IS Indiainfo the first of the dotcom deaths? Not quite. But if the business press is to be believed, its certainly on life support system. This, even though 30-year old promoter Raj Koneru offers strong denials.
The grapevine has it that cash is giving Indiainfo the slip. Is this how not to run a dotcom?
IS Indiainfo the first of the dotcom deaths? Not quite. But if the business press is to be believed, its certainly on life support system. This, even though 30-year old promoter Raj Koneru offers strong denials.
Indiainfo had a meteoric rise; early this year, it seemed like every second billboard in Mumbai was an Indiainfo billboard. It recruited aggressively, it talked big, it announced acquisitions, it launched vortal after vortal after vortal. Then came the first signs of trouble, soon after it signed a deal with vsnl, the countrys largest isp, with close to 500,000 Internet subscribers. Indiainfo was to pay vsnl Rs 200 crore over the next three years, or 20 per cent of its revenues, whichever was higher. In addition, vsnl was to pick up a 30 per cent stake in Indiainfo. This, in return for letting Indiainfo be the default home page for vsnl subscribers. While the deal was agreed upon, it did not actually happen, with Indiainfo officials saying the tie-up will take "time to work out". That sent newshounds sniffing. In the face of Indiainfos inability to put forward a convincing argument, everyones bet was that the company wasnt in a position to cough up the cash needed to seal the deal.
Annual revenues of $12 million - mostly from web hosting - a claimed 60 million page views a month and 21 channels is fairly creditable for an 18-month-old portal. But is that precisely the problem? Did Indiainfo overreach itself to get to where it is? Any portal with an employee strength of 900 and a burn rate of over a million dollars a month is bound to feel the strain when it has had just one round of funding from just one venture capitalist, JM Morgan. Contrast that with rediff, which has only about 150 employees, and in five years has net investments of only $10 million. Even big spender sify.com has a staff of only 120 working on its portal.
If the buzz is to be believed, then thats precisely what Indiainfo has done. Burnt up just too much money, too soon, in an effort to play catch-up with biggies like rediff and sify. And what has that led to? An exodus of staff and a curtailing of plans. These are the only symptoms that seem apparent at the moment. But then, the dotcom business is anyway a high turnover business. And fast moving too. Business plans change by the nanosecond.
Till Outlook went to press, Indiainfo had not responded to its e-mailed queries. Given its high burn rate, Indiainfos health hinges on its ability to raise further cash. The company was to go in for its adr issue earlier this year, but had to delay it courtesy the slump in the nasdaq and the cold shoulder it is currently giving Net stocks. The other option? Further VC funding. Koneru has been quoted in the media saying that hes managed $10 million from a VC. If thats the case, Indiainfos lifeline just got longer.
But remember, the Net is a winner-takes-all business. You are either in the top two or three. Or you shut shop. The first dotcom crashes have already happened in the US and Europe. And India is at best considered just six months behind in the Internet life cycle. Deny it as he might, everyones eyes are on Indiainfo.