However, unlike many start-ups that struggle to take-off in the initial days of their journey, TravelTriangle, an online travel services company launched by Sankalp Agrawal and Sanchit Garg is clocking revenues of Rs 1.2 crore in just seven months.

Both first generation entrepreneurs who quit plush postings at Adobe and Yahoo in the middle of 2010, Agrawal and Garg took nearly a year to fine-tune their concept before launching their venture last year.

They started out in a garage in Noida seven months ago with a business model that links customers with travel agents who offer the best deals. These are value-added deals customised to specific needs of the traveller.

Each request by a customer goes to at least three travel agents with operations in the area that is the client’s destination. The agents compete among themselves to provide the best experience and price to the vacationer.

“There is no perfect time to start your own business. If you have a great idea, you should just take the plunge,” said Agrawal, 26, who earned his degree in computer science from IIT Kharagpur in 2008. Co-founder Garg graduated from IIT Bombay.

Soon they roped in a third friend from school, Prabhat Gupta, who graduated from IIT Guwahati the same year, as a core development member. The idea came about on a trip to Leh some two years ago when Agrawal found that two other friends booked similar packages as theirs but from different travel agents. One of them booked with the local travel agent in Leh and got the best deal, whereas his group shelled out much more for the same package.

Their pride was hurt, but the friends soon realised it also offered a business opportunity to set up a platform to book customised travel packages at competitive prices.

“Traveltriangle is not a travel agency”, says Agrawal. The services are free for travellers who also get quotes from multiple agents.The start-up now has tie-ups with 150 travel agents in India and overseas, including Malaysia, Thailand, Cambodia and Egypt.

“For us there couldn’t have been a better time to take control of our lives as we are young and have no hang-ups or pressures. We haven’t even started paying our insurance EMIs,” said Agrawal. The only hitch was convincing parents about their own belief. “They took time as they thought we were too young to start up but soon understood our intent and supported us.”

“We are seeing entrepreneurs emerge with a more diverse set of backgrounds – professionals, undergrad students, people who are not from traditional business families,” said Mohit Bhatnagar, managing director at Sequoia Capital. Agrawal is in talks with multiple venture capital and angel firms to raise first round of funding, evaluating offers from investors in the US and India.

“I am sure funding will not be a cakewalk for us, but that does not stop us from trying our ideas,” he said. Agrawal has ensured that he works with a lean team (they are just a 12-member operation) and is very picky with spending and new hires after a “lot of wrong hiring and firing.” The 12-person team already includes senior managers from Spicejet, with “attractive and innovative compensation plans” devised to recruit and keep the best employees.

For decades, Hollywood has been portraying machines that humans can converse with, delegate tasks to, and command. Remember the HAL 9000, KITT the car, COMPUTER from Star Trek, or even the brilliantly conceived and visualized Apple “Knowledge Navigator” from over 20 years ago? The day is dawning.

Hello Siri.

The response to Siri has exceeded even my own imagination … and I have a rather vast imagination. I don’t believe it’s an accident that Siri has captivated as it has. It’s fun, it works well for most, and makes complex interactions simple. And while I don’t know what Apple plans to do with Siri going forward, you can bet that it’s going to get better and do more. I’ll be the first one in line for the iPhone 5, 6, and 7 just to get the latest Siri. (Better yet, I’ll just ask Siri to send me the latest model as they become available.)

But these are the early days. I believe that when our kids are our age, they will ask us in amazement how we got along without having a virtual assistant to delegate the menial tasks of our life to, in the same way we can barely remember a world without the internet, Googling, and the laptop. As the state of the art progresses, you will see domain-specific competitors emerge across all kinds of verticals where conversational interactions make complex interactions simpler. Think banking, where a European bank is already aggressively investing in automated virtual tellers, e-commerce where evidence hints at Amazon starting to walk down the path of speech-based commerce. Don’t forget virtual travel agents, virtual customer service agents like VirtuOz, and ultimately Virtual medical assistants that will embody Vinod Khosla’s vision of Dr. Alogorithm. This world is coming, and coming soon. But why?

Because the AI Virtual Assistant is the interaction substrate of the digital future.

This is because it elegantly encapsulates the myriad of elements we want in applications and internet services such as personalization, simple interaction, contextual awareness, and integrated actions … all wrapped up in one simple conversation. For example, if we use a conversation snippet from an imaginary virtual travel assistant, you see how several aspects of services are joined:

“Dag, your flight is 2 hours, 30 minutes delayed. Can I find you  a hotel room in the area? Or can I check other flights to the same destination?”

To do this seemingly simple task integrates an understanding of time, location, context, personalization, as well as integrating flight status, hotel booking and available flight services. If we continue in this domain we could imagine this follow-on response to the travel snippet:

“I have found a seat to Seattle on Friday, October 3 departing at 8:30am. I have requested an aisle seat and a frequent flyer upgrade as usual.“

Again, this snippet shows a knowledge of travel destination, seating preferences, frequent flyer features, and flight booking service in one elegant interaction. Doing exactly the same thing in today’s smartphone paradigm would entail some serious form filling, at least three or four different apps and far more time and clicks.

Imagine the magic that happens when your virtual assistant knows your preferences across many areas, your friends, your credit card, your address, music tastes, accounts, and lots of other information about you and dynamically applies these across whatever you need done across many available services and applications.

-“Send a check to PG&E for $89.47”

-“Let me know when Sting is playing nearby”

-“Buy the Steve Jobs biography and send it to my brother”

-“Set up an afternoon doctor’s appointment for late next week ”

-and on & on & on

It will be game over. You will not go back to yesterday’s way of doing things. When a platform emerges that integrates the web with conversation and understanding, the user paradigm will change forever and a kinder, gentler version of the HAL 9000 will emerge as the norm. One interesting question that remains unclear is whether the world will have one gigantic AI overseeing all of your needs, weaving together the various vertical domains into a single AI mosaic or whether we will have many assistants at our beck and call. As John Battelle elegantly put it, “the future of search isn’t search, it’s a conversation with someone we trust.” And while I’m not sure he was thinking of this specific example, it’s a wonderful way to sum up the coming age of AI Virtual Assistants.

With the world’s largest online retailer, Amazon, preparing for entry into India and the market separating the strong from the weak, India’s best-known and stronger online retailers are taking the lead in the consolidation race.

After Flipkart announced last week that it is acquiring consumer electronic retailer Letsbuy, its biggest rival Snapdeal is in advanced talks to acquire a company that will give it a bigger presence beyond its strength in the group-buying market, industry executives familiar with discussions told ET.

“In 12-18 months, we will see the leaders emerge. There will be a couple of multi-product generalists who will be successful and a winner in each single-product category,” said Prashanth Prakash, a partner at venture capital fund Accel Partners, whose investments include Flipkart and Letsbuy.

For the approximately 10 million Indian e-commerce consumers, there has been a growing choice of online stores that sell everything from books to travel experiences. But behind the scenes, e-commerce start-ups-around 40 active ones at last count-are battling price wars and high customer acquisition costs.

Leaders in the e-commerce space-ones that have raised money, have large teams and are aggressively pursuing growth-are spending $1-2 million (Rs 5-10 crore) a month, including on marketing, overheads and salaries.

At this rate of burn, smaller firms with scant capital are unable to cope and looking for buyers. Among them are Exclusively.in, a fashion and lifestyle portal focused on NRIs, and babycare portals a2zbaby and BabyOye, according to industry executives privy to the discussions. But the companies and their investors deny that a sale is in the offing.

CAPITAL TO PLAY DIFFERENTIATOR
Harish Bahl, founder and chairman of the Smile Group, which owns such e-commerce portals like Fashionandyou, FreeCultr, Dealsandyou and Bestylish, said companies that did not raise capital, or got some funding but do not have a well thought-out business model, and companies in very narrow niches are looking to be acquired. “This is a logical progression. Consolidation had to happen.”

Consolidation is also being hastened by the inability of smaller firms to raise money at the valuation levels they commanded even last year. Yebhi, a multi-product retailer that raised Rs 40 crore (approximately $8 million) from venture capital firms Catamaran and Nexus Venture Partners in July 2011, was in talks for a fund infusion earlier this year, according to a private equity investor.

However, the venture firms valued the company at around $50 million, less than half the valuation the firm received in the previous round, according to the same private equity investor.

Yebhi declined to divulge valuation details and did not confirm that it is planning to raise more money. Manmohan Agarwal, the co-founder and CEO, said in an email that the company was adequately capitalised to meet its growth plans.

“It is a fundamentally robust industry. But there are too many players fighting for the same pie,” said Deepak Srinath, director, Viedea Capital Advisors, an advisory firm that helps start-ups and small firms raise funds.

Capital, in fact, will be the key differentiator. Without funding, an e-commerce company will find it difficult to survive, observed Raja Lahiri of Grant Thornton.

Large brick-and-mortar retailers leveraging their retail expertise online, such as Future Group and Shoppers Stop, and older, established multi-product e-commerce sites like Indiatimes.com, have the advantage of size and capital. In a capital-intensive segment like e-commerce, these companies have the staying power and marketing muscle.

Indiatimes Shopping, a Times group company that publishes The Economic Times, for example, has seen its revenues grow 100% from last year without raising any outside capital, the company said.

“Larger players are well-positioned and have the capital. But smaller players have the agility and speed, which are important in this sector. If the larger players keep this in mind, they will do well,” Lahiri said.

Even Flipkart’s valuation has been slipping, with an investment banker estimating that the company will be worth only around $550 million. Even its acquisition of Letsbuy, believed to be at the behest of the common investors, Tiger Global and Accel Partners, has done little to improve its valuation.

The consensus among industry analysts is that venture capital investors will show more caution this year while continuing to invest. Capital will start concentrating in the hands of category leaders and many ventures will not be able to raise follow-on rounds of funding, said Aashish Bhinde, executive director at Avendus Capital. “This year capital will go to those ventures that can demonstrate they can reach profitability.”

Social media continues to move forward toward business integration, a trend that I identified last year. In a joint study from Booz Allen and social platform developer Buddy Media, 57 percent of businesses surveyed plan to increase social media spending, while 38 percent of CEO’s label social as a high priority.

I was also partially accurate in predicting that Google would “strike back” in 2011. They did, with Google Plus, a formidable initiative that acts as Google’s “social layer” to the Web. Part social network and part social search, Google Plus has industry observers scratching their heads, wondering if Facebook will be given a run for their money or if the service evolves into something complimentary in a highly social Web.

I had one big swing-and-miss on Facebook’s intrusion in the location-based services war. While Facebook still supports location tracking in a number of ways, it has not put Foursquare out of business. Foursquare still enjoys a niche audience of highly active participants who enjoy telling the world where they are and post pictures to prove it. It is however worth noting that Facebook recently acquired location based network Gowalla, so continue to watch this space.

So what can we expect in 2012 in a world that seems to grow ever connected by the hour? Here are six predictions to ponder, in no particular order:

Convergence Emergence. For a glimpse into how social will further integrate with “real life,” we can look at what Coca Cola experimented with all the way back in 2010. Coke created an amusement park where participants could “swipe” their RFID-equipped wristbands at kiosks, which posted to their Facebook account what they were doing and where. Also, as part of a marketing campaign, Domino’s Pizza posted feedback — unfiltered feedback — on a large billboard in Times Square, bringing together real opinions from real people pulled from a digital source and displayed in the real world. These types of “trans-media” experiences are likely to define “social” in the year to come.

The Cult of Influence. In much the same way that Google has defined a system that rewards those who produce findable content, there is a race on to develop a system that will reward those who wield the most social influence. One particular player has emerged, Klout, determined to establish their platform as the authority of digital influence. Klout’s attempt to convert digital influence into business value underscores a much bigger movement which we’ll continue to see play out in the next year. To some degree everyone now has some digital influence (not just celebrities, academics, policy makers or those who sway public opinion). But for the next year, the cult of influence becomes less about consumer plays like Klout and more about the tools and techniques professionals use to “score” digital influence and actually harness, scale and measure the results of it.

Gamification Nation. No we’re not taking about video games. Rather, game-like qualities are emerging within a number of social apps in your browser or mobile device. From levels, to leaderboards, to badges or points, rewards for participation abound. It’s likely that the trend will have to evolve given how competition for our time and attention this gaming creates. Primarily, gamification has been used in consumer settings, but look for it in other areas from HR, to government, healthcare and even business management. Perhaps negotiating your next raise will be tied to your position on the company’s digital leaderboard.

Social Sharing. Ideas, opinions, media, status updates are all part of what makes social media a powerful and often disruptive force. The media industry was one of the first to understand this, adding sharing options to content, which led to more page views and better status in search results. What comes next in social sharing is more closely aligned with e-commerce or web transactions. For example, Sears allows a user to share a product or review with their networks directly from the site. Sharing that vacation you just booked, or recommending a product, or service from any site to a social network is where sharing goes next. We probably don’t know what we are willing to share until we see the option to do it.

Social Television. For many of us, watching television is already a social act, whether it’s talking to the person next to you, or texting, tweeting, and calling friends about what you’re watching. But television is about to become a social experience in a bigger and broader sense. The X Factor now allows voting via Twitter and highlights other social promotions, which encourages viewers to tap social networks while they watch. Another way media consumption is becoming social comes from a network called Get Glue which acts as something of a Foursquare for media. Participants can “check-in” to their favorite shows (or other forms of media) and collect stickers to tell the world what programs they love. Watch for more of this this year as ratings rise for socially integrated shows.

The Micro Economy. Lastly as we roll into 2012, watch for a more social approach to solving business problems through a sort of micro-economy. Kickstarter gives anyone with a project, the opportunity to get that initiative funded by those who choose to (and patrons receive something in return). A crowdsourcing platform for would be inventors called Quirky lets the best product ideas rise to the top and then helps them get produced and sold while the “inventor” takes a cut. Air BnB turns homes into hotels and travelers into guests, providing both parties with an opportunity to make and save money. These examples may point to a new future reality where economic value is directly negotiated and exchanged between individuals over institutions.

These are a few emerging trends which come to mind. As with anything, looking to the past often gives us clues for what may come in the future. Please weigh in with your thoughts: where do you see “social” going in 2012?

As the launch date of Apple’s third-generation tablet — popularly being called iPad 3 — nears, internet rumour mill is buzzing overtime. Expected to debut in the first week of March, the tablet is keeping Web media as well as analysts busy with speculations about its design and specs.

While some reports hint at iPad 3 getting a higher resolution display, others hint at the possibility of Apple launching two versions of iPad 3.

Here’s taking you through the iPad 3 rumour mill.

Screen size

While iPad 2 retains the same screen size as the first-gen iPad, several reports claim that Apple may release two versions of iPad 3.

Speculations suggest that Apple may also unveil an 8-inch version of the iPad along with the current 9.7-inch model.

Retina display

Over the past few months, speculations doing rounds suggest that Apple may add Retina display — a high-resolution screen found in iPhone 4– in the next version of iPad.

Several reports claim that Apple’s upcoming iPad 3 will feature an improved display to support quad extended graphics (QXGA), a display resolution of 2048 X 1536 pixels with a 4:3 aspect ratio to provide full high definition (HD) viewing experience.

The current iPad 2 retains first-gen iPad’s screen size with 9.7-inch LED-backlit display.

Processor

There is high specualtion on if Apple will pack the company’s first quad-core processor in iPad 3. As according to several analysts, there is strong possibility of this happening.

Several reports suggests that the upcoming device will run Apple’s new A6 quadcore processor, expected to be faster than the A5 CPU which currently powers iPad 2 and iPhone 4S.

Also, several reports suggest that Apple will finally up the RAM count above the current 512MB. Increasing the RAM will mean more multitasking and stable applications use.

Operating System

According to Web rumour mill, iPad 3 will ship with iOS 5.1 update. The new update is expected to be released for iPhone and iPod

NFC

There are strong rumours of Apple including the NFC (Near Field Communication) support in the upcoming version of iPad.

NFC is a technology that allows mobile users to use their handsets as digital wallets. The technology enables users to pay for retail goods or services such as transit rides by waving their handsets across a reader.

Camera

The current iPad 2 uses a VGA-capable camera on the front and a HD camera (720p) up to 30 frames per second in the rear.

However, a higher megapixel count tops prospective iPad buyers wishlist. Going by the speculations, iPad 3 might offer an 8 megapixel rear camera. There is also a possibility of flash support in iPad 3.

According to several Web reports, next iPad will feature a high-definition front-facing camera for FaceTime HD video chat.

Bigger battery

Going by the rumors, one can expect a bigger battery in iPad 3.

This could be likely to make for larger screen resolution 2048 X 1536 pixels or possibly because of expected inclusion of 4G/LTE radios.

SD Card slot

One of the sorely missed feature in iPad 2, SD card slot, is likely to find its way in iPad 3. This means iPad users will be able to transfer files more conveniently than ever.

Siri

It is expected that iOS 5.1 will bring Siri to iPad 3. Siri is Apple’s voice-controlled personal assistant software that made its debut last year with the launch of iPhone 4S.

Apple’s speech-controlled assistant, which can do everything from taking dictation for text messages and entering calendar appointments to answering general knowledge questions, is regarded as a key factor in iPhone 4S’ success.

So the countdown has begun to see what exactly will happen on December 21, 2012. 

As per many predictions of the Mayans, Aztecs and Nostradamus, the world will end on this very day.

The movie ‘2012’, with all its over-the-top graphics, ended up rubbing this fear in to people all the more. Since we all are well into the year now, is the clock really ticking? Are there just a few days left before the elements of nature will devour us all?

Metrolife speaks to a few Bangaloreans to find out if they believe that December 21, 2012 is the doomsday?

Radhika, a second year student of Jyoti Nivas College, feels everything depends on one’s fate. “Human psychology is difficult to understand. When a movie like ‘2012’ comes, half the people’s minds are swayed. I guess the film created an awareness and curiosity but no one can tell what will happen till the day actually comes,” she says. “Whether you believe in it or not, why live in fear of it? Just live your life till your day ends,” she quips.

Nirmala Gowda, a sports teacher in Bishop Cotton Women’s Christian College, believes a lot in astrology. “I follow all the television programmes on astrology,” she informs. “I feel there may be a tsunami due to global warming at the end of the year as we are also troubling nature in many ways. After all, who expected Japan to be struck with a tsunami? But I don’t believe that a disaster of that magnitude will occur,” she asks.
Some feel the change may be something positive.

“Some technological revolution may happen, something the world hasn’t seen before,” says Deepak, a second year BBM student of St Joseph’s College of Commerce. “But the world being destroyed is surely a hoax. It’s not something that will materialise. Especially the way it’s shown in ‘2012’ with India being washed away and a couple of Americans surviving.”

A new age interpretation of this transition states that the inhabitants of Earth may undergo a positive physical or spiritual transformation. While some say the earth may collide with a black hole or an asteroid. Naveen Nanjudappa, the vice president of Bangalore Astronomical Society, assures that nothing of such sort will happen.

“When we have our programmes, a lot of people ask us about 2012. But we always say that it’s highly unlikely that a disaster of that impact may happen unless the human race does something really drastic,” he says.

“The events that occur in the movie ‘2012’ can happen only once a meteor hits the earth or a massive volcano erupts. But panicking without knowing what’s going to happen is like saying ‘I am not going out on the road as I may meet with an accident’,” he notes.

Justifying his views further, he says, “With bigger telescopes being invented, even the smallest of asteroids, meteors and comets can be detected. If something of that sort was going to take place, the scientists would have spotted it by now. There are even ways to stop it or deviate its path,” he adds. Speaking of black holes, he informs, “A black hole is nothing but a dead star and at present, there is no black around the earth. So on the whole, the people don’t have to worry about it.”

Despite all the theories, many are still anxiously waiting for the D-day to see what happens. But on a lighter note, the world may just not perish! After all, as a joke doing the rounds states — Rajnikanth just bought a laptop with three years warranty!

My view of this is the nature of our entire education system is uni-dimensional (in line with Lord Macaulay’s perceived observations) and it in a lot of ways inhibits our attempts at being out of the box creative thinkers. The erstwhile English education system, that we rigorously have adopted, is a system that is made ideally for the bureaucrats and not the creative thinker. It is tailor made for people who report to a certain higher authority but not someone who can create a world for oneself. This underlying nature of the system is reflected in our day to day education system of today’s society.

In today’s education system of India the main issue, leaving corruption aside, is that the nature of it is very memory oriented. It is stuffed up with text, text and more text without any context to it. When we study history, we don’t understand the context behind it, we just mug it up for the sake of clearing the exam in the 7^th or 8^th standard. When we are studying our famed science subjects, especially in our State Boards, the process is to memorize our way to glory in the run up to the board exams in 10^th and 12^th. You get verbatim questions in the exams from the textbooks which makes a mockery out of the intelligence of the creative Indian. While memory is indeed a value addition in competing in the competitive global environment, too much of it blocks the creative urge within our system. We end up nodding our heads to whatever that is preached in the texts irrespective of questioning why and what is it all about. On the other hand, the American system instills the ability to explore the unknown at a very early stage. The instilling of this ability to question at an early age sets them apart especially when they start their Core courses. In addition to this, they have this ability to mix the aesthetics with the core courses to be more balanced unlike our system.

Our system is so rigid that it pushes us into one narrow path of education with no way back once one is inside it. One doesn’t have the leeway to actually move away from what one is ordained to by the system. On the contrary, the American model offers you flexibility in courses at the academic level. You can pick up a course in Painting while doing a major in Mechanical Engineering. This ability to compliment the engineering or core science with aesthetics is an asset whose importance was exemplified by people like Steve Jobs. In our system, we are neither provided the opportunity to understand the other facets nor are we provided the opportunity to integrate these two aspects to form a holistic approach to education as a whole. This reduces our diversity and ensures we don’t have an understanding of the multiple disciplines which is crucial to be a visionary in today’s world. While I talk about this, the counter argument is the presence of the world class IIT’s. I agree they are world class but whether they are innovation driven is a different question.

The IIT’s are indeed world class, the students produced are indeed world class and the professors have a stature that is very well reputed. While I have high regard for them, I also find it amusing to know why none of them are world beaters at the innovative game. Note the word “innovation”. Innovation is inventing something not having a multimillion dollar service company (which is more of discovering others innovation); there is a difference between creating a Windows platform (that changed the world) and running an outsourcing IT company. Innovation is producing a new concept and revolutionizing it in the magnitude of Bill Gates or a Steve Jobs. By and large most of the IITian’s are in prominent positions under some big boss (there are exceptions ofcourse) but don’t necessarily produce Nobel Prize winning innovations or even path breaking innovations that create impact. This might happen in the future but still the count in comparison with America is less. Despite the quality of the IIT’s, we find it hard because fundamentally the system is something that is catered towards memorizing and accepting what is fed, not questioning and challenging the norms of what knowledge is fed. I do know students who actually attempt that despite the system’s inadequacy but even if they do so, the system pulls them down without providing support to them.

Education should be about acquiring skills and application of skills. The focus should be on the skills set and not the knowledge jargon since the former is the key to adapt to various scenarios. Education across the world doesn’t perfectly give this but the American model seems to provide this better (atleast from the output of innovators). The Indian model or the erstwhile British model (the Indian model’s source) has its own set of advantages in terms of enhancing our mental storage potential but it is too rigid for todays world. In today’s world of innovation, the confluence of academic areas and the brashness to think out of the box is the need of the hour and the key to innovation

While we might have our Abdul Kalam’s and JRD Tata’s, for the potential of our massive nation, we have the capability to produce numerous Steve Job’s, just that our system as a whole needs to be redefined to focus on the area of exploration and not the path of nodding our heads to the factual science that is being preached

Till then, Where is our Steve Jobs, would still remain a question for all of us

 A few months ago, ‘The Soup Bowl’ could sense that it was time to take the plunge. The business had caught on, but there wasn’t anyone waiting in the wings to bankroll the country’s first soup chain. Funds came from an unlikely quarter.

A well-heeled investor, better known as HNI in the world of wealth management, was willing to write a cheque for 2 crore. The person, who had plans to park a slice of his personal investment in a start-up, liked Soup Bowl after visiting one of its outlets.

Soup Bowl had no qualms in offering the investor a significant minority interest: it was an opportunity for the firm to grow beyond Mumbai. While the story comes across as a typical breakthrough moment for a small business, it also speaks about the appetite of wealthy investors to part-own little-known start-ups.

The market for such deals is yet to reach a critical mass and transactions are often struck through an acquaintance or family broker who puts the word around. Occasionally, investment banking arms of brokerages tap HNI clients to sell a start-up idea.

But wealth managers and private bankers agree that more and more wealthy investors and families are approaching them for buying stakes in unlisted entities and start-ups. Some are drawn by the exotic element that a start-up can add to their portfolios. For most, it’s a new bet that they hope can cover the losses in their bag of stocks, mutual funds and fancy debentures.

“There is an increasing demand from sophisticated clients looking at opportunities, where they can directly invest in unlisted companies,” says Rajesh Saluja, managing director and chief executive officer, ASK Wealth Managers.

Deal sizes could be anywhere between 2 crore and 10 crore; terms and conditions vary from deal to deal; and the details are fine-tuned by the entrepreneur and the investor across the table.

A choppy market and growing number of millionaires will only fuel the demand for new investment windows such as start-ups. According to a December 2011 report by Karvy Private Wealth, total individual wealth in India is expected to nearly triple to 249 lakh crore by 2016 from the current 86.5 lakh crore.

INVESTING IN NICHE SECTORS

Putting in a few crores is no big deal for serious investors if the business model attracts them.

A few years ago, an HNI family from Delhi invested 4 crore in the Bengaluru-based retailer Inventus, which used the money to set up more stores and launch an e-commerce platform.

“There is demand from HNI family offices for such deals in sunrise sectors,” says Anshu Kapoor, who heads private wealth management in Edelweiss Capital. But even old economy companies do attract investors – just as an unlisted chemical company in western India, with a turnover of 25 crore, discovered two years ago when a Mumbai-based investor picked up 20% stake in it.

According to Mumbai-based wealth manager Richa Karpe, often there is a passion to invest in niche or high-growth segments such as sports, entertainment, renewable energy, a niche restaurant and so on. “HNI families believe start-ups are good long-term bets, where they can get multi-bagger returns. Many families in the West have made money backing such start-ups – something that is luring Indian HNIs,” she says.

Smart HNIs look for small firms with businesses that are scalable and sectors such as education, hospitality and e-commerce fascinate them.

Organisations with wealth management as well as investment banking divisions often play a role in helping clients execute such deals. “Many a time such deals are struck within the bank itself between two clients,” says Vishal Kapoor, the wealth management head at Standard Chartered Bank.

But such deals have their risks. Besides taking a long time to generate good returns, they have to navigate risks, fish for funds and battle nasty surprises from bigger players.

Typically, such investments are advised for a period of 5-7 years, and exits could be either by selling to a bigger PE fund or through stock exchange listing. Wealth managers, with no investment banking arm to back up, are reluctant to work on such deals.

Reasons: such deals aren’t easy to spot, wealth managers lack the skill to monitor the company after the deal is closed, and lastly, there is no standard fee that can be charged for such transactions. “Many times we merely introduce the company to our HNI client and leave the finer negotiations to them,” says Karan Bhagat, CEO at IIFL Private Wealth.

Traditionally, HNIs have taken indirect exposure to unlisted companies and start-ups by investing in private equity and venture capital funds. But in such investments, they have no direct control over the investee companies. When these funds fail to generate the expected return, investors look for greener pastures and direct stakes.

Since most investors either head a business or run closely-held enterprises, there is a natural tendency to pick start-ups where they have some knowledge of the product line and industry. “HNIs scout for investments in sectors they understand. At times, along with capital, they provide managerial inputs,” says AV Srikanth, executive director, Anand Rathi Wealth Managers.

Start-ups could draw many rich investors who have preferred sitting on cash in the past one year and are now looking for investments. “They can devote time and managerial inputs to start-ups and are keen to invest,” says Ashish Khetan, head of family office and advisory business at Kotak Wealth Management.