Venture Capital in India

Excerpts from an interview with Sumant Mandal of Clearstone (whom I also met recently in Mumbai):

There is approximately $1 billion that’s been raised for investment in private companies in India. I’m not quite sure how much of that is going to go towards IT or services businesses that are IT enabled, but I can say for sure that a vast majority of that money will go into existing and later-stage businesses. There is little or no real VC money available in India. Companies that are receiving money in India are either spin outs from existing large businesses (an example being GECIS, which is a spin out of GE), captive units or second tier outsourcing providers that may lack the size or scale to compete with giants like Wipro and Infosys and want the private equity money to grow through rollup and acquisitions. In the early-stage investing business, there are a few small funds that are local to India but have not done too many deals.

So there’s a big hole in venture money for start-ups in the way we recognize them here in the U.S. (early stage, pre-product or pre-revenue companies), and a majority of the private equity is going into late stage businesses. There is quite a bit of competition for later-stage businesses as there are very few that have strong management teams and international aspirations. Funds that are active in India for later-stage investments are General Atlantic, Warburg Pincus, TPG, Carlyle and some local players like Chryscapital. We [Clearstone] would fit in the early-stage investing mold. For early-stage investing, there are either companies that are developing IT products that are internationally relevant (technologies that are servicing the North American or European markets but are built using Indian talent) or companies that are creating services targeted at the Indian consumer, where there is potential for hyper growth. Connectivity (mobile and broadband), content and enabling electronic commerce are good areas in India today.

Mobile Web 2.0

Ajit Jaokar writes:

The mobile device has the potential to act as a significant reporter of data rather than a mere consumer of data. The Web 2.0/mobility interplay needs more thought. Consider principle two from the list of seven principles (harnessing collective intelligence).

Functionally, we must be able to

a) collect intelligence unique to being mobile
b) share that knowledge
c) enable others to comment on that knowledge
d) Ensure that the enhanced body of knowledge so created can be shared with the community.

This leads to more questions – What type of information can we collect when we are mobile (location, pictures(MMS)), How can it be shared?, How can it be enhanced?

Gadget Wars

New York Times writes:

THE average American household now owns some 25 consumer electronics products – televisions and stereos and high-tech gimcracks of every imaginable flavor. That statistic brings that industry’s annual convention in Las Vegas last week into stark relief. Some 130,000 people moved around a noisy, pulsing display space, with thousands of products covering a land mass that seemed roughly equivalent to Norway’s.

That battleground for things like who makes the biggest flat-screen TV with the highest-definition picture was, of course, in full force at the show. But it is now only one of two battlegrounds. The other – call it branded ubiquity – is about who controls the interaction between the consumer and that gadget and, more and more, all the other gadgets in the house as they become interconnected.

Increasingly, multiple gizmos live in a single box. Just as iPods can show videos and photographs, new generations of mobile telephones can store hundreds of songs but also take a heck of a photo or get access to a video and Web content. And there are, of course, Microsoft’s Windows Media Centers and other “digital lifestyle” devices that will be powered by its software, or Intel’s new Viiv technology platform.

Databases to Contentbases

[via Sadagopan] Dave Kellogg writes:

There’s a big divide that exists in information technology. One that we’re not supposed to talk about. One that we pretend doesn’t exist, but in fact gets wider with each passing year — it’s the divide between data and content.

Data is a first-class citizen in the IT world. Data has a nice home. It lives in databases that offer control, consistency, security, backup/recovery, indexing, and a query mechanism.

Most content, on the other hand, is homeless, relegated to the file system. If you’re lucky you’re using a search engine to index content, so you can find files containing certain words or phrases. Or, with some additional setup, you can index a few XML tags, if present, and run fielded searches against them. But for most content, the full benefits of living in a database — such as powerful, fined-grained queries, transaction consistency, and immediate availability — just aren’t available.

As a result, our understanding of content has become comparatively impoverished, our expectations for what is possible with content are reduced, and a myth gets perpetuated that content can and should be managed with the same tools and approaches as data.

2006: Cautious Optimism

Shrikant Patil writes:

Nature demonstrated its anger in 2005. The next year could be one where there could some interesting outcomes. Some I fear are

– Reservations expanding from private education institutions (political parties ganged up against a supreme court ruling) to private enterprise. This will severely impact the meritrocracy hiring policies of all companies including IT.

– The China bubble could burst. The balloon is just bigger so needs to more air than previous occasions like Asian crisis of 1997.

– The U.S. dollar gets revalued lower triggering global economic chaos. This could also happen with the Yuan getting revalued higher.

– Indian businesses which depend on rupee revenues will struggle because of high real estate costs. The high real estate costs are driven by companies that have dollar incomes. So if you are not IT, not an exporter it will be tough to survive.

– Indian infrastructure will continue to decay thanks to our leaders like the President, PM and FM who will gloat in their past perfromance and our stupid people who will waste another year believing they will do something.

– Mobile business will continue to grow with new facilities like lifetime prepaid. Local calls all over India is a possibility.

– Low cost airline will continue to grow with more middle class Indian experiencing the Power to Fly. They will shift from Railways to Low Cost Carriers.

– Airport Infrastructure will not be able to keep up with the growth of airlines.

– Sensex will stabilize around 6500 to 7000.

TECH TALK: 2006 Tech Trends: Broadband Networks Everywhere

6. Networks are becoming higher speed and ubiquitous.

Broadband is happening on both wired and wireless networks. While countries like Japan and South Korea have had broadband for a few years, it is only now becoming widespread in the US and other markets. In India, the early signs are positive even through telecom operators still tend to do metering of traffic. Broadband is now an accepted reality. Even on wireless networks, the data speeds are improving. China and India are on the verge of announcing terms for 3G networks. WiFi hotspots are spreading and then there is the promise of WiMax on the near horizon. We are on our way to living in an envelope of connectivity.

Fred Wilson: In Frank Barnako’s Internet Daily, he quotes Kevin McKenzie, chief executive officer of JiWire.com, who says: Wi-Fi is going to be ubiquitous. You’re going to see more municipal hot zones going from announcement to reality. We’ve seen a huge increase in shops offering free Internet access as a way to get people in their doors. Free and ubiquitous wifi is important because it makes access available to anyone with a wifi enabled device, levels the playing field in a host of ways, and makes wifi based telephony a reality.

Internet News: Could 2006 be the year that Ultra Wideband starts to make personal area networks happen in the home for tech-savvy and media-loving consumers? If Freescale, the semi-conductor spin-off of Motorola, has any say, it will. The company has said it hopes to see UWB transmission rates hit a full gigabit per second, and it hopes to get its chipsets in more devices in 2006. Plus, after two wireless networking industry groups, The WiMedia Alliance and the MultiBand OFDM Alliance Special Interest Group (MBOA-SIG), merged in 2005, some of the squabbling over formats and protocols could be streamlined for products to ship. Then, there’s that 802.11n high-speed spec for the somewhat competing Wi-Fi wireless networking standard. UWB supporters say both have their place, but that UWB is better-suited for home networking and zipping media from one TV to another device. UWB’s transmission rates, at 40 to 50 megabits per second, as well as its ability to support networking via the Bluetooth standard, puts it in a position to make headway in the home in 2006We also think wireless USB (WUSB) will be the most “visible” new technology of 2006. There are countless billions of peripheral devices connected by USB cables. With WUSB, all those cables could disappear. The WUSB specification which was formalized in 2005 and is backwards compatible with existing USB connections. That means the countless billions of USB peripherals have a simple wireless upgrade path. The first WUSB devices are expected by the second quarter of 2006. Look for the technology to gradually displace Bluetooth and Infrared as the dominant wireless interconnect for personal devices and peripherals.

David Kirkpatrick in Fortune: Myprediction is that telcos will become more powerful Internet service providers. Mark Anderson, who writes the Strategic News Service newsletter and has a keen sense of communication trends, says cable companies, telcos, cellphone companies, and other ISPs are becoming generic bit providers that will compete solely on how cheaply they can deliver digital contentfrom phone calls to TV shows. But telcos may have some advantages over the other players. Wolfgang Ziebart, CEO of Infineon, recently told me that the German chipmaker will ramp up production of its so-called VDSL2 chip in early 2006. This chip can send data at the Holy Grail rate of 100 megabits per second over ordinary copper phone wire for distances of more than 600 feet. That may not seem very far, but it represents a much greater capacity to transmit data than has previously been available on copper wires. This will enable phone companies to avoid stringing expensive optical fiber all the way to consumers’ home computers. Instead, telcos can install optical fiber cables to hubs and then use traditional pre-existing copper phone lines to connect them to nearby households. Texas Instruments and other chipmakers are working on similar technology.

Bruce Perens: “Cellular Carriers are Just Carriers. Cellular carriers have chased the dream of value-added content, served through feature phones, as a revenue enhancer. But they’re ignoring history: remember the first generation of internet providers? Compuserve, Prodigy, Genie, GNN, and AOL all worked hard to provide unique content and enhance the user experience. They lost out to a second generation of internet providers that were just high-speed data pipes, while content moved to carrier-independent entities like Google and the user experience was engineered by software application providers like Netsape, Microsoft, and eventually the Mozilla project. Edge-enhanced GPRS is already available in most U.S. markets, thanks to the conversion of American cellular infrastructure to GSM. It provides a means to access the global internet and ignore carrier content. And that’s what feature-phone users will do.”

Tomorrow: Peer Production and Syndication

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