One97 Communications To Close $25 Million In Funding
Mobile Value Added Services company One97 Communications is in the process of raising $25 million in Series B funding, the company has confirmed to contentSutra. Vijay Shekhar Sharma, Founder and MD of One97 Communications said that the company will close the funding shortly, and has signed term sheets; existing investors are willing to put in more funds than the pro rata requirement. The company will use the funding for going global - China is among the markets they’re eying - and will also set aside money for acquisitions and incubation. This year One97 plans to roll out new services, broaden the existing product portfolio with investment in infrastructure, R&D and with inorganic growth.
The company is fairly bullish: Sharma told contentSutra that they’ve seen 6 times growth in month-on-month revenues over the last fiscal. One97 Communications claims to be the largest voice platform in the country handling a billion calls, half a billion SMS and WAP, and 140 million unique users on their platform. One97 had raised a Series A funding of around $10 million from SAIF Partners and Silicon Valley Bank. Sharma had founded One97 in 2000. Other significant players in the VAS space are OnMobile Global (a public listed entity) Bharti Telesoft (part of the Bharti Airtel group), Cellebrum (part of the Spice Mobile group) and IMI Mobile.
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Comments (12)
May 5, 2008 7:30 AM
Good Move for One97. any idea about the valuation ??
May 5, 2008 7:35 AM
will have updates on how the company is doing and their plans by tomorrow
May 5, 2008 7:50 AM
One97?? Never heard of it. Who are these guys anyway?
May 5, 2008 8:05 AM
As someone with years of experience in the VAS industry, I can honestly say that One97’s business model does not seem to be sustainable. There is no way these guys are going to be able to leverage the funding into anything positive.
May 5, 2008 9:02 AM
This is interesting. Onmobile with lot of cash and now One97 raising $25M.
Is not getting over funded ? Any
Ramesh, what are your thoughts on business model.
May 5, 2008 9:48 AM
@ VAS GUY : I told you so… :)
@Ramesh : they are primarily into voice based services and that has a big market . second point is that they are the only VAS operator in India who have got their *own server* at operator’s place which mean they have deep lobby at operator
its a enviable position to be in VAS .
now the $25 Million Question is ; Why did they raised funding ? Ans : Because they can ..Indian market is not bursting with good startup so VC/PE guys need to invest their funds and One97 is a Good Value proposition . Not Yahoo/Google of world but not ibibo /webaroo either
what will they do with the money ??
thats a good problem to have . :) What say VAS Guy ??
May 5, 2008 2:54 PM
@ Long Time Listner Repeat Caller: Most VAS companies in India put their own servers (dabba in VAS lingo) in the operators place. One 97 is only one of them. Guess you need to get your VAS industry fundas right.
@ Ramesh: You are right. Their model is not sustainable from a VAS industry perspex. But yes, from a promoters PoV it is. That is making max money from VCs. This holds true for most Indian VAS companies.
First of all Indian telecom VAS market is heavily loaded in favour of Operators and Content providers. Gross margins for a typical VAS player is in the range of 10% to 20%. And in some cases even negative.
There were/are 76+ VAS companies in India in 2007, of which 50% will be closing shops or will have closed shops by now. The rest are busy showing up profits at least in the books so that they can go for an IPO or boost their valuation to fool some dumb VCs/PE funds . Other pre IPO/Valuation strategies include hire high profile guys(esp from IIMs or US BSchools paying astronomical sums of money and ESOPs), go for some ‘Vapourware’ applicaton launch with ‘patents pending’ or do an aggressive PR (like One 97).
There are lot of VCs who have put in their moolah in real bad eggs such as Indian VAS companies. They are stuck in the muck there with less chance of getting out now. Some ways out are hope for an IPO, get a higher valuation and get out, get some more VCs to put in money and save their ass.
May 5, 2008 11:41 PM
@Seethihaji : i read it here at CS Only (http://tinyurl.com/3bafyc). i am not from VAS Industry i am more of an internet guy but i think my funda are clear :)
May 5, 2008 11:45 PM
and all those who are worrying about Sustainability of One97’s Biz model can relax ..look at TellMe Corp ,USA .
if One97 gets that much valuation on exit this will be a Hall Of Fame deal for the VCs involved.
May 6, 2008 2:03 AM
Dear friends, do some deep business study in Mobile VAS. if you guys searching for sustainable business models in mobile vas, do let me know. the real game is not started yet.
Well, One97’s major revenues come from autodialers, voice portal, content and backend systems. there is a rapid change in voice based technologies. dont know why operator’s still pay higher, charge higher for that??? this may effect One97’s voice revenue in near future.
May 6, 2008 2:12 AM
I think there will be many twist and turns on way. Having money and great team could be a good preparation for them.
My view on business model which i wrote earlier (see http://tinyurl.com/5tnsed ) :
Let’s look a parallel here. Device makers in different market operate one of these two methods.
Some places (typically USA) operator will sell your device and some other (like India) you have to sell your own device , operator is only selling connection.
You could be probably right here. In long term both approach will find equilibrium somewhere near middle. I will say “the winner” will be the one who knows this game from both sides and plays according to market space. It definitely is not a one way street. (And rest of them won’t become absolute looser either, Haier sells mostly/only by bundling with operators and still makes “some money”.)
Jun 12, 2009 3:48 AM
Can any body tell me about this one97 . is it a reliable organizattion ??/