NEW DELHI: This year clearly marks the second coming of dotcom companies in India judging by how heavily private equity investors and VCs are pumping money. Around $75 million has been invested by eight private equity players in seven Internet companies since the beginning of the year.
So whether it is a Kleiner Perkins, Norwest, Westbridge or Reliance Capital, their funds have been directed towards the back-in-vogue Internet.
What seems to be beckoning the PE players to India is that it clearly has one of the fastest growing Internet-user bases in the Asia-Pacific. According to the Internet and Mobile Association of India (IAMAI), the Internet user base will grow from 39 million in 2006 to 100 million in 2007.
"With increasing Internet penetration, valuable Internet businesses can be built much like the ones in US and China," says Sandeep Singhal, MD, Westbridge Capital Partners, a leading venture capital firm that has invested in 3 Internet companies – Times Internet, Travelguru.com and Shaadi.com.
So why is this Internet boom different from the bust of 2000? "Today, viable revenue models have evolved while earlier it was about euphoric valuations," says Dinesh Wadhawan, MD and CEO Times Internet. This time around the approach is more cautious and it is about "balancing timing and market opportunities."
Not all successful Internet models in the West can be replicated in India. Investments in Web 2.0 and podcasts are still few years away. But Internet entrepreneurship in terms of ideation and shopping for funds will begin now.
Experts say that online trading, travel, recruitment, ticketing, real estate, classifieds and social networking are a few spheres ripe for investment in India. "Rest assured e-commerce growth will not be hampered by lack of funds," says Ravi Sardana, VP, ICICI securities.
Leading private equity players flush with India funds’ are looking for viable next generation revenue models to invest in. Dotcoms fit the bill when it comes to ideation and entrepreneurship. "With low-entry barriers in the Internet and technology space, this is where all the action will be," says Deep Kalra, founder and CEO Make My Trip.com.
Companies with strong revenue models, which survived the meltdown in 2000, have only grown stronger today and have caught the fancy of private equity players. This is because more people are more inclined to move on-line with higher disposable incomes, ease of use, higher credit card penetration and assurance over safety.
