Post on 13-May-2015
description
Emerging Trends, Areas & Opportunities in the Emerging Trends, Areas & Opportunities in the Online WorldOnline World
May, 2009May, 2009
© Copyright 2008 Canaan Partners 2
2
Increasing Internet Penetration
• Internet reach is expanding rapidly
• Internet penetration goes beyond top 8 metros
* In millions
Source:: IAMAI
Active Users CAGR =
48%
Internet and PC Penetration
Geographical Diversification
55%38%
20%
21%
6%
12%
19%29%
0%
20%
40%
60%
80%
100%
2004 2007
Top 8 Metros Other Metros
5-10 Lakh Population Cities 2-5 Lakh Population Cities
0
10
20
30
40
50
60
70
2000 2002 2004 2006 2007
PC Users Ever User Active Users
© Copyright 2008 Canaan Partners 3
3
5
25
55
70
70
110
0 20 40 60 80 100 120
Real Estate
Gaming
Matrimony
Travel
Advertising
Search
Jobs
3
Encouraging Trends and Indicators
• People are spending more time on internet and across diverse applications
• Cheaper and faster access to internet will further proliferate it
• Growing comfort with internet transactions helping eCommerce
* Net Revenues in $ millions
Source:: IAMAI, Canaan Estimates
Successful Internet Businesses
Internet Usage
64%51%
10%
11%
20%
20%
5%13%
5%1%
0%
20%
40%
60%
80%
100%
2001 2007
Email Chat Information Entertainment E-Commerce
© Copyright 2008 Canaan Partners 4
Low Cost Internet Start Ups
» 1-2 MN unique visitors
» Free SEO traffic
» Founder’s skill set
» Initial traction at low cost help the start ups achieve funding Source: Alexa
© Copyright 2008 Canaan Partners 5
5
Sectors US Players Indian PlayersSearch/Portal Yahoo , Google Yahoo, Google, SifyEcommerce eBay, Shopping.com fabmall, FlipkartTravel Expedia , Travelocity MakemyTrip, Yatra, TravelGuruOnline Trusted Clearinghouse Verisign VerisignOnline Financial Services Bankrate , checkfree ?Advertising ValueClick, DoubleClick MediaturfISP Earthlink, United Online VSNL, BhartiEducation Leapforg, eCollege.com ?Web 2.0 YouTube, Metacafe, Facebook Facebook, Orkut, YouTube
Opportunities – Concept Arbitrage
• Interesting Areas like Ecommerce , Advertising , Education , Financial Services
• Significant localization is needed even in concept arbitrage
• Quality of execution is the key success factor
Internet Sectors by Market Cap in US
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Opportunities – What’s different about India?
• Mobile penetration is far higher than internet penetration
• Internet growth coincides with the consumption growth
• Demographic curve is tilted towards young population
• Cheap labor costs
• Deregulation
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Opportunities – Specific Examples
Financial Services
• Deregulation• Increase in disposable income and savings• Product and Pricing fragmentation
Education
• Young and career oriented population
• Strong long term employment market
eCommerce
• Increase in disposable income
• Increasing comfort with online transaction
Social Media
• Broadband penetration• Cheaper internet access• Distinct entertainment categories for Indians• Growth of mobile internet
© Copyright 2008 Canaan Partners 8
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Investment Climate
Source:: Business Today (June 2007)
Internet Investments
• Availability of capital likely to shrink over 2009
• Investors backing experienced entrepreneurs and valid business models
Deals SectorsBharatmatrimony ClassifiedsYatra TravelMakeMyTrip TravelSulekha.com ClassifiedsTravelGuru TravelTutorVista EducationSeventymm Video RentalGuruji Local SearchWeb 18 eCommerceCleartrip TravelMapMyIndia InformationApnaLoan Financial Services
Examples of Deals Done
2
2220
28
13
85
180
137
0
5
10
15
20
25
30
2005 2006 2007 2008
# o
f D
eals
0
50
100
150
200
$MN
Number of Deals Amount
© Copyright 2008 Canaan Partners 9
Canaan Investment Focus
» Consumer Internet› Internet usage and transactions growing at 40%+
annually
» Mobile› Existing 400m wireless subs growing at 10M a month
» Enterprise & Managed Services› Increasing enterprise automation in emerging markets
› Continuing labor cost arbitrage
Thank You