Note: This is a 2-part series of covering Location-based Services in Indian context. Below is the 2nd part & 1st part is published here.

As discussed in my yesterday’s post, I tried to present a case wherein the status quo of Indian internet vis-a-vis emerging technologies like location-based services was presented keeping the present status of Indian mobile market & its various nuances.

In this post, I’ll try to wrap up with different cues where I feel that location-based services can actually help in India’s internet growth story much quicker than anticipated.

Before that couple of recent developments which caught my attention:

1. Rediff buying in minority stake in Location-based services startup called Imere Technologies (Link)

2. Indian telco Reliance launched BigMaps on their GSM network (Link)

3. Not to mention, Google launched their own service (free) called Latitude (Link)

And many more developments on & off the radar of my social graph that I’ve been able to capture. So looking at these developments, it’s needless to say that location-based services do have some life on their own (even though not at a mass level, especially for Indian markets).

But lets start from a quote from Ajit Balakrishnan, Rediff Chairman -

Location-awareness in applications is critical for hyper-local search and local advertising besides many evolving social networking and enterprise applications.

Now let’s freeze it there. Indeed that’s true. LBS is very critical looking at the context of reaching that extra mile into consumer’s habits and indulging them into buying something or making it easy for consumers to make a buy decision. And that’s where the real money is for applications that are being developed & deployed.

But can we really say that location-based services give enough impetus and become one of the key drivers to push the Indian internet growth story?

Though I’m optimistic but still I don’t see it happening to a mass level with immediate effect. Reasons are plenty as I discussed in yesterday’s post but surely there’s something intriguing which prompts me to say that LBS can fuel internet reach to the mass level. Here are some of the reasons I feel so:

1. LBS’s reach to rural consumers: Lets face it, until & unless, internet reaches to the SEC C & interior parts of India, we can’t ever say that Internet as a medium has achieved mass acceptance. Now that’s tough to attain looking at broad reasons like infrastructure development & blah blah blah. But mobile as a medium cuts that intermediate barrier since Indian telecom infrastructure is one of the best since it already supports nearly 500 million subscribers and makes it easy for anybody from some remote corner of India to access internet via his mobile phone. Now again, my previous assumption of reduced hardware costs & enough data access to remote corners of the country would be crucial for seamless mass adoption which I feel happening sooner or later since for telcos to survive, differentiation at root level via larger set of data access post 3G auction is the key.

2. Win-Win proposition for publishers, advertisers & content devourers: Location is the core element in mobile applications (so as to say). It opens numerous doors for content publishers & advertisers to geo-target consumers since we carry the mobile device along with us everywhere. Though the context changes everything we are on the move, but it opens wide range of services for location based services to offer to consumers. Though free location-based services supported by advertising-driven model would work primarily but going forward when the average screen size of mobile devices will increase & cross-compatibility of different devices with network offerings won’t be a problem, then again it presents a more symbiotic development for LBS ecosystem which would provide more value to end-users. So on the go, users will definitely log-on to internet to access information and it will add to the stats of internet traffic. And in this model, it presents a win-win situation to both content publishers, advertisers as well as content devourers.

3. Cost implications: Being in India, cost is a very important factor if we want to reach out to mass adoption levels. Apart from cost of GPS devices being low, the cost of these addons on networks has to be come cheap to end users. For example, as I pointed earlier, what’s needed now is free location-based services supported by advertising. But naysayers believe that it might not work since consumers consider it as obstruction to privacy and so on & so forth. But we have to bite the bullet since since we get some, we need to lose some. So users might have to lose some amount of privacy in the midst of getting geo-targeted messages which might come in handy. But that means a change of mindset which as we talk is the most basic barrier for adoption of these services. But I’m most optimistic that once users see the advatanges; it might help them take the call in favor of the trade-off.

4. Capitalist Overture: If we look at how this industry is shaping, then there’s no doubt that its future is not that murky as it may seem. Huge investments along with high-profile acquisitions are the classic signs that this sector is going to be one of the most lucrative ones in the near future. Now to make these investments viable & profitable, companies will lay out the building blocks to make profits out of it (you can say this is one of the fall-outs of capitalist overture) and make users use these services to make more & more profits which in turn will again help the overall ecosystem to grow.

As GigaOm pointed out, massive growth in these types of rich and context-relevant mobile applications will change the way consumers purchase and interact with mobile devices. Ultimately, the growth of mobile apps will help drive the device market. And while apps get even cooler over the next five years, mobile devices and data will get more accessible. Handset prices will fall, and hot devices like the iPhone, Palm Pre and netbooks will capture even more consumer attention. 3G networks will get more powerful; the demand for mobile data and connectivity will increase; and operator subscription fees will get more affordable worldwide.

So these are my presumptions about how Location-based services can prove to be the window to the next phase of Indian internet growth. Although the location-aware web isn’t showing up tomorrow or day after tomorrow for sure but as they say every big journey starts with a very small step – and we have started it for sure.

Note: This is a 2-part series of covering Location-based services in Indian context. Below is the 1st part & next part will be published tomorrow!

If you ask yourself what made *Internet* your favorite hangout place, then surely the one-word answer would be dynamism. Dynamism of content & information in many forms has made internet the favorite destination for almost 1/4 of the world’s population.

But now that has started creating problems for many of us. The problem primarily pertains to the information deluge we experience everyday while searching for any specific information. The problem is primarily driven by the availability of the vast number of tools that make publishing to the web a breeze but at the same time, consumption of that content has become a difficult task since lack of enough easy tools. So the classic case of demand v/s supply of information consumption & aggregation has created newer avenues for growth & innovation.

Enter Location-based services – it provides enough context to information aggregation related to much basic needs we feel everyday and makes the dynamic floating content of the vast internet filtered in our hand-held devices. Let me explain:

Location Based Services provide information related to local weather, restaurant, traffic etc which we need everyday. Not only this LBS can help us in people tracking, location enabled search & advertising (monetization for local publishers too) and other services like proximity based actuation or proximity based notification. Not to mention, the recently developed voice guided in car navigation or voice guided pedestrian navigation. These are some of the services which are quite prominent applications of LBS. I can’t help think of the possibility that LBS applications can be extended as real-time pocket friend who can provide minute-to-minute information for just about anything around me.

Now that’s the possibility part of the story. A lot remains to be explored especially for Indian market viz. what about market acceptance, hardware costs, 3rd party developers married with incumbent network providers who’s responsibility in terms of bringing these services to end-users are most crucial. These are some of the questions we need to answer before proclaiming that LBS services are in as for Indian markets are concerned.

Let me take each of these cases one by one:

1. Market acceptance: Recently, GigaOm published an article where it mentioned that LBS apps are growing from all corners in virtual marketplaces like iPhone Appstore, Nokia’s Ovi store etc.

So clearly, it shows that LBS apps have gained enough acceptance. But I’m sure these stats are for developed markets like US. Can we say that same thing for Indian markets as well. Though we don’t have enough data for Indian LBS market but surely I came across these stats which provides enough confidence that LBS is catching up faster amongst Indian mobile users (Also I’ve seen many of my friends starting to use these services for daily needs). The stats tells that Indian LBS market spends will rise to $78.2 million by 2013 which by no means is a small number considering that presently the total Indian mobile advertising market is about $120 Mn approximately whereas globally LBS subscribers are expected to grow from 41 million in 2008 to 95.7 million in 2009 while revenue is anticipated to increase from $998.3 million in 2008 to $2.2 billion in 2009.

2. Hardware Costs: In 2009, higher availability of GPS enabled phones and mobile application stores has driven the global consumer location-based services (LBS) subscribers and revenues. But in India, cost is a major barrier to mass adoption of such devices which in turn is blocking such services to be used. With days to come, I’m sure that hardware manufacturers will look at such avenues since the whole mobile industry is going through a cyclical changes where the network operators are benefiting more from add-on services and less from voice services. So much so, even the ARPU has fallen below Rs. 200 (i.e. ~US $4 per month). Hence lot of stress is being put on network operators which in turn might put pressure on hardware manufacturers to reduce their high-end GPS enabled phones to enable end users to avail such services.

3. 3rd party Vendor market: Recently we are seeing considerable growth in mobile 3rd party vendors which renewed promise to revitalize the mobile industry and revolutionize communication. Now that’s a great step forward. But again this depends on network operators to marry these services and bring it to end users. But a considerable amount of mindset shift is required since the whole question is again pegged like a chicken & egg story for Indian market – i.e. Should we target some 4-5% of growing Indian smartphone market for such services or target whole mass market who are still happy with vanilla services like SMS or voice? Though data services is growing at breakneck pace in Indian market but still lot of things are expected post 3G auction which is in shambles for the last one & a half years. But frankly speaking, I don’t see immediate shift over of these telecom players towards data services post 3G auction too. But still hope is something we can’t leave as humans I guess!

This is all I’ve for today’s post. Please come back again for the Next part in tomorrow’s post!

Sometimes it happens that you just wish for it and there it is! It happened with me today. Sometime back when I wrote about Twitter Lists, I missed pointing out one crucial element other than my “Twitter Lists Search” rant – soon after its launch I wanted a widget (like twitter already has it in their Goodies section) which is easy plug-n-play, compatible with most websites & social networks.

And today I really got lucky I guess. Within few days, my wish has been granted.

Actually, few days back I was exploring Twitter to see what all new additions they have incorporated and was happy to see the Goodies section with easily customizable widgets for Profile, Search & Favorite Tweets. Now today they have added the widget for Twitter Lists.

I think this is brilliant and twitter sure has got some attention from people about this new feature – e.g. within few days of its launch, there were about 37 million twitter lists being created (according to Google). Although suddenly the number has taken a nosedive to about 4 million now. So I guess, Google realized that a huge chunk of those lists are just junk – hence the drop. But I guess that’s a good step since it will at least keep the spammers away from the search results.

btw, if you got some time, then do read this detailed post on “Twitter Lists” which brings together a collaborated effort of how Twitter lists can be effectively utilized. And thanks to the author of the posts for inserting some of my comments from my Twitter Lists post.

Note:  I’ve put in my “Social Media Marketers” list in my blog too. Just scroll down to see it on the left hand side. Oh if I’ve missed putting you in my “social media marketers” lists, then do give me a nudge in the comments section and consider it done.

btw, its already quite early in the morning. Need to get ready for a long day ahead of meetings & some amount of intra-city hopping I guess. Expecting to meet some interesting people from the Media & Advertising industry.

I’ve been thinking about this word “Failure” for sometime now. Of course, the word has always been referred with negative connotation but that’s for people who are not ready to take risks. But people who are ready for risks have always appreciated this word since it not only denotes just the other side of the coin but also lot of things can be learnt and inherited to flip it to the better side of the coin.

For now, I’ll only mention “Entrepreneurs” since I believe they are the ones who make the world go that extra mile – starting from Henry Ford to Steve Jobs or our very own maverick Dhirubhai Ambani. All have their own share of success for sure but what’s not being ever highlighted is Failure. Those who know that, appreciate it and work through to achieve greater heights. But one of the reasons we usually don’t hear failure stories is because we don’t like to hear it since its painful and filled with lot of angst and discomfort. Hence, history only reminds us of great success stories instead of failed ones. And I think that’s a problem. Why – because our culture finds failure in bad light and considers failure as unacceptable.

And coming back to the point – this social norm of not accepting failure as just another way of learning and bettering things is a big threat to the whole entrepreneurship ecosystem. This is what I used to believe. And of course, this has made me always calculate my risks (sometimes more than I should), even though I knew that my gut feel says that I can do it. But that’s another story.

But I always like to be proved wrong; since it’s another way of learning faster.

So when I came to know about this specific conference called “FailCon” being held in Silicon Valley to celebrate “Failure”, my eyes lit up. The intro of the conference says it all:

FailCon is the first conference EVER to ask successful founders, investors, designers, and developers “What’s gone wrong and how did you fix it?” Come learn how to avoid the most common startup mistakes, network with leading founders and executives, and take away practical and actionable advice.

Now that’s exciting stuff since on a common platform, entrepreneurs and venture capitalists shared war stories about their failures so that the next generation can learn from them. The experience of failure often gives entrepreneurs the drive to make a comeback, accompanied by the constant fear that they could one day experience that failure again.

So, when we are able to truly understand that success & failure are all relative and just two sides of the same coin, then only I believe we will truly understand the essence of Failure in big success stories and then success will taste more sweeter than ever. And more often than not, that success is sustainable and not time-bound.

Img Credit

Twitter lists have been rolled out for almost everybody I guess. And the next thing I’m waiting for is to see how the 3rd party apps pick up on it and add another column (like Tweetdeck or Seesmic) to sort out friends according to lists. It’s going to be very interesting for sure. Btw I heard Tweetdeck is already on its way. Great – all the more because all such development drives value in twitter’s ecosystem which is what we need from any consumer internet technologies.

And I should probably mention this that its been long long time that I’ve actually seen something worth writing about twitter. And when the talks was doing its rounds about twitter coming up something called “Twitter Lists”, I should say the truth that initially I didn’t think that this would be any different from any other casual development we have seen from Twitter team lately. But when I started using Twitter Lists, my perception has totally changed now.

So rather than jotting down paragraphs, let me put it in points for easy understanding:

1. Twitter lists are great to follow highly targeted people. For example, I wanted to follow the “Social Media Marketers in India“, then simply I tried to get a glimpse in my “Lists Following You” tab and there it is or ask for a recommendation from your twitter peers since they might have come across something worth which might help you.

2. Twitter Lists are great “Perception Builder“. Why? Firstly, if you check your “Lists Following You” tab, then you’ll see what people think about you and thats why they have added you in that list – both from personal front or professional one. Secondly, the lists you create says a lot about you – like I created a list called “Social Media Marketers“. Now if I carry on making lists pertaining to my professional field, then surely it helps build a perception about you.

3. Twitter Lists are a great way to build a “Recommendation Engine“. Twitter lists can help everybody in your network to follow the exact sort of people whom you were trying to connect with. And surely, it makes it easy for follow and connect. Now you might think that then what about sites like “WeFollow“? Now that’s an interesting question – if people get into the bandwagon of “Twitter Lists” then surely I’m left with no doubts that these sort of sites won’t survive long since what Twitter lists does is help people at a micro level build connections; whereas sites like WeFollow just helps you in ego boost to show that you are connected Ashton Kutcher or Oprah. I say who gives really…!!!

But this is not all for me. I see great potential in this application. Some of the things which I would really appreciate seeing in the near future from Twitter are:

1. Search: Twitter should enable some search option which makes searching “Twitter Lists” easier. Like for example, I like to know if there is any lists available for “Social Media Agencies in Mumbai“. And if there is one, then this search option should help me get to that. It just adds to that extra bit of feature needed for twitter lists to make it successful and get that extra bit of mileage & traction.

On this regards, Twitter can integrate “Twitter Lists Search” in Twitter search only with two tabs in place of one tab (like Google). See the screenshot below:

2. At the time of registration only, Twitter should ask users if they would be interested in making any “lists” (like it does for “Suggested Friends“) e.g. Friends, Co-workers, Acquaintances etc which would help to categorize the following/follower list. This sort of feature helps organize the chaos around twitter a bit.

These are some of my initial thoughts on twitter lists. May be, I would add on as it evolves. But what do you say – will it last the hype cycle?

Today read an interesting article at AdAge which reminds us of the lineage of the medium which we love so much. On 27th Oct, Digital Advertising completed its 15th so-called birthday and surely it marks a monumental moment for all of us who are attached to it – directly or indirectly.

According to the article, Oct. 27 marks the 15th anniversary of the industry’s first banner display ads, which appeared on Hotwired.com (the first commercial digital magazine on the web and the offshoot of Wired magazine).

Digging deep, I tried to find out if around that time, any other ads were displayed or not. To my surprise, there was I guess, but surely Hotwired.com should get the credit to start the revolution of sorts. So, according to this article, AT&T launched their future-predicting ad with “you will” campaign from 1994 (Source:10jahreonlinewerbung that collects old banners and celebrates the tenth anniversary).

Some info about the ad:

For the record: the “Have you ever clicked your mouse right HERE?” ad was created for Modem Media/AT&T by TANGENT Design/Communications of Westport, CT.

Principal Creators:
Copy Writer: Joe McCambley, Creative Director, Modem Media
Graphic Design: Craig Kanarick, Associate, TANGENT Design (pre-razorfish)
Executive Producer & Art Director: Otto Timmons, VP, TANGENT Design
Contributors: Brent Hood, CEO, TANGENT Design
Research Intern, Tangent Design (I will have to track his name down)
The Client, AT&T (a great guy and ditto on tracking the name down)

Although we had the most popular ad on Hotwired (according to Brian and Matt…) there were at least five or six other banner ads that launched at the same time and they too should get credit for being “first”. I can remember Club Med, AT&T, ZIMA. Last but not least, O’Reilly’s Global Network Navigator, GNN, started accepting paid advertising at the same time (one banner ad on the home page, as I recall).

Actually, forget about the “who came first” debate. It doesn’t matter since what matters most is that they paved the glorious path of now standing multi-billion dollar business which employs millions of people and act as economic growth drivers.

BTW, if history interests you, then this nugget won’t do much harm I guess (I took it from one of the comments in the AdAge article):

•HotWired launched with 14 sponsors. In addition to the six already mentioned I recall seven other campaigns but am forgetting one.

•Here’s a list of those I recall: IBM (from Ogilvy/NY), Metricom (client direct), Xircom (Chiat/SF), Internet Shopping Network (client direct), Sprint (JWT/SF), AT&T (client direct and separate from the Modem AT&T campaign which also went live 10/27/94), JBL speakers (client direct I believe).

•I think Sharon Katz placed IBM, Tara Lemme placed Xircom, Bill Rollinson placed ISN and Thom Campbell placed Sprint. And, of course, Steven Comfort placed the 4 MVBMS campaigns and GM O’Connell himself called me on the phone to order banners for Modem clients Zima and AT&T.

•On the sales side, Doug Weaver, Mitchell Kreuch and Bill Peck did a lot of the heavy lifting and were key to HotWired selling out of all ad inventory at launch.

•The first contract was signed on 4/15/1994 by the AT&T client direct. I can’t recall his name now but I believe this was sold by Jane Metcalfe who co-founded WIRED with Louis Rossetto. Two AT&T campaigns ran on HotWired at launch.

•HotWired’s banners were 476×60 at launch but were modified to 468×60 in late 1996 when the IAB published banner standards.

In the last 15 years, I think we have come quite far yet much remains unexplored and unearthed in this every growing complexity!

Simply Amazing. What do you think?

I’ve been doing something below the radar of my social graph of daily routine updates. In the past couple of weeks, I’ve testing many products from major web-tech companies. I know you must be asking why – For starting, let me tell you that it’s one the interesting things that you can do. But thinking truly, one of many reasons is to find the hidden gold within those not-so famous apps which might turn out to be the next most major app, both for personal and more importantly for enterprises. Also there is a high probability that many of you guys (considering that all the readers here are smarter than average crowd) might have used those application/services before.

So as I was saying, such interests has led me to believe that the next (yet again) phase of capitalist revolution will try to test waters of enterprise solutions since financially business ventures never had any problems in putting money where they have had found much value. But this can’t be said about personal users like us who spend countless hours per day on internet, mostly using services free of change. Even more so, we also vehemently oppose to the very idea of giving money to use any basic application over internet. Now I don’t want to get into the whole debate of why (may be some other day) but surely the next monetization scope for any internet business lies in enterprise solutions. But lets face it, it definitely comes with a caveat i.e. it has to provide value at par with the financial cost attached with it – e.g. Google Apps. Ever since I’ve started using it for my professional reasons (yes my present company H-Farm Ventures have Google as their basic email, docs etc provider and since I’ve been using it for the last couple of months, I haven’t seen any problem, even when Google run into much debate about their recent #Gmail #fail outages).

Anyways, continuing with the topic, I never realized that many companies who have been coming up with new new products already have those hidden gems which we might not realize instantly (even those companies too) that it has huge potential to provide immense value which we won’t mind paying to use it later; especially enterprises who are looking for reliable, accurate and faster flow of information. Now I guess, it’s pointless to mention even that information will hold the key to break the consumer code IMHO (with respect to this, I still remember reading Bill Gates’ book many years back whose title “Business @ the Speed of Thought” says it all.

So enough talking now – so what are those apps I’m talking about that has potential to go long and create interest at enterprise level also. Below I’m listing couple of apps which I personally feel has to full grown potential to go long since it provides the unique characteristics of speed, near fatal accuracy and coherent information.

1. Google Domestic Trends: Google Domestic Trends basically tracks Google search traffic across specific sectors of the economy. Changes in the search volume of a given sector on google.com may provide unique economic insight. (As of now, its restricted to US search traffic but hoping this product to evolve faster to provide key insights).

2. Google Insights: I found this tool to be quite helpful. Actually better than Google trends sometimes. With this tool, we can compare search volume patterns across specific regions, categories, time frames and properties.

3. Facebook Lexicon – Sometime back I wrote about Facebook’s attempt at digging information from its vast socialscape. They named it Lexicon. This tool follows language trends across Facebook. Specifically, Lexicon looks at the usage of words and phrases on profile, group and event Walls and calculates it as per demographics, associations, sentiment pulse and maps too for each keywords or tag you would be interested. I can see lot of user sentimental analysis happening through this tool (if it evolves that is).

4. Google Wave: I’m quite bullish @ Google Wave’s future outlook because it presents a case where it might revolutionize the way we are looking at present day emailing. For this, I think you should read this very insightful post by Daniel Tenner.

5. Real-time search – I’m searching for that one app/website which will fulfil my need to know real-time information. Top of my mind, I think TweetMeme, Topsy, Collecta, OneRiot, Twitter Search caters to my needs. But still I haven’t yet found one which will do it for me. Actually thinking more about it, I don’t think that right now I will decide on only one since this space is still evolving – waiting for Bing & Google to latch on to it though. But surely real-time search has caught our fancy and sure presents lot of possibilities, even for enterprises.

Finally, I’m sure I haven’t even skimmed the surface of the above mentioned topic. So if you’ve used or experienced any such apps/websites which you think presents a great possibility, then do let us know.

Have you seen Technorati.com recently? If no, then I suggest you should check once before going for this post. And for those unassuming who are wondering what is this Technorati, then good for you guys since as they say – “Ignorance is Bliss!” [btw Technorati is was search engine for blogs; like Google is for whole web, Technorati was only for blogs around the world].

Now they are not? They have changed. And me not liking it very much. Since the value proposition they had when I signed-in 2007 is clearly missing in there now. Heck! The whole feel of yesteryear Technorati is missing.

I know they are going for the kill with ad network and all but come on – you guys had a wonderful product going. Suddenly kaboom! You just dashed it out of the room. Not good! Again me not likes you, no more (is all I’ve to say now).

Btw in the process of overhauling their whole system, now it seems that they don’t crawl non-English language blog (btw I don’t remember but couple of months back, I went through this report which proclaimed that Japanese is the language in which most blogs are written in the world). Now, got to give some credit to those Japanese. What they did at one go is alienate the whole non-English generation of bloggers.

Again not good! From the day I’d this blog, I had a tab which you must have been on the top left hand side which says “Add this blog to my Technorati favourites”. Now it totally seems redundant since it doesn’t matter if someone favourites it or not since I can’t see it. The link is destroyed!

Also at one point of time, Technorati claimed that it had about 133 million blogs. Now 8,50,000+ blogs. And that had affected many blogs’ ranking in Technorati’s ranking system. I now stand at some 53K out of 850k. Don’t know what to say!

But overall, I’m neither impressed at the Technorati’s new design nor the content. And don’t even start with UI since now I see the whole website design more clumsy with irrelevant link structure and breadcrumbs, not to mention the so-called use of space to put irrelevant ads.

Though I understand they are trying to change things around their house and the growing costs to run those servers maintaining that huge boatload of blogs (mostly junk) didn’t make them feel good though. But if you’ve seen them changing things for the last couple of months, you might have realized that Technorati is now more of a Advertising networks than an awesome dedicated blog search engine.

Btw, in the midst of my rant, don’t forget to run through this Ethan Zuckerman’s post on the same.

Some lines from his blog post though:

However loathsome you find this categorization, it helps explain where Technorati’s trying to go. Their business isn’t a comprehensive blog directory – it’s the hub of an advertising network that now ranks fifth in the universe of social media, managing ad inventory on 450 web properties. Persuading advertisers that bloggers are “are a highly educated and affluent group,” not to mention mannerly, neat and well scrubbed, recently helped the company raise another $2 million in venture capital funding.

Now you decide?

I just read this article by Rajesh Jain where he pointed out an important aspect of Indian venture capital investment and entrepreneurship. He pointed out that missing strings in Indian entrepreneurship ecosystem are the first two stages of the investment pipeline: Angel investor and 1st round investor.

Although this topic is not new to Indian VC ecosystem but surely this topic has been much less talked about. There are host of reasons to such condition.

One of the primary reason is that the risk vs reward equation is drifting more towards the risk than the reward. And the trade-off also doesn’t seems better off for many tangential reasons like for example, entrepreneurship in India has always been more like family oriented, especially if you look at the assets being created over the period of last 3-4 decades. So that puts lots of stress on VC fund houses to put in money when the founder or the product is not tried and tested. And if the product is in a me-too category then the whole idea of putting in good amount of sum doesn’t make sense since it’s not going to change the world at least. So the reward becomes paltry again. So the entrepreneur-VC ecosystem in India is running through a vicious circle IMHO.

But this isn’t the case in developed countries  especially silicon valley where it started way back in 60’s. So investors (viz. Venture Capitalists) are less jittery about the risk-reward equation.

So lets define the problem statement:

We need to device a way which will act a bridge between entrepreneurs & investors where the risk is mitigated by the amount of money being put in the first place.

Now wait. There is already ways entrepreneurs are doing it right? Yes there are! Enter Angel Investors who basically are the retired entrepreneurs and company execs. So their presence not only work as a short duration of cash but also due to their nature of patience, experience Angels also work as mentors.

And after the Angels have helped much then the entrepreneur can try to their 1st round of financing through VC’s. Great story ends!

But wait. This is not the end to it. If we forget the whole aura of Silicon Valley for a while and get a reality check about India’s investing scene then it might give a different picture. First of all, in India we don’t have enough Angel Investors. Whereas, in US, in 2005, according to the University of New Hampshire’s Center for Venture Research, the total amount invested by angels exceeded the amount invested by venture capital funds.

But the question arises then why VC’s don’t invest in Indian startups? There can be lot of gibberish around it but the moot problem remains the same. For a VC, they won’t ever consider making an investment in the order of $150-200 Mn out of their corpus in Indian startups because that’s a lot of money for Indian startups and risks are also highers because of the above mentioned reasons. Also, a VC fund of $150-200 million may have a genuine problem in financing a start-up this early and this small. The fund’s overhead cost limits are such that they can afford at best two or three experienced people to find and make investments and work with entrepreneurs. This naturally limits the number of deals they can do to ten or fifteen a year. Thus, they tend to concentrate on deals of larger sizes, say, and a minimum of Rs 10 crore as the starting investment.

So that makes the need of intermittent investment process for Indian entrepreneurs much more important.

Also Indian startups don’t need that huge amount of sum initially. What they need is just a small fraction. Also the much needed mentorship through the initially phases. All the criterion makes an Angel a perfect fit.

But what we have in India is handful of Angels. Also in the post which I mentioned earlier where Rajesh Jain pointed out the sum which Indian startups need IMHO is way too much.

In the Indian context, angels should typically invest 1-2 cr ($200-400K) to give enough money for the company to get started and through to the early product prototype. First round investing (typically by a venture firm) should be between Rs 5-15 cr ($1-3 million) for products focused on the Indian market.

I personally feel that is still way too much; especially for companies who are developing consumer internet products. I think around INR 10-15 lakhs ($20-30K) is more than enough to take products of that nature from prototype to marketability stage. This also puts less stress in small time angels to put in their money with lower risk appetite. And the best part is what it does for the overall industry. When a lot of smaller amount of money follows many small startups, then surely it would be great for overall startup-VC ecosystem also. At least its good to have many startups who fail than having nothing at all since the experience curve will help to make fewer mistakes going forward.

But I’m sure that Rajesh Jain would come up with some fantastic idea which he promised for tomorrow’s post. Will try to plug in more thoughts on it laters. For me, let me know what do you think? Do you see a bail-out from such condition? Let me know!

Around end of last year, I wrote an article titled “End of Tangible Media“. In that post, I was more or less ruminating over the future of print media or more specifically any tangible media that we consume in our day to day lives.

On similar lines, ContentSutra posted an article yesterday titled “Widespread Drop In Circulation Of English Dailies In Latest ABC Round” which more or less validates my hypothesis that industry-wide drop of print circulation (which also forms a formidable entity in tangible media).

Some of the reasons as I’ve mentioned earlier are but obvious like:

1. Rising “Digitization” of content is putting more stress on top-line growth; and drop of subscription is not helping much in that effort.  Digitization makes content transportable across digital and mobile platforms. This is a big thrust for entertainment and media companies including print.

2. Cost of reaching the target: (As mentioned earlier in one of my article) Study shows that over the last five years, the cost of reaching the target audience has risen four times, even though the basic TV viewing time has increased. But because there is an increase in the number of channels, advertisers are forced to purchase more spots to reach the target audience. So I believe the initial phase of transformation has started i.e. adopting digital channels to market.

3. Cost of newsprint has increased manifold on Y-0-Y basis which again is putting a lot of pressure on bottom-line also. Not to mention the rising cost of operating such entity with huge chunk of back-end support. All this definitely is multiplying the miseries of tangible media.

Amongst all these, there is still lot of opportunities uptapped in regional segment. Regional language newspapers has shown sales growth much due to the nature of untapped markets which again opens door for further penetration. But surely English Dallies are still making some amount of profits in the meantime.

But going forward, there definitely would be some changes more due to the nature of consumer shifting to devour more digital content online/mobile rather than just buying print format. That’s means some changes are surely due on that front.

Personally, I would be looking at this sector more minutely to get more interesting perspectives. But till then, let me know what do you think?

Note: English ABC Comparison October 2009 (PDF link)