The Hindu Business Line : Canaan plans 12 deals in telecom space

Chennai, Aug. 25 Canaan Partners, a multi-billion dollar global venture capital firm, plans to close 10-12 deals in India in the next three years as part of its latest $650 million fund – Canaan VIII. Nearly 20 per cent of this amount is to be invested in early stage Indian companies in telecom and allied services sectors, according to its Executive Director, Mr Harish Gandhi.

The first investment in India under Canaan VIII was $6 million made in July in UnitedLex, a Gurgaon-based legal consulting, analytics and outsourcing solutions’ company.

Canaan’s investment mostly ranges between $2 million and $7 million. It has also invested less than a $1 million and above $10 million. A follow-up investment ranges between $15 million and $20 million. “Every month we see 60-70 plans coming to us from India. Valuations are getting high and there is pressure in our area of operations as well,” he told Business Line.

Mr Gandhi, who was earlier with Bharti Airtel and Nokia, joined Canaan in January to focus on investments in the telecom/ mobile VAS space. “There is a lot of excitement in mobile VAS [anything other than voice and SMS] space. It gives us a great opportunity to invest in companies with good technology platform and content,” he said.

Mobile VAS

A number of mobile VAS players that got funding two years ago are coming up for second round of funding. There are a few established players in this sector such as Onmobile, BhartiTelesoft and IMI Mobile.

But, there are around 100 small companies that have technology and content, and a number of them are looking for funding, he said.

Mobile VAS has been slow to start in India due to bandwidth limitation. The focus till now has been on voice and less on data like accessing market information. However, with the increased use of mobile to access the Internet and introduction of 3G services in a few months, this trend will change and data traffic will increase.

The June 2008 report of the Telecom Regulatory Authority of India said that at the end of March 2008, India had 14.9 million PC-Internet subscribers. At the same time, the mobile Internet subscribers were over five times more at 66.09 million – a trend that shows that mobile has become the preferred device for people to access the Internet.