OF OPERATION: M-commerceFUNDING: $ 2.2 million, Hellion VenturesREVENUE: N.A.SIZE OF TARGET MARKET: N.A.KEY COMPETITORS: Paymate, mChek
Get dialling: Jain's targetting the well-heeled Indian consumers
Look at the numbers and it seems like a no-brainer. At 200 million, there are (four times) more mobile phone subscribers in India than internet users. Better still, that count is surging at 7 million a month, making India the fastest growing cellular phone market in the world. So, if people wanted to buy virtually and buying via mobile phones was as easy as buying over the pc, what would they prefer: the pc or the phone? Sourabh Jain, 29, thinks it will be the cellular phone. Ergo, four years ago, he quit his job at Lucent Technologies to launch a mobile payment solutions company, JiGrahak (for Yes, Customer).
Jain isn't without competitors. Paymate and mChek are some others trying to tap, or rather grow, this market. However, there are certain differences between its competitors and JiGrahak. To use its proprietary NGPAY software platform, one needs to have a GPRS- and Java-enabled phone, unlike the others, who offer SMS-based payment service. "Our target market is not the panwalla or doodhwalla, who are primarly voice customers. Our potential clients would be using GPRS- and Java-enabled phones," says Jain. Except for countries such as Japan and South Korea, mobile payment hasn't taken off anywhere in the world. And although it's the seller who pays the transaction fee, buyers must feel secure about mobile payments before they start dialling money out.
\-Venkatesha Babu
ASIA CRYO-CELL Life Blood
NAME OF COMPANY: Asia Cryo-Cell YEAR OF FOUNDING: June 2004FOUNDER: S. Abhaya KumarAREA OF OPERATION: Private Banking of cord blood; research and therapy applications using cord bloodFUNDING: Rs 20 crore, largely by Abhaya Kumar; remainder from investors like P.S. Pai and other individualsREVENUE: Rs 15 croreSIZE OF TARGET MARKET: N.A.KEY COMPETITORS: Reliance Life Sciences; Karnataka Cryogenic; Cord Life
Ahead of others: Chandramouli will soon get US FDA certification
In late 2004, when S. Abhaya Kumar, the promoter of Shasun Drugs and Chemicals, launched Asia Cryo-Cell, it was the first cord-blood, or stem cell, bank in the country. Since then, though, four other players have entered this nascent business, but Asia Cryo-Cell, better known by its brand name, LifeCell, remains ahead of competition. Not only does it have a 100 per cent clean room facility where 6,000 units of cord blood are stored, but is getting us FDA certified (via the American Association of Blood Banks) by the end of April. "We could do this because of our associated pharma background," says CEO V.R. Chandramouli.
The certification will ensure that the cord blood from LifeCell's bank can be used by customers in regulated countries. LifeCell is also the only one to have a national distribution network, with tie-ups with more than 265 hospitals for collections. It also intends to set up offices in Colombo, Kuala Lumpur, Singapore, Thailand, among others, by 2008, as a partner of Cryco-Cell, a us-based company. LifeCell hasn't stopped at banking. It is working on various basic research applications pertaining to diabetic and cardiovascular diseases as also geriatric-driven applications, and hopes to have at least three patented products by 2008. It has tied up with Chennai-based Sri Ramachandra Medical College for applications that require clinical trials and to facilitate transplants in the same hospital, should a donor require one.
End of this financial year, LifeCell hopes to rack up revenues of Rs 15 crore, "but by 2010, we hope to have a turnover of Rs 250 crore and a market share of 20 per cent", says Chandramouli. It looks like LifeCell's start-up days are over.
-Nitya Varadarajan
NAUTANKI.TV Television Online
NAME OF COMPANY: Nautanki.TV YEAR OF FOUNDING: November 2006 FOUNDERS: Sunil Nair, Vikram Prabhu and Herumb KhotAREA OF OPERATION: Online TV channel FUNDING: Rs 1.5 crore from founders and two investment bankers in their personal capacityREVENUE: Advertising revenue approximately Rs 12 crore by March 2008 ( first full-year operation)SIZE OF TARGET MARKET: Internet advertising market in India to be Rs 750 crore by 2009-10 (source: PwC) KEY COMPETITORS: None yet
Free to view: (L-R) Khot, Prabhu and Nair offer six channels online
What happens when three youngsters-one from television, another from the internet and the third from fashion and television-come together? You get Nautanki.tv, an online entertainment channel that caters to Indians all over the world. It was a real TV channel that Vikram Prabhu, Sunil Nair and Herumb Khot had set out to launch last year, before they realised that they would need at least Rs 300 crore to do so. So raising Rs 1 crore from two I-banker friends (the trio chipped in with Rs 50 lakh), they did the next best thing: launch an online TV.
Nautanki.tv went online eight months ago with six channels, including drama, thrillers, documentaries, and humour. The online TV webcasts a fixed schedule of programmes every day. "We have half hour of fresh programming every day. By end of March, we expect this to go up to one hour and by June, to two hours," says Nair. Currently, 70 per cent of the content is produced in-house, while amateurs contribute the rest. The content is free to view, and the website makes money the traditional way-from advertisers on a pay-per-viewer basis. "For a 30-second commercial, we charge Rs 25 per view," says Nair.
All programmes on Nautanki.tv are typically 4-minute long, with a maximum duration of eight minutes. The website gets 75,000 visitors every day, and 40 per cent of the traffic comes from the UK and the US. The promoters are now planning to launch a Gujarati channel that will be generic in nature with news, current affairs and cultural programmes. "We are looking to extend our regional coverage to include Tamil, Telugu, Marathi, Bengali and Kannada channels," says Prabhu. Needless to say, the Mumbai-based Nautanki.tv plans to tap VCs for funds in June this year.
-Anusha Subramanian
ONYOMOSearch on the Go
NAME OF COMPANY: Onyomo YEAR OF FOUNDING: January 2006 FOUNDER: Shailesh Mehta AREA OF OPERATION: Person to Application (P2A) segment of mobile value-added services, including SMS sent by end users for contests and for seeking other information FUNDING: Shailesh Mehta and IIT Delhi (in talks with VC and PE investors for large funding) REVENUE: Won't reveal before the commercial launch SIZE OF TARGET MARKET: Rs 428 crore for 2006 (source: IAMAI) KEY COMPETITORS: Ziva Software, Bangalore
Have a query? SMS it to Mehta at 8888
You are in Delhi's Connaught Place, and want to know what are the Chinese restaurants in the vicinity. Don't bother stopping by at an internet kiosk; your mobile will do just as well. That is, if Shailesh Mehta's plans pan out. The 33-year-old, IIT Bombay and Insead alumnus has just launched a firm (out of IIT Delhi's Business Incubation Unit) that offers SMS-based search in test mode in Delhi/NCR, Mumbai, Chennai and Bangalore. This is how it works: You SMS a query to 8888 and in about 15 seconds the answer is SMS-ed back to you.
The start-up currently has a team of 10 techies and sales people and has been recording "more than 5,000" hits every day even without a commercial launch (which should happen before April 2007 in partnership with Indiatimes.com). "We don't have a predilection for phone, net or many other digital channels that are entering the market. Our credo is to provide timely and relevant information, irrespective of the medium," says Mehta. He plans to roll out the service to another 22-25 cities soon.
VCs, lick your chops.
-Kapil Bajaj
SEVENTYMMIndia's Netflix
NAME OF COMPANY: Seventymm YEAR OF FOUNDING: 2005-commercial operations started in March 2006 FOUNDER: Raghav KherAREA OF OPERATION: Organised movie rental-part of the home video segment FUNDING: Initial funding from Draper Fisher Jurvetson ($2 million) and second round led by Matrix Partners India ($7 million)REVENUE: N.A.SIZE OF TARGET MARKET: Home video market Rs 2,100 crore by 2009-10 (Ficci-PwC 2006 report)KEY COMPETITORS: Mad House and Clickflix
Keep watching: Sarker's target is one million subscribers in five years
It's possibly the best-known of our 10 start-ups. So we won't waste space giving you the history of Seventymm, but rather tell you what it plans to do. Having taken its order-movies-online model (a la Nextflix of the us) to Bangalore, Delhi and Mumbai-it has 15,000 subscribers here-it now plans to hit Chennai, Hyderabad and Kolkata. "We hope to rope in 1 million subscribers over the next five years," says its coo, Shubhanker Sarker.
-Anusha Subramanian
UFO MOVIEZBeam-me-up Movies
NAME OF COMPANY: UFO MoviezYEAR OF FOUNDING: 2005 FOUNDERS: Raaja Kanwar and Sanjay GaikwadAREA OF OPERATION: Digital cinemaFUNDING: Initial funding of Rs 100 crore from Apollo Group and second round of Rs 100 crore from private equity firm 3i REVENUE: First full-year operations 2007-08-Rs 100 croreSIZE OF TARGET MARKET: Rs 10,000 crore by 2009-10KEY COMPETITORS: Only player in the market
Panacea for piracy: 650 theatres have installed Gaikwad's digital platform
Imagine first-day, first-show movie release across A, B and C-class towns and also to global audiences. What's the outcome? Besides happy movie-goers, savings in print cost, wide release of film, curb on piracy, and lower break even point. The venture behind it: UFO Moviez.
Part of the Apollo Group, UFO Moviez is one of the world's largest digital cinema chains, founded and led by Raaja Kanwar and Sanjay Gaikwad. "We looked at it as a platform business. We identified the right technology for the digital platform, through which movies can be screened digitally and at the same time will not be a cumbersome and a cost burden to the producer, distributor and the exhibitor," explains Gaikwad. UFO Moviez undertakes the entire cost of installing the digital system at the exhibitor's end and the exhibitor is charged on a pay-per-show basis. If an exhibitor has to install the digital cinema system on his own, it would cost him anywhere between Rs 12-Rs 15 lakh. UFO Moviez only charges a one-time cost of Rs 25,000 for installation.
Currently, 650 theatres have been installed with UFO Moviez digital platform, and Gaekwad expects 3,000 installations by end of 2009. "We would be able to add about Rs 4,000 crore to the industry revenue that is currently lost to piracy," says Gaikwad. As you can tell, it's a happy story in the making.