India's hottest start-ups

This is Business Today’s Third Annual Listing of hottest start-ups and, pretty much like the two previous lists in 2007 and 2008, this listing is also completely subjective. But we did not put the names of the companies—drawn by a host of venture capitalists, consultants and even our reporters—on a board and throw darts at them. Nope, we took a long hard look at all the names we got— and we got a lot—and we looked at how viable these businesses would be. So, while a company might have some great guys working for it and a solid idea, we looked at whether it would still be around by the time Business Today’s 20th annual list of Hottest Start-Ups comes about.

Did we have any criteria? Yes, we did. All companies, save one, on our list are around three years old or younger. Though MeritNation is rather old, the company changed totally in 2007, keeping the old name but little else. The second is that the company has to be an “Indian” company: some nominations were great and did all their business in India but were registered abroad.

The third criterion, as we explained, is survivability and that involves doing something new in India. Not reinventing the wheel by creating “India’s Facebook” or “Twitter for India”— those services already exist and are called Facebook and Twitter, respectively, and the lack of borders on the Internet mean that Indians use them far more than local social networking sites. All our companies are doing products—in hardware, software, services or healthcare— uniquely honed for India.

We are pragmatic enough to realise that we might get some wrong. Our companies in the 2008 list (page 106) have had to change their plans, because the world has changed (and how!) since this time last year. But we are sure that our class of 2009 will not just survive the slowdown but are going to be the standardbearers of India Inc. in the future.

Inbiopro
Money from Molecules
Inbiopro, set up with the aim of taking potential blockbuster molecules from biotech firms and building them up to the preclinical and clinical trials stage, broke even within a year and has already delivered three molecules for trials. Two founders—Chief Executive Sohang Chatterjee and Chief of Operations Kavitha Iyer Rodrigues—have worked together in biotech, while a third, Aditya Julka, had worked with them at consultants McKinsey & Co. and then at Millipore and Avesthagen, both lifesciences and biotech firms.

“We are focussed on capability rather than products,” says Chatterjee, “we provide a sizeable difference in time-to-market and costs to our customers.” Inbiopro works for the emerging markets, touted as the next big thing in pharma.

It has attracted two rounds of venture capital investment from Accel India and is using some of the money to upgrade and expand its labs in Bangalore, but it is in no hurry to expand—its two-floor office in the industrial suburb of Peenya houses fewer than 20 people. The focus: executing complicated projects.

“All three founders have the required skill and experience,” says Prashanth Prakash of Accel India. Inbiopro has never missed a trick when it came to cutting costs and hitting break-even: it began life in an apartment owned by Iyer Rodrigues’ parents and tapped them (both are IIM professors) for their business plan. Today, it is located in a nondescript office building, not in Bangalore’s expensive central business district. “We’re not a page 3 company,” says Chatterjee, “we’re happy flying under the radar and focussing on the bottomline.”

Location: Bangalore Year of founding: 2007 Founders: Sohang Chatterjee, Masters in Microbiology from National Centre for Biological Sciences, which is part of Tata Institute of Fundamental Research and Ph.D from Cornell, Kavitha Iyer Rodrigues, Masters in Clinical Microbiology from Kidwai Institute of Medical Sciences, Manipal and Working MBA from IIM Bangalore & Aditya Julka, M.Tech in Bioprocess Engineering, IIT Delhi and completing MBA from Harvard Business School this year Nature of business: Bioscience Funding: Accel Partners ($3 million) Will make money by: Already profitable Number of employees: 19 Revenue: Not disclosed Size of target market: $70 billion Key competitors: Companies like Gala Scientific, Charles River and BioReliance in the US. Claims no major home-grown competitor Biggest threat: Slow pace of regulatory approvals in the US and European operations for generic biotech drugs

— Rahul Sachitanand

Carnation
Motor Mechanic
A Start-up after retirement? Trust Jagdish Khattar to do it. The man who became synonymous with the Maruti Suzuki success story decided to change the way Indians maintain their cars. Just weeks after stepping down from Maruti Suzuki, in December 2007, he set up Carnation, which is to be a chain of service centres that can handle 80 per cent of the models and makes on Indian roads. “In developed markets the concept of a branded service player is well-established. In India, other than Maruti and Tata Motors, manufacturers do not give their owners much choice but to go to dealerships to get their vehicles serviced… owners end up with unlicensed neighbourhood mechanics,” explains Khattar.

Carnation’s first outlet is in Noida and Khattar plans to have a nationwide presence by the middle of next year. “Insurance companies and large car fleet operators have come to us as we can save them massive amounts of money,” Khattar says. Carnation isn’t going to be only about service: Khattar plans to foray into car sales and mechanic training schools. Sometimes, with start-ups, no matter how good the idea, experience matters. And Khattar has plenty. Little wonder, then, that the name Carnation has the tag, “A Jagdish Khattar Initiative”.

Location: Noida, NCR Year of founding: 2008 Founder: Jagdish Khattar Nature of business: Multibrand Auto Sales Maintenance and Allied Services Funding: Rs 80 crore from Premji Invest, Rs 28 crore from IFCI ventures Will make money by: The 2nd full year of operations (2010-11) Number of employees: 500 by March 2009, 5,000 by 2012 Revenue projection for 2009: The rollout commences from fiscal year 2009 and the revenue ending 2009-10 is projected at Rs 300 crore Size of target market: The auto service industry is estimated at Rs 2,500 crore Key competitors: Mahindra First Choice operates in the branded used car market Biggest threat: Extremely dependent on Khattar’s personality to drive marketing and sales; Khattar is already 66 years old

— Kushan Mitra
Invention Labs Engg Products
Inventing for India

They have a common passion: developing engineering products. They share a common aspiration, too: give Indian engineering an identity like the way German engineering is known for precision and durability and Japan for micro and nano technology. To achieve this, Ajit Narayanan (27), Adib Ibrahim (28), Aswin Chandrasekaran (27) and Preetham K. Shivanna (26)—all from IIT Madras—have set up Invention Labs. “Indian conditions are unique. Using a foreign technology or retrofitting has not worked. We want to invent India-specific products,” they say. Set up in June 2007 with an initial capital of Rs 15 lakh and a seed capital of Rs 5 lakh from IIT Madras, Invention Labs currently has 11 employees (including the founders). It has developed a few products: Kavi—a handheld communication device for children afflicted with cerebral palsy and machine vision systems for quality control (the current downturn has affected sale of this product). It is betting big on retail vending machines—prototypes of which are under development. Meanwhile, its servicing business—designing of sub-components and parts for various industries—ensures adequate cash flow for this start-up to keep its activities going.

Location: Chennai Year of founding: 2007-08 Nature of business: Engineering products development Funding: Promoters’ equity (Rs 15 lakh) and seed funding (Rs 5 lakh) Will make money by: Already cash flow positive Number of employees: 11 Revenue: Not disclosed Size of target market: Rs 1,000 crore Key competitors: Vending machine suppliers, Netbooks, Soliton & Cognex Biggest threat: At the moment, product failure

— N. Madhavan

 flipkart.com
Indian Amazon
N. Madhavan

Sachin and Binny Bansal (no, they are not related) found themselves in boring technology jobs after doing their computer science from IIT Delhi in 2005 and got their creative spark only when their career paths converged at Amazon India, the world’s largest online retailer. Amazon has only development centres in India—and the two figured they could very well replicate its online retail model. “Initially, we thought of opening a comparison shopping engine. But after studying the e-commerce space we realised there were no good players in India,” explains Binny. “We thought of books, as online sales for books is good, there is no touch and feel factor and the suppliers are also e-enabled,” explains Sachin. In September 2007, they quit their jobs to set up the company and had the site up and running in a month. “It was an enormous task to get tie-ups with the major book vendors, as we didn’t have an off-line book store. … Another major challenge was to get the approval for the credit card payment gateway. …we had to convince Axis Bank for the payment gateway and that wasn’t easy,” says Binny. Against the Rs 4,000-crore books market, online business is a measly Rs 25 crore. “We want to be number one in online book sales,” says Binny. The company is growing at 35 per cent per month.

Location: Bangalore Year of founding: October 2007 Founders: Sachin Bansal & Binny Bansal Nature of business: Online retail Funding: Self-funded, invested Rs 4 lakh Will make money by: 2011 Revenue: 2008-Rs 4-5 crore; 2009 (Projected)-Rs 20 crore Number of employees: 20 Biggest threat: Other online retailers which sell books, such as Indiatimes and Rediff

— Tejaswi ShekhawatAskLaila
The local platform

When compiling a list of hot start-ups, BT had decided to avoid crowded spaces—online travel agencies and local search. So why did AskLaila make the cut? Well, because we use the service quite a bit and we rather like it. But why did the founders Sriram Adukoorie and Kiran Konduri, both Microsoft veterans, call their local search site “AskLaila” and not something else? “Well, when we were writing the code we gave female names to all our projects…When we were testing our search code we called it Laila… and we began to like it,” says Konduri. His wife initially thought it was a soft porn site—and even now it gets search requests for nude images. The service is available in eight cities and will be entering six more soon. “Our biggest competition is not some other site… but word of mouth,” Konduri argues. He is not positioning it as a web service, but a local hub on a variety of platforms including mobile telephony. Where does it see itself in a few years? “…With an increasing mobile population local search will increase. But wait a while, we have something big up our sleeve,” Konduri says.

Location: Bangalore Year of founding: December 2006. Founders: Kiran Konduri and Shriram Adukoorie Konduri was previously at Microsoft and has founded two companies, including Zephyr Software, which was acquired by Infospace. Adukoorie was with Microsoft for 10 years. He launched MSN in India and several South East Asian countries. He was leading the content efforts at MSN across Asia Nature of business: Consumer-specific local information service delivered through multi-platforms (web, mobile, TV and print) Funding: Secured a total of $12 million from Matrix Partners India, Lightspeed Venture Partners, SVB India Capital Partners Fund in two rounds of funding Will make money by: Not disclosed Number of employees: 30 technical engineers and nearly 150 on field support Revenue: Not disclosed Size of target market: $200 million

— Kushan Mitra
InkFruit.com
Hosting design talent

Do you love to draw/paint/design but keep your artwork stuffed in some box? Upload your designs on inkfruit.com—good ones get voted on by its community of designers and end up on T-shirts. You get rewarded. The brainchild of Kashyap Dalal (27) and Navneet Rai (28), inkfruit.com hosts the work of designers from all over the world. The popular ones then get screen printed on T-Shirts for sale. Dalal and Rai are from IIT Bombay, with Dalal also having an MBA from IIM-L. After holding several regular jobs, the duo got together in 2007 to turn entrepreneurs. “There was a huge gap in creative merchandise space,” explains Dalal. Inkfruit.com was launched in 2008 with their savings of Rs 3-4 lakh. The idea was first marketed in colleges and design schools to create an inventory of designs. Today, there are monthly contests, with cash prizes from Rs 2,000 to Rs 10,000. Seed capital came from their seniors, Karamveer Singh and Gaurav Songara, at IIT. Thereafter, Inkfruit received angel funding from Mahesh Murthy, Anand Lunia and Paula Mariwala. In just one year, Inkfruit has fetched revenues of nearly Rs 2 crore. “We are expecting to break even by the middle of this year and expecting revenues of Rs 8-10 crore for 2009,” says Dalal. Inkfruit currently sells about 5,000-6,000 TShirts a month and gets 5 lakh page views a month.

Location: Mumbai Year of founding: Mid-2007 Founders: Kashyap Dalal & Navneet Rai Nature of business: Promotes creative merchandise Funding: Angel, amount not disclosed Will make money by: Should break even by middle of this year Number of employees: 15 Revenue: 2008-Rs 2 crore; 2009 (projected)-Rs 8-10 crore Size of target market: Merchandise (Tshirts, bags, posters) around Rs 650 crore Key competitors: Offline—Tantra, Karma, etc. as well as Pepe, Lee, UCB. Online— Customisation websites where you can print whatever you want Biggest threat: A backlash from the design community in case they don’t like the things it does. So, it is trying to grow in a way that's fun for the design community

— Anusha SubramanianAyurVAID
Ayurveda, right side up

By 40, most people prefer to settle down in their careers— but not Rajiv Vasudevan (46). A scientist at Indian Space Research Organisation, operations person at Godrej & Boyce and Country Head of Motorola’s paging systems division before joining the Kerala government, where he was the head of Techno Park at Thiruvananthapuram and Director, Kerala IT Mission, versatility has been a hallmark of Vasudevan’s career. While working on the government’s biotech policy, he realised that ayurveda was not practised the way it should be. “For most, it just meant a massage,’’ explains Vasudevan. In April 2005, Vasudevan (then 41 years old) took the plunge and set up AyurVAID—a 15-bed hospital in Kochi that practises Ayurveda the classical way, including rigorous processes and extensive documentation— with an initial investment of Rs 20 lakh. In May 2008, US-based Acumen Fund invested Rs 4.5 crore. Today, AyurVAID has hospitals in Aluva, Bangalore, Mumbai and Hubli (in all 140 beds). “We will turn profitable next year,’’ says Vasudevan. He plans to have at least 2,000 beds over the next five years. His goal is to make ayurveda the treatment of choice for select medical conditions.

Location: Kochi, Aluva, Bangalore, Mumbai and Hubli Year of founding: 2005-06 Nature of business: Healthcare Funding: Initial promoter’s equity (Rs 20 lakh) and venture funding (Rs 4.50 crore) Will make money by: 2010 Number of employees: 75 Revenue: Not disclosed Size of the target market: Unlimited Key competitors: Other healthcare service providers Biggest threat: Misperceptions people have about ayurveda

— N. Madhavan

Orange Cross
Healthy to the bank

The promoters had no background in healthcare when they decided to set up this unique venture, which will advise healthcare consumers about options. But their lack of domain expertise (barring Melvin Barreto’s passion for marathons) did not deter the likes of Sridhar Iyengar, former Chairman and CEO of KPMG, Pravin Gandhi, IT industry stalwart, Shantanu Prakash, Founder of Educomp, and Ashutosh Garg, Chairman and Managing Director, Guardian Life Care, coming aboard as advisors. Neither did it deter private equity firm Lumis Partners from injecting an unspecified amount into the new-born. Sandeep Sinha, Managing Partner, Lumis, says: “As a rule we do not invest in early stage companies. Orange Cross is perhaps the only exception, but that is because of the nature of their business.” Orange Cross had a very clear business plan: to offer third-party advice to patients— from interpreting adverse trends in the annual health check-ups to suggesting venues for getting a particular diagnostic test done, together with cost options. “We help people manage their health and wellness requirements,” says Co-founder Prajakt Raut.

The start-up charges the healthcare consumer depending on the services rendered. Barreto says: “We wanted to be in an industry where we would have the opportunity to shape customer thought processes….” Whether they will make money is a question that will be answered in a few years.

Location: Gurgaon Year of founding: 2007 Founders: Prajakt Raut and Melvin Barreto Nature of business: Provision of healthcare and wellness services Funding: Lumis Partners bought a stake between 10%-50% for an unspecified amount Will make money by: Cash flow positive by CY09; P&L break-even by 2010-2011 Number of employees: 21 Revenue: Not disclosed Size of target market: At least a billiondollar opportunity Key competitors: None within India Biggest threat: The sheer scale and the rapidity of the ramp-up of their project

— Shalini S. Dagar

Intelizon Energy
Lighting up Rural India

Kushant Uppal, 39, an IIT Madras engineer armed with a Ph.D from the US , quit his job in the US and returned to India to set up Intelizon Energy in February 2007. Uppal saw merit in what his mentor, Professor Ashok Jhunjhunwala of IIT Madras, had to say about the possibilities of solar energy, particularly in rural india. He was also able to convince Ventureast and Emergic Venture Capital funds to put in money. His first product? A solar LED task-light with an embedded solar panel, priced at Rs 799, and branded Zon Light (Zon is Sun in Dutch). “So far, we have sent out around 8,000 units….” says Uppal.

Since Uppal does not tap subsidies, this task-light cannot be sold below Rs 799 per unit. He is talking to microfinance institutions so that the poor can afford it in instalments. He claims it is cheaper than current solar lanterns, and 200-300 households can be lit up for between Rs 1.5 and Rs 2.5 lakh.

Says Uppal: “Our vision is creating a world of smart energy.”

Location: Hyderabad Founder: Kushant Uppal Nature of business: Renewable energy with focus on rural and semi-urban markets. Funding: Has got venture funding of between $ 0.5 million and $ 1 million Will make money by: 2011 No of employees: 25 Revenues: Around Rs 50 lakh for 2008-09; projects a five-fold increase for 2009-10 Size of target market: Sees markets in India and Africa and estimates a market size of over $ 1 billion Key competitors: Local brands, torch lights, kerosene lamps and emergency lights Biggest threat: The use of LED light not becoming a trend. Also, if funding sources become tight

— E. Kumar Sharma

MeritNation.com
Custom-built Education

Pavan Chauhan and Ritesh Hemrajani are entrepreneurs at heart. Buddies from the 1996 batch of IIM Bangalore, they worked at Philips briefly before deciding to quit and do their own thing with just Rs 40,000 as capital. The start was almost a disaster, as Chauhan recounts. When they put in an advertisement in a newspaper to attract MBA aspirants, their contact address did not work and the telephone went kaput. “We were down Rs 15,000 for a 40 cm display ad with both the address and the telephone not working. We really laughed that day,” says Chauhan. Salvaging the situation, they managed to convert their first few walk-in customers. “We served them with our life,” says Chauhan. Initially, they dabbled in the education space but by 2007, they reconfigured their company to cater to a new product: an adaptive assessment engine for learning. “The product will enable customisation of learning…. Every child is different. The product will identify the problem, and then generate appropriate content for the child,” says Chauhan. Funding ($1.6 million) came in at the right time from InfoEdge, the holding company for online recruitment brand naukri.com. Next steps: opening up to schools and teachers, then online subscriptions and break even.

Location: New Delhi Year of founding: 2001; completely rejigged the business in Oct. 2007 Founders: Pavan Chauhan and Ritesh Hemrajani Nature of business: Web-based education Funding: $1.6 million in April 2008 from InfoEdge Will make money by: 2009-10 Number of employees: 55 Revenue: Rs 2.5-3 crore (2008-09); Rs 5-6 crore (Projected 2009-10) Size of target market: Huge, there are 2.5-3 million students on the Net Key competitors: Mathcrew; Extramarks.com Biggest threat: Limited broadband connectivity

— Shalini S. Dagar

Last year’s start-ups

3DSoC: By May last year, Bangalore-based 3DSoC had hit pay dirt with its 3D authoring, visualisation and compression idea. The auto sector found 3D emanuals useful in downstream visualisation. When it got hit, 3DSoC’s revenue target of $1 million went for a toss. What if the auto sector is shut? There’s telecom beckoning! “We have signed up with a mobile operator to provide 3D greetings on the mobile as a value added service,” says CEO K.K. Venkatraman .

BigTec: It’s talking to a couple of European medical device makers to license its handheld diagnostic unit. Initially funded by an initiative of the Council of Scientific & Industrial Research, it now needs to raise at least $10 million to take its lab-on-a-chip product to the market.

Ikya: Bangalore-headquartered Ikya Human Capital Solutions has seen the slowdown drag down its HR revenues. But it scaled up its footprint across 11 cities and increased full time staff. “The recession has impacted our organic growth but we have balanced it by buying AVON FMS, a company in the facilities management,’’ says Ikya Chairman Marcel Parker.

iViz: This Kolkata-based specialist in on-demand application and network penetration testing has not been affected much by the downturn—companies have become more conscious of security. Co-founder Bikas Barai admits revenues are below target, but it has spent less by putting on hold plans for offices in the US and UK. It has moved to larger digs, and doubled headcount of computer scientists and friendly hackers.

iXiGO.com: As airlines cut flab and stop paying agent commissions, the iXiGO.com’s meta-search platform seems to have done better than the transactional model offered by online travel agencies. iXiGO has enlarged its product portfolio, taken its innovative platform within the reach of 70 million WAP-enabled phone users and gone international with its hotel and flight search offerings. CEO Aloke Bajpai hints at a second round of funding by the middle of this year.

Lordsofodds.com: This Punebased online entertainmentprediction gaming site has grown from three employees to 10. The website has now entered into a contract with ESPN STAR Sports to run prediction games. While the co-founders are still not willing to talk about revenues, they are confident of breaking even in the next three months.

Premedia Global: The outsourcing publishing company is set for revenues of Rs 120 crore this fiscal, down from the expected Rs 170 crore. Yes, the recession. And the promoters have decided to conserve cash, opt for organic growth and look at cashless acquisitions.

Sresta Natural Bioproducts: As against revenues expected for 2008-09 at Rs 25 crore, the company will be doing about Rs 13 to 14 crore. The drop in revenues, it says, is because of change in focus to retail products for exports and also due to the longer time it took to put various arrangements in place. It has finalised selling arrangements in the US for marketing its retail product range. Its area under organic farming is up from 12,000 acres in April last year to 30,000 acres.

Stempeutics: The Manipal Group-funded company has introduced its stem cell treatment across several hospitals owned or managed by its parent in AP, Tamil Nadu and Karnataka. The company has opened a second research unit in Malaysia and is adding stem cell therapies for several more ailments to its capabilities.

Zerostock Retail: As against expected revenues of Rs 35 crore for 2008-09, the actual figure is less than Rs 7 crore. Accordingly, it has significantly scaled down its goals for 2010-11 from Rs 420 crore to around Rs 40 crore. Reason: the slowdown. It is now redefining its business model and expects to be a profitable entity by July 2009.