As I look for seed investment opportunities I have narrowed my focus to critical mass plays ( Rs 500 per year from a million user type plays) that could potentially provide 400 crore exits in 4-7 years.
As the Indian economy expands some wealth creation has to come from companies that are just starting and my guess is that there will be atleast a hundred such 400 crore + companies in the next 7 years.
One of the key things I look for in entrepreneurs is the ability to accept “delayed gratification” and the ability to deploy capital efficiently. In an Indian context “delayed gratification” could mean taking a CTC of Rs 20000 a month while your peers get say Rs80000 per month. Sometimes the delayed gratification can take very long and it may never happen.
Like someone said you cannot have a baby in one month by getting nine women pregnant.
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Hi Sanjay,
This is Anish , the co-founder & CEO of the startup TNGicube . TNGicube is incubated by Asianet Satellite Communications (Asianet is the largest Cable and Broadband Service in Kerala with about 1 MILLION cable & broadband homes and also runs 8 exclusive channels with a viewership of 4 million and is the only fully digitalised cable network in India) to manage it’s Online, Broadband, Wireless and ITV services.
This give’s TNGicube access to over 1 Million cable and broadband susbcribers of Asianet and the flexiblity to innovate, conceptualise and launch any products in the Wireless, broadband, online and ITV space and the next major advantage is that we have access to unlimited free commercial time on Asianet bouquet of channels to promote our services.
Now i do subscribe to Sanjay’s idea of creating a enterprise with 1 million subscribers generating an ARPU of Rs500/subscriber/year and that’s why we innovated a strategy christened “MBMF strategy” and we divided our focus into three areas 1) Mobile 2) Internet 3) Digital Tv services.
Now apart from many services we provide on the mobile service(like SMS(sms 62635), IVRS(dIAL 5757), RINGTONES, WALLPAPERS ETC…….the niche areas we hope to create value is NXTPAY – our innnovative mobile payment platform that enables any one to pay at our partner merhchant outlets via SMS/IVRS or WAP + p2p fund transfers(RBI has not regulated this now). Now to people who is having doubt whether how NXTpay plans to compete with say a PAYMATE or an NGPAY or say an MCHQ or expected players like paypay mobile..the answer is simple….we have 1 million cable & broadband susbcribers where we have direct access..so our strategy is to partner with the banl..launch a co-branded mobile payment soilution…provide al Asianet cable & broadband subscibers(unlike other MSO’S these susbcribers are directly owned by Asianet..eevn the last mile is owned by asianet..perhaps it’s teh only organised cable network in India.) free NXTpay accounts (Remember what paymate has recently told is that their biggest challenge wil be customer aquistion). so the next question u have is dude, ur customers has got a booklet and an account opening form from teh guy who distributes the bill,..so how do you communciate to the customer abt ur product?…..well again my answer is that ..Asianet has 8 Tv channels exclsuively for it’s cable subcribers and is among the mostly watched channels in kerala and has 4 million viewers and we have “UNLIMITED COMMERCIAL TIME” for promoting the services on TV. ….So the next question in mind..dude u have subscribers!..u have a medium to promote….now what abt the partner merhchants?..what’s ur startegy for partnering with brands….welll my answer is again that i depend on Asianet for this…ALmost al leadinfg barnds in every city is an advertsior on Asianet..more over we can provide more exposure to teh partcioating merhcvnats like free promtioin on TV (Get 5% disocunt in Diamond..pay using nxtpay from Alukkas)….!
Well if there is a nxtpay on mobile, we have services on internet like a propert portal, jobs portal, finance portal, travel portal on the internet side(hmmm…..so u say u r going to fight 99acres.com, jeevansathi.com or magicbricks or simplymarry.com…….So u wanna be the next web2.0 burst victim.?…..well if this is in ur mind..am sorry….but dude am not competing againt a nuakri or an apnaloan.com or makemytrip.com..but just capitlaising on my existying subcriber base of 1 million and i have medium to promote as well..so my plan is that i cna easily effortlessly buil up my subscriber base in kerala ..create value..get funded expand nationwide………)
Well this is a jsut a few of our products and services we are working on….also
on those who are curious abt our partnerhsip with Asianet..well though we are incuabted by Asianet , tehy dont have a stke in us, but just we work onm a revenue sharing arrangement .which means the all the IP and technology we develoepd inclduing brands we develop beleongs to us. Now coming to our point ..i always beleievd in some thing like what sanjay has always told and thast the reason why decided to go with this strategy…well many peopel called us Over focussed….also many of oiur products where develoepd on teh same pltform rediucing cost and manpower…..but defnyely we do has our own share or problems which ranges from a smal tem which has to focus on multiple products and the danger assocaited with it……….but within our contsrainst we are trying to develop a system in place.
Now when it comes to “delayed gratification”…….we always believed in that(well the fact is that after paying our employeess..nothing remained)…So what we stayed in the office in the night and slept on the conference hall(well in Orkut there is a column in the personal profile page: in your bedroom you will find?….my answer “my boardroom is my bed room”, so i do believe we enterpreneurs should always sacrifice a little ..bcoz ultomately at the end of the day, we are the one who benefits!
Now back to TNGicube, apart from Asianet our clients include HONDA, ING VYSYA, Mathrubhumi group, IDEA Cellular and our partners include ONMOBILE, IMI MOBILE , CONTEST2WIN to name a few. We always belived in creating value(susbcriners + brand) and apraoch a VC (well being from kerala we also didnt get much opurtunities to network with a VC or making a presenattion at Mumbai or banglore..was some thing which never fit on our pockets..hmm thanks to AIRDECCAN, the situation is changing….).!
Anyway if there is any one who susbcribes to our ideas or just wanted to know more about us contact me at : +91-99473-62635 or sms ANISH to 62635 or email me at: achuthan.anish[at]tngicube.com.
ho god!..what had i done..self promotion(well seen his a lot in orkut….so am i spamming this beautiful hang out of VC’s and entrepreneurs?)..h..anyway guys now i wil tell the truth.just saw sanjay’s post and i coudlnt resist writing abt my startup.but aftre writing everything only, i felt like..oh god ..was i slightly over board….!
Sanjay, i dont agree that delayed gratification should be in the form of taking a pay cut. I think taking home a good salary is an efficient use of capital as it frees an already under pressure entrepreneur from unnecessary tensions (like missing a loan payment or not being able to pay a phone bill). My views here: http://www.newdelhitimes.org/archives/2007/01/why_do_vcs_insi.html
Hi Sanjay,
Are you looking for companies that are pilot ready, or have implemented their go-to-market strategy on a smaller scale and have some proof of adoption?
I assume that your model describes a relaxed Rs. 500 times 1 million equation (or “n” times “N”) where either “n” or “N” could vary by a factor of 10? Secondly, some of the comments assume that the revenue – all of it, comes directly from the consumer? I would think – that Rs. 500 could come from ad revenues and other B2B deals as a result of your model. For example, IRCTC?
Another question – how did you arrive at the 4 to 7 years figure for the exit timeline. The one example I can think of is InfoEdge, and I think they took about 8+ years to IPO.
P.S I wish the VentureWoods could clearly indicate who the author of a blog post is and what his background/profile is. I am looking for yours but I seem to have missed it.
– Santosh
Deepak/Cram,
Good points and I agree Rs 500 a year may be low. Just a few points to ponder. In the elephants I have been associated with becoming a market leader has been the key.
Monetizing too early can be a problem if it impedes rapid adoption. Exit valuations are a complex subject. If you are acquired by a profitable company, in the US ( I think this is true in India as well) your valuation will be higher if you have accumulated losses but are now showing revenue and margin traction with visible future economies of scale then if you have no accumulated losses. In case of an IPO your future prospects will be the key rather than your current profit or loss. A case in point in India is MCX ( Multi commodity exchange). I am guessing here, but if and when MCX does an IPO its valuation will be high because of projected growth in commodity trading, its international tie ups etc. Its current numbers will probably be anemic.
Good to see “low margins, high volumes” talk. Just the kind of strategy that will succeed in India. But I agree with Deepak in that rs 500 seems too small an amount to justify a service (unless you are talking ringtones, wallpapers or membership fees).
Here’s Idea No 1: Since a huge chunk of Indian small business is yet to go online, web design and hosting, especially hosting, could be a possible play that fits the parameters you have listed out. Surely there are 100 K small businesses, NGOs and other enterprises that can be convinced to go online.
Design a site (one-time charge of Rs 8,500) and host it (Rs 2,000 a year, recurring). Throw in free support and maintenance for a year.
Design revenue = Rs 85 crore ( (over five years).
Annual recurring income from hosting = Rs 20 crore. This translates into Rs 100 crore over five years.
Total=Rs 185 crore.
Additional revenue could come in from paid suport and maintenance after the first year.
Idea No 2: Build a Web-based student information management system. Get schools to sign up at Rs 100 per student per year. Provide hosting, maintenance, support and training.
Total number of students from Classes I to 12 per school = 1,200 (approx).
Total cost for school per year = Rs 120 K
Aim to sign up 10,000 schools over five years.
Projected revenue over 5 years = Rs 120 crore
More later