Author Archive for Mukul

Onion Rs65/kg, Petrol Rs65/litre, Beer Rs65!

Very interesting perspective from an analyst from IDFC. Thought to share – these are Mumbai (Maharashtra prices)

“Onion Rs65/kg, Petrol Rs65/litre, Beer Rs65!”

For the first time in history, basic needs, life style needs, luxury needs are at the same price, prompting us to explore why basic needs like onions are so expensive.

The visit: We visited Pimpalgaon and Lasalgaon – Asia’s biggest onion wholesale markets (240km from Mumbai) – and interacted with over 25 farmers, a wholesaler, assistant to APMC chairman (Agriculture Produce Marketing Committee) and visited three farms.

Key Takeaways: The price rise is due to significant supply shortage arising from unseasonal rains, with crop yields falling to a tenth of the normal 70-80 quintals per acre in many cases. At these yields, despite farm realizations reaching 2-3x of last year (Rs2500-3000/quintal) a farmer is still unable to break even. With the next onion harvest expected only in March, supply shortage is expected to continue for at least two months. However, we see pressure on onion prices even beyond that as unseasonal rains have also damaged seeds, due to which seed plantation is likely to be lower than last year. Unseasonal rains have also damaged grapes and tomatoes and thereby prices have doubled.

Our view:
We believe pressure on the price of onion, tomatoes and grapes is going to sustain for at least 6-9 months due to supply shortage (albeit not to the same levels seen last month when onion prices touched Rs 70-80/ kg). A bigger concern, though, is the possibility of high sustained inflation continuing, especially if supply shortages occur frequently across food commodities (as seen in the past year). Even if supply gets back to normal levels, prices will not reduce to the levels last year for two reasons: 1) farmers, having seen increasing crop disruptions, will demand higher prices in normal years to create a higher safety net for a bad year; 2) having seen that the consumer is willing to pay Rs60/ kg, the entire supply chain will attempt to extract slightly higher prices than earlier (scarcity-driven prices that touch super-normal levels always settle at a higher normal due to the sticky nature of inflation). In this case, with onion prices currently at ~Rs45/ kg (up from Rs 20/ kg last year), even if supply does get back to normal in 6-9 months, it is unlikely to get back to Rs20/ kg seen earlier and is more likely to settle at ~Rs25-30/ kg (still at least a 20% increase). While government interventions in terms of export bans are likely to provide temporary relief to consumers, the threat of sustained long-term inflation is likely to stay.

More here

The mystery of the absent Onions

NEN Program for Women Entrepreneurs

Here is an announcement from National Entrepreneurship Network. Please feel free to write to the below mentioned email

Are you a woman entrepreneur who dreams big or do you know of one?

If so, this is for you!

It is a known fact that most young companies die in the first 4-5 years of their life. This is also the time when startups begin to explore the opportunities for growth. The transition from startup to growth is a tough one and this is when most entrepreneurs have said they could use some focused help.

So here is an excellent opportunity for you to nominate yourself or a friend, relative or colleague to the NEN “Tools for Growth” program developed in partnership with London Business School, under the Goldman Sachs 10,000 Women Program. Eligibility criteria includes a current turnover of between 5 and 50 lakhs per annum.

This Workshop will help women entrepreneurs address key issues around growing their business. The entrepreneurs will be exposed to different tools and frameworks through case study discussions of real companies. Additionally, they will work with teams of 4 entrepreneurship faculty members from India’s top institutions to evaluate their company’s readiness and action plan for growth
For more information on the following, please visit NEN Resourcesand get in touch with

A Billion Dollar Indian Internet Company

I have always (after coming into the VC industry) heard the concept of $1 bn company while evaluating early stage businesses. “Can it become a $ 1 bn company?” has been a perpetual question. I always doubted on the concept of $ 1 bn market cap internet company out of India. However; last week our portfolio company, MakeMyTrip IPO made me a big believer of early stage investing.

Early last week, the IPO was oversubscribed by a big margin. My team at SAIF Partners in India was happy that the company will get listed at higher price range of the band giving us a 10x return. It was a joyous moment specially because MakeMyTrip is one of our very early stage investment. Thursday turned out to be a different day for us. All of us checked MMYT (MakeMyTrip NASDAQ ticker) multiple times at night. The stock went through a crazy day and finally closed 89% up on the debut day itself. By this time MMYT was already a $800 MN Market Cap company


It zoomed again yesterday and according to Nikhil (MediaNama) “the first instance of an Indian Internet company crossing the $1 billion Market Cap”

Though I have joined SAIF very recently but I feel privileged to be a part of the joyous moment. I strongly believe MakeMyTrip IPO will go a long way in contributing to the Indian Internet and start up ecosystem.

1.) It will reinforce investors’ confidence in Internet in India. Couple of days back, Alok bounced if more money will flow to Indian early stage businesses. I didn’t have an answer that time. However; now I believe that it will. I am already seeing lot more deals cooking with various VCs

2.) Hiring senior level talent would be easy in growing Indian Internet/Mobile companies. After Naukri, MakeMyTrip would become another example of wealth creation through ESOP. I am seeing great interest in senior level hiring in our other portfolio companies like HomeShop18 and One97. I think ESOP story will become more credible to sell

Personally, it has created lot of energy and motivation in the team and we will see many more SAIF investments in early stage companies in India. One97 would be another early stage investment of ours going to hit markets soon.

B2B Internet Businesses

As we announced our investment in MotorExchange; I thought to bounce my views on broader B2B plays. In last couple of years, I have noticed two broad growth challenges in Indian internet start ups:

1.) Last mile penetration – This is function of internet penetration in the country and the growth is still incremental. We have seen few services scaled up in India.
2.) Payment Infrastructure – This is a big pain point.

However; I have seen good traction in b2b plays in last 9-12 months. Businesses like FlightRaja, ItzCash have scaled up nicely. Observation is that a large number of services and products like travel tickets, hotel bookings, insurance payments, investment products, and real estate brokerage are delivered through local neighborhood entrepreneurs. Though this ecosystem is fragmented and inefficient (in few cases) it solves the problem of last mile distribution and payment collection. I think that there can be possible opportunities in organizing this unorganized market by providing platform driven services to them. If there is a value proposition, small businesses are willing to spend money and invest in a computer with Internet connection.

There are B2B businesses in areas of logistics, commerce, auction exchanges, assisted commerce, and financial products distribution, which are seeing good traction. These platforms are helping fragmented businesses to increase their efficiency, sales, and customer retention. The challenge here is to reach the fragmented channel and there can be a good offline component to such services.

Any thoughts? or similar businesses?

I would love to meet entrepreneurs who are in similar b2b space and understand their businesses.

TiE Con Delhi | Offer to Venturewoods Community

TiE Delhi has extended an offer to Venturewoods community for their annual flagship event – TiE Connect (18th & 19th Sep)

1. First two people will get a free invitation for the entire event
2. All will be able to avail TiE membership rates for the event (Rates offered to TiE members are subsidized as compared to non members).

To avail both the offers – people have to mail to Manish Joshi (; 9971766455). First two – will get free offer from TiE

Please refer to the event site: for more details.

Angel Investment Ecosystem in India | Need Inputs

Hi All,

I have heard speakers, panelists and entrepreneurs saying lack of angel financing as a major gap in the Indian entrepreneurial ecosystem. At Canaan, we have always tried best to participate in the start up ecosystem. This year, we are contemplating to initiate a dialogue with angel investors in a more systematic manner. In this regard, I would like to reach out to angel investors on this forum for suggestions on the nature and form of this dialogue.

I would also love to hear challenges faced by angel investors while making investment decisions or working with companies. They can be in areas of deal sourcing, regulatory visibility, network in corporate groups, working with the companies after investment etc.

I would also request start ups to send me names of their own angel investors with contact address and I would reach out to them individually. Keep viewing this forum for more on this and you can write me at


I think periodic recession is good for health!

If these economic jolts of last few weeks are called recession; I am pretty amused by it.

– Pleasantly amused by my all brokers (companies like ICICI Direct, Kotak) sending me mailers explaining different plans and simple logic behind them. None of them cared a quarter back. Last year it was a “take it or leave it” attitude.

– Pleasantly surprised that companies are talking about online, mobile, low cost models, leveraging technology etc etc. A quarter back, everybody was in a land grab mode – open as many outlets as possible, hire as many people as possible

– Pleasantly surprised when I went to my school back at ISB. Students’ expectations seem to be with rest of the world. An year back – everybody was dreaming for a Cr job

I think two main +ive developments have happened:

1.) Businesses are willing to spend time with their customers. There is a thought of “Customer Retention”.

2.) Cost of doing the business – from real estate cost, talent cost etc has come down.

Overall, I think lot of arrogance, which comes with growth have moderated. I understand that a recession also brings lot of pain (I lost my entire savings of last year) but I think it’s necessary to set things right for further growth. Thoughts? Comments?


NASSCOM EmergeOut Conclave 2008

NASSCOM has extended discounted entry fee for the VentureWoods community for its upcoming NASSCOM EmergeOut Conclave 2008 scheduled for 29th Sep 2008.

Please find attached the registration form. Please email to for any clarifications.

TiE Canaan Second Episode

Second episode of TiE Canaan Entrepreneurial Challenge would be aired on CNBC TV18
Saturday – 26th July – 1:30 PM
Sunday – 27th July – 9 AM; 1:30 PM; 6 PM

Canaan led $6MN investment round in UnitedLex

I am happy to share that we have led an investment round of $6MN in UnitedLex with Helion. UnitedLex is a legal consulting and outsourcing firm. Sahad has covered some numbers on broad KPO market in his posts.

Since last 12-18 months, we came across many companies in the broad KPO market – Legal Outsourcing, Financial Analytics, Market Research etc. We believe that ability to scale and sustain growth will become a key success factor in the KPO space. While on sales side, one needs a good sales engine which can close deals in the competitive and fragmented US market. W.r.t delivery, you need ability to drive efficiency by bringing more and more processes on a technology platform. UnitedLex has been able to excel both on sales and delivery front and we hope to help build this into a big business.