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Tuesday, 15 August 2006 17:43

India story takes off on mobile commerce applications

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Sourabh Jain is ecstatic and can barely keep his excitement down. His start-up, which worked on user-friendly mobile commerce software over the past two and a half years, has just received $2.2million in a first round of funding from Helion Ventures.

Three weeks ago, Paymate, another mobile commerce company, received $5 million in venture funding from two Silicon Valley firms -- Kleiner Perkins Caufield and Byers and Sherpalo Ventures. It claims to have a unique payment model using text messaging from the mobile.

Earlier in February this year, WestBridge Capital, Intel Capital and Sequoia Capital have invested $10 million in Mauj Telecom, which operates in the mobile value-added services. Visibly happy CEO, Arun Gupta, felt that gaming, ringtones and multimedia are hot applications in the mobile space and Mauj for sure was betting big on them.

Today, with India crossing the 100-million cellular subscriber mark and adding 4-5 million subscribers a month, mobile applications and telecom firms are having a roaring time - coming up with unique applications which are getting funded by leading VCs.

The latest to get onto the fund-wagon, Jain’s Bangalore-based start-up called JiGrahak
(which means ‘Yes, customer’ in Hindi), has developed a downloadable software called NGPay (Next Generation Pay), which enables mobile users to book airline tickets, buy a range of stuff listed at Sifymall.com and would soon allow users to also buy movie tickets in the metro cities – all this just by text messaging.

Although it falls in a similar category of players like US-based Obopay, Paypal Mobile and TextPayMe, which are in the pure play payments domain, JiGrahak has developed a mobile data services platform which helps the user to place an order to buy and pay – on the same platform, re-defining the entire mobile commerce space.

“JiGrahak is an early mover in the fast growing mobile commerce space and the NGPay is one of the most few user-friendly applications available today,” Kanwaljit Singh, managing director, Helios Ventures said.

Although mobile operators offer value added services, most of them are voice-based and chargeable whereas JiGrahak offers a free-for-the-consumer solution which is easy to download and use – their revenue comes from part of the transactions that merchants make from the mobile commerce platform. “We are planning to take this solution global – once we get a strong foothold in the local Indian market,” adds Jain confidently.

That is the similar modus operandi that Mauj is employing. According to its Gupta, the company will use the capital to expand globally in the areas of mobile music and mobile gaming.

Private equity firms bolster the India story
 
According to data from Venture Intelligence India, a firm which tracks private equity and venture capital activity in India and Indian-founded companies worldwide, in 2005, private equity and venture capital investors invested $128 million across eight deals in companies with direct/indirect linkages to the Indian telecom services sector.Incidentally, there were just two deals worth about $25 million in similar companies during 2004.

“The kind of investment that is going into the Indian mobile telecom services market is unprecedented – and I expect a larger amount of investment will go into the mobile space in 2006 because India has becoming a testing ground for local product firms,” says Arun Natarajan, CEO, Venture Intelligence India.

Says Sanjeev Aggarwal, managing director, Helion Ventures, “VCs are realizing that if a company can succeed in the cost-conscious Indian market, they would be able to break into global markets too with sufficient financing,”

Echoing a similar line of thought, Sandeep Singhal, managing director of WestBridge, believes that the mobile applications space will take off quickly. “We believe that mobile value-added services are poised for rapid growth globally,” he said during announcement of the Mauj investment.
 
Meanwhile earlier this month, US-based venture capital firm Matrix Partners has set-up $150 million Matrix India Fund which will focus its investments across the consumer services sector, including Internet, mobile value-added services, financial services, media and entertainment, and travel and leisure.

Paul Ferri, founding partner of Matrix Partners, had said at the Mumbai press conference, “Matrix Partners is the first leading venture capital firm to establish a fund in India. The burgeoning Indian market represents a new frontier of innovation and Matrix Partners is excited to be participating in the region's growth.”

Undoubtedly VCs are realizing that the India story is now hinging on the telecom and mobile space but there are a number of constraints. “India is a growing market and entrepreneurs here often face liquidity crunch. We will provide capital and technological assistance to entrepreneurs in the telecom and internet businesses and help them grow,'' Helion managing director Ashish Gupta said.

“Even with the strong GDP trajectory and explosive growth of consumption in the region, we have not scratched the surface in terms of seeing innovative, new consumer services for the Indian market,” Avnish Bajaj, managing director, Matrix Partners India added.

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