Monday, October 1, 2001
The only product startups founded in India that seem to have much hope of survival are those that have been transplanted, with their technology, to the U.S. and given solid U.S. backing. Building a large technology product company in India and selling to global markets while the company is still headquartered in India has thus far proved extremely difficult, although no doubt it will happen some day in the not too distant future, as the Indian IT industry matures.
Despite the gloomy outlook, we have put together a list of 25 of the most interesting product startups that are headquartered in India. We have omitted all services companies from the list, and have chosen to feature mostly early stage companies. We acknowledge the problems that many of these companies will face, but we feel it’s important to feature them as a snapshot of what is happening on the ground in India’s high tech hubs, and as a taste of great things to come.
Hardware design software could be a good field for Indian startups. Here are three startups trying to survive in this market…
1. Inspiration Technologies
Founded: February 2000 by Ravishankar R
Funding: $200,000 (angel funding)
www.inspiretech.com
Inspiration specializes in the development of verification environments for network processors. It has also created reusable IP in the area of verification blocks, such as packet generators for Ethernet chips.
Inspiration has been involved in various stages of the design cycle, pre-silicon as well as the post-silicon, for verification of Intel’s 10/100 Mbps and Gigabit Ethernet switches (6 million gate chip). “Inspiration’s verification environment has been deployed at Intel in Santa Clara and Israel,” says Mohan, the company’s director of marketing.
Last year the company was working with only Intel. This year in addition to Intel, it is working with Synopsys. One-fourth of Inspiration’s employees are in services. The rest of the employees either focus on developing IP in the verification area or work on the company’s own networking products.
2. Ittiam Systems
Founded: January 2001 by Srini Rajam, CEO
Funding: $5 million (Global Technology Ventures, Bank of America Equity Partners)
www.ittiam.com
Though the technology firmament may seem to be crashing down, Srini Rajam has made a bold move, leaving a job as head of Texas Instruments (India) to launch his own company: Ittiam Systems. Rajam is obsessed with making Ittiam the number one DSP company in the world. The company’s name, an acronym of Descartes’ “I think, therefore I am,” is no less bold.
Ittiam is focused on DSP software and systems design. By design, the firm deals with multiple domains: wireless, broadband, audio and video. “We are very clear that we must participate in the wireless area, which includes mobile wireless, wireless infrastructure and wireline broadband. These are promising areas. It is a challenge to develop multiple expertise. That challenge has to be overcome if you want to be a sizeable company,” says Rajam.
Rajam is well respected, and will hopefully be able to attract the right people to his company, despite the tough market.
3. Poseidon Technologies
Founded: March 2000 by Suhas Hiwale, CEO
Funding: $500,000 (angel investors)
www.poseidon-tech.com
Poseidon Technologies is an embedded systems and VLSI company. According to CEO Suhas Hiwale the company’s App2Chi (application-to-chip) product helps system design companies get to market.
The product is in its development stage and will be completed by December 2001. Says Hiwale, “We displayed this product in a design and automation conference in Las Vegas. There was a good response. We are talking to NEC, Infineon Technologies, Lexra, Sasken, Force Computers.”
The company, which is pitching to VCs, will be competing with some real heavyweights, and will need money to survive.
Hardware products will be a tough sell from India, but a chip maker and a networking company have set out to make an impact.
4. MosChip
Founded: 1999 by Ram Reddy
www.moschip.com (Hyderabad)
The idea of a chip company coming out of India, to supply the global market, is an exciting one. MosChip founder Ram Reddy has had extensive U.S. experience in the semiconductor industry. But starting out with this kind of venture during a global slowdown for the chips industry will prove difficult.
The company’s decision to start out with a simple product for the printer market could well be a smart decision. Obviously MosChip will try to compete on price, but that’s always a dangerous proposition.
5. Tejas Networks
Founded: 2000 by Sanjay Nayak, CEO
Funding: Desh Deshpande, ASG-Omni
www.tejasnetworks.com (Bangalore)
Tejas Networks is Sycamore founder Desh Deshpande’s project in India. The firm essentially markets Sycamore’s optical networking products in India and the Asia Pacific, and also develops some regionally-specific networking products.
Tejas — the Sanskrit word means “brilliance” or “radiance” — was started in July 2000. Its first product, which debuted in March, is an access device for optical networks. The first customer is Mumbai-based Tata Power.
CEO Sanjay Nayak says, “We see good potential for our products and services in these markets.” Clearly the market in the U.S. is tanking, but demand for optical infrastructure in Asian countries (particularly China) is still on the upswing. China is turning into a blockbuster market, where local Huawei Technologies is raking in the profits with about a 40 percent market share. If Tejas can get a piece of that action, the company could be in good shape.
The wireless craze hit India in a big way, dozens of startups emerged, targeting the global and domestic markets, but most seem doomed to fail.
6. Delta Innovative Enterprises
Founded: January 1997 by R. Kothandaraman, Managing Director
Funding: IFC Washington, Bank of Oman
www.deltagram.com (Chennai)
In the small town of Rajahmundry in Andhra Pradesh very few public call offices exist: so getting a line when you call up is a huge challenge. But the villagers can send electronic messages easily and cheaply. Delta Innovative Enterprises, a Chennai-based satellite messaging firm is looking to tap into this new business opportunity.
Managing Director R. Kothandaraman says, “Digital mail, voice mail, cash transfer, credit card authorization and voice call centers offer an excellent business opportunity in India, where the population is dispersed.”
The company’s service, code-named Deltagram, is in use in 750 towns and 5,000 villages across the country. The system stores and forwards messages using postal index number (PIN) codes as destination identifiers.
The chilly reality is that the total project cost has been estimated at $55 million. Kothandaraman’s strategy is to raise $33 million through franchisees, $4.44 million in equity, $8 million in debt, and the rest through interest accruals. “We are funded by IFC Washington and Bank of Oman,” he says, unwilling to reveal the exact figures.
7. iNabling Technologies
Founded: 1997 by John Aravamuthan, CEO
Funding: $3 million (B V Jagadeesh, Infinity Technology Investments, ICICI)
www.inablers.net (Bangalore)
Making e-mail access affordable is the mission of Bangalore-based iNabling Technologies. (see siliconindia, August 2001, page 16). The indigenously developed iStation is a low-cost e-mail device loaded with Engati software, which allows multiple language usage. The iNablers (as they call themselves) have also designed a POP server that costs one-tenth of a normal ISP server.
“Apart from the consumer segment, we will also target Public Call Offices, where iStations can be installed to provide e-mail access at a nominal cost,” says CEO John Aravamuthan. STD/ISD booths have had remarkable success around India, so the idea of converting Public Call Offices into Public Email Offices is interesting.
The company says it will be selling 50,000 units by the end of March 2002.
8. Applogic Broadband Systems
Founded: March 2000 by Venkat S. Meenavalli, CEO, Anil Kumar & Bhaskar Reddy
www.applogicsystems.com (Hyderabad)
Venkat S. Meenavalli, CEO of Applogic Broadband Systems hopes to solve bandwidth issues in India with its electromagnetic wireless highways (EWHs).
When launched last year, Meenavalli promised to connect India’s metro areas to remote regions where no wires could penetrate.
Now, he says, there is no money in individual wireless connections, so the company is targeting the corporate Indian market for its wireless bandwidth solutions. The reason? Applogic has only three towers in Hyderabad, each with an eight km range — not enough to enable a feasible business for individual connections.
This is a big boy’s game. Corporate bandwidth in India is not a large enough business to begin with, and with larger competitors like Reliance getting involved, Appologic will be swept away.
9. VisualQuest
Founded: June 1999 by Birad Yajnik, Shalini Bhupal, Raghuram Reddy www.vqindia.com (Hyderabad)
Consumer wireless data applications are a tough sell, especially if you’re trying to build them for the Indian market. Visual Quest’s content management application — VisualScript enabling mobile users to receive content in Hindi and other regional languages on a 9.6Kbps GSM network with an Internet enabled handset — fails to impress. The company is expecting to develop more feature-rich applications soon.
Founder Birad Yajnik says his company is hoping big mobile operators will market its products, but remains silent about the customers Visual Quest is targeting, and the VCs it is pitching to. Obviously, Yajnik is hunting desperately for both customers and VCs.
10. Jataayu Software
Founded: March 2000 by Mahesh Kumar Jain, CEO
Funding: $2.5 million (GE Capital and TCS)
www.jataayu.com (Bangalore)
Last year, WAP was the next big thing. No more. In March 2000 Jataayu founder Mahesh Jain spun off the wireless division of Integra Micro Systems to start Jataayu software. Director Raj Kesarimall claims that 70 to 80 percent of network operators in India use Jataayu’s WAP gateway. Jain declares that Jataayu is possibly the only company that offers solutions on all platforms: Windows NT, Windows, Linux, Solaris, HP, AIX and Palm OS/ WinCE/ Epoc. The company is trying to sell its products overseas, where the wireless markets are all vastly different, and WAP is a struggling market anyway.
11. Wilsys Technologies
Founded: February 2001 by Kiran Kumar Varanasi, Managing Director
Funding: $600,000 (InfoStar, angel investors)
wilsystechnologies.com (Bangalore)
Bluetooth startups are suddenly a dime a dozen in India, at a time when many are questioning the future market for Bluetooth.
When Hyderabad-based wireless research firm Wilsys Technologies was launched in February, New Jersey-based Infostar was supposed to kick in $1 million in R&D funding. But then Infostar “partly” backed out, stating that it was not the right time to fund any Bluetooth project.
Founder Kiran Varanasi had to raise $350,000 from angel investors and managed to get the basic infrastructure to kick off the projects. The company is developing both Bluetooth and short wave wireless technology, and has, according to Varanasi, filed for a number of patents.
Unless the company can rope in some major international backers that put their weight behind the company, Wilsys will be unable to survive, since this isn’t a viable product for the Indian market.
12. MyZus
Founded: 1999 by Roshan D’Silva, CEO
www.myzus.com (Mumbai)
MyZus is another “device neutral” wireless content application platform company, essentially indistinguishable from so many others. Even the most well funded players have not been able to pull this one off on a large scale, and MyZus will either remain very small or fade away.
13. Impulsesoft
Founded: 1998 by K. Srikrishna, CEO
Funding: Angel funding in May 2001
www.impulsesoft.com (Bangalore)
Bangalore-based Impulsesoft, once solely focused on Bluetooth, is now looking at the more successful 802.11 wireless Ethernet standard.
CEO and co-founder, K. Srikrishna admits the slowdown has reduced the visibility of his company. Impulsesoft calls itself a “short-range wireless solutions provider.” Three of the five founders once worked with Texas Instruments, another with National Semiconductor, but the company will struggle to survive.
14. Tarang Software Technologies
Founded: 2000 by Ram Kumar V, CEO
Funding: $5.5 million (Global Internet Ventures, WestBridge Capital)
www.tarangtech.com (Bangalore)
“Pervasive computing” is becoming a buzzword. Bangalore-based Tarang Software claims to offer pervasive computing solutions that enable information access anywhere, anytime, and on any device.
To call Tarang a pervasive computing company is a bit of a stretch. In reality, it should probably be termed a wireless data company, and many with similar models have cropped up all over the world. The three founders — two are former Wipro executives — announced the launch last October.
The firm says it has six customers, four in the U.S. and one each in Europe and Japan. The idea is to deliver data applications to any wireless device. But that business model has faltered in the market thus far. U.S. investor WestBridge is a sign of some credibility.
15. Tenet Technologies
Founded: 1996 by Rajendra Misra, CEO
Funding: Citicorp
www.tenetindia.com (bangalore)
Bitten by the entrepreneurial bug, Rajendra Misra quit Kajima Corporation in Tokyo and came to Bangalore in January 1996 to start Tekelec India, a wholly-owned subsidiary of U.S. telecom products firm Tekelec. Within two years, Tekelec divested its equity in Tekelec India. The company was renamed Tenet India Private Limited.
Tenet develops various wireless solutions, including Bluetooth products, wireless LAN products, wireless applications, and even home gateway products. The company acts essentially as a specialized services firm, deploying its own technologies.
Founded: 1998
Funding: $400,000 (Global Technology Ventures)
www.ionicmicro.com (Bangalore)
Bangalore-based Ionic Microsystems has developed home gateway software as well as hardware reference designs for home networking. Over 25 per cent of broadband households in the U.S. will have a residential gateway by 2003, according to the Yankee Group, but Ionic will have a tough time capturing that market.
17. Adamya Computing Technologies
Founded: 1996 by Yatheendranath, Managing Director
Funding: $1 million (Infinity Venture Fund)
www.adamya.com (Bangalore)
Adamya claims it has developed the smallest certified Bluetooth stack in the world. Beyond Bluetooth, the company has already completed the product design for a baseband controller.
Investors Infinity Venture Fund will likely need a miracle to turn this business model into a success.
Software Products should logically come out of India, given the country’s software expertise. But selling software products in the global marketplace is easier said than done.
18. MicroWorld Software Services
Founded: 1994 by Govind Rammurthy, CEO
www.mspl.net (Mumbai)
MicroWorld Software Services’ internet security products — Escan and Mailscan — apply a concept called MicroWorld-Winsock Layer (MWL). MWL, placed above the Winsock layer, tackles a threat before it reaches enterprise applications.
Security products from companies like Symantec (Norton) are designed to protect the File System Layer. However Microworld’s products, based on MWL, protect the Winsock Layer.
Says Govind Rammurthy, managing director and CEO of MicroWorld, “We believe that other security companies need to come up with something similar to MWL in order to retain their position. So the real challenge will be to hold our position by having strategic partnerships with vendor companies, who develop software.”
He’s right that major partnerships will be a must. Microworld is setting up its first U.S. office, but it will most likely be killed in the market by established players like Check Point. Survival depends on penetration in South East Asia and India.
19. Pramati Technologies
Founded: July 1997 by Vijay Prasanna Pullur and Jay Raghavendra Pullur
Funding: $3.4 (Citibank, Intel)
www.pramati.com (Hyderabad)
Brothers Vijay Pullur and Jay Raghavendra Pullur quit Wipro in 1997 to start their own software firm, with the ambitions goal of competing with the likes of IBM and BEA Systems.
The company, which pulled in VC backing from Citibank and Intel, released its first product, Proton, in July 1998. Proton is an application server producing dynamic content for web enabling applications.
But will they succeed? Although IBM, BEA, Oracle and Sun implement the same standards, the kind of market Pramati has chosen is different, claims Pullur. “We are one of the first companies to build an application server embracing Sun’s new Java standards, or J2EE. Notwithstanding the slowdown there are a lot of application companies that are developing applications on J2EE,” he says.
The idea is for firms using J2EE to integrate Pramati products and sell them. The backers and team offer some hope of success, but the market will be tough to crack.
20. Celstream Technologies
Founded: July 2000 by Brijesh Wahi, Managing Director
Funding: $6 million (Grass Valley, Tektronix, ICICI Ventures)
www.celstream.com (Bangalore)
Celstream Technologies is developing a suite of products dedicated to providing a range of tools for digital media asset management. Its solutions help businesses to catalog, store, find, repurpose, and distribute media assets — audio, video, image or text files that are typically online, but may also be offline.
Founder and Managing Director Brijesh Wahi says, “A typical user spends 2.9 minutes searching for a single file and fails to find the file 39 percent of the time. Celstream’s solutions reduce the time individuals spend locating, organizing, and distributing files thereby increasing workflow efficiencies.”
For now, Celstream remains largely a services play. The company has multinational ownership in the sense that Grass Valley Group and Tektronix have taken a 20 and 10 percent equity stake respectively in the company. ICICI Venture Funds has also invested $6 million into the company. The backing is solid, but it’s a tough service to sell.
21. eSymmetryx
Founded: 2000 by Gerard Rego, CEO
www.esymmetryx.com (bangalore)
Supply chain software will offer huge opportunities going forward, since visibility into the supply chain is still a real pain point. eSymmetryx is using the buzzword “collaborative commerce” to characterize its software platform that offers a single interface and common enterprise platform, centered around one product. The company is targeting particular vertical markets like defense, aerospace and the automotive industry.
No matter how good the software, sSymmetryx will never be able to compete for global business with established enterprise software players like i2 or Commerce One.
22. Consign Technology
Founded: February 2000 by R. Raja Raman, Managing Director
Funding: Intel Pacific
www.consigntech.com (Chennai)
Chennai-Based Consign Technology provides tools and technologies that aggregate, manage and publish primary and secondary financial industry content.
Formed in February 2000, Consign rolled out its first product, finvest, in June 2000. Within the first six months the company signed up portals for its ASP services, including Zeenext, Indiainfo, 123 India, Indiatimes, Sivan Securities, Paisapower, Times of Money, as well as 15 stock brokers. Today the product sells in the Middle East and Singapore. Relying on business from portals will mean a poor revenue stream going forward, and the company will likely find it hard to stay above water.
A few companies in India are seeking to create their own markets. The road to success will be challenging at best.
23. Spatial Data
Founded: May 1999 by Dr. S. Rajgopalan, CEO
www.spinfosoft.com (Bangalore)
Digital maps, part of everday life in the U.S., are still in their infancy in India. Dr. S. Rajgopalan was a Geographic Information Service (GIS) consultant until 1999, when he set out to start Spatial Data (or Spinfo as he likes to call it).
In two years, Spinfo has developed four GIS products (maps of Karnataka, Kerala, Bangalore, and Chennai). The company says that in the next eight quarters it will have mapped ten Indian states and 15 cities. That’s a long time. So far, 60 customers use Spinfo Karnataka and 10 use Spinfo Kerala. The company will not be able to generate the sales volumes to thrive.
24. Peacock Solutions
Founded: 2000 by Dr. Mahesh Jayachandra, CEO
Funding: Angel Investors
www.peacocksys.com (Bangalore)
Bangalore-based Peacock Solutions began operations in March 2000. More than a company, this is an R&D lab. Its strengths are in Linux, clustering techniques, embedded systems and neuroscience.
Quirky CEO Dr. Mahesh Jayachandra always wanted a powerful enough system to model neurophysiology data. He and his team picked up commodity components from the local Bangalore hardware markets and created ready-to-go supercomputing. It is the first Indian company to commercialize supercomputing technology.
The technology will need to prove that it’s viable in the market.
25. NetMagic
Founded: 2000 by Sarad Sanghi, CEO
Funding: $4 million (eVentures, B. V. Jagadeesh, K. B. Chandrasekhar, Kanwal Rekhi)
www.netmagicsolutions.com (Mumbai)
The hosting business has become commodity in the U.S., bringing former Wall Street darling Exodus to the edge of ruin. But both Exodus founders have invested in NetMagic, a hosting company for the Indian market. We’ll see how the market evolves in India.
Net Magic should conseve cash and not build out infrastructure too aggresively. si
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