Guest post: Why did Lightspeed take AskLaila bet?

October 6, 2007
By sinha

[Subodh is a veteran entrepreneur and is CEO/Founder of YouMagix, a startup working on user-generated listing service. A passionate entrepreneur, Subodh will discuss VC/funding related aspect of starting up in India.]

Why did Lightspeed take AskLaila bet?

Ever since I heard the news of LightSpeed led $10 million investment in AskLaila, I have been scratching my head and searching for answers. For starters, AskLaila (review) is a purely India focused local yellowpage website with an added layer of basic value added services such as user reviews.
How much ever I may wish to laugh away this investment as one of the 90% VC investments that go down the drain, the reality is that nobody, especially hardened breed known as venture capitalist, invests $10million without a clear glimpse of potential high payoff.

Here is a clue, when we look at Indian Market there are two clear realities that strike an aware mind

  1. One one hand, we see a growing economy, that clearly has a potential to be one of the largest in the world in next couple of decades. With a vibrant economy comes phenomenal consumption demand that can raise many billion dollar companies in basic customer facing services alone.
  2. On the other hand, we have an utterly underdeveloped consumer services infrastructure. A casual visitor from western world can clearly appreciate that India lacks basic services that everybody in the West takes for granted.

Now you start to see some method in the investment madness across sectors in India. We are talking about basic consumer facing infrastructure that can deliver reliable services day in and day out, which does not exist in India today.
When it comes to basic infrastructure, It may take a lot of investment & efforts to build something that works, but successful players will have the last laugh.

Three cheers for hundreds of AskLailas, Lightspeed Ventures, entrepreneurs and investors who have decided to take a plunge.

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               About the author - Ashish Sinha is a Startup Mentor/Product Strategy Coach, and the founder/chief editor of pluGGd.in. He has launched/managed couple of products (consumer as well as enterprise) in US and India, and now consults with startups/small businesses on their product/media strategy. He can be reached at: ashish (at) pluGGd.in [+91 98452 06443]
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    Not much on my mind lately. Basically not much notable happening to speak of. Eh. I've just been letting everything happen without me. I can't be bothered with anything lately, but I don't care.,
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  • "On the other hand, we have an utterly underdeveloped consumer services infrastructure. A casual visitor from western world can clearly appreciate that India lacks basic services that everybody in the West takes for granted."

    this point may explain a huge IPO for Reliance Energy , to certain extent it may also explain NEA's Investment in Novatium ,as Power and PC are infrastructure play . now think of Local Search on these line and i can't go very far . Reason ?

    #1 no doubt that high Mobile penetration and comfortability with SMS is a supporting factor for Mobile based Local search but that advantage has been pretty much levled out as most of the palyer in this space have exploited it . OnYoMo , JustDial,Guruji , Google etc . so you can't raise $10 Mil based on this fact alone .

    #2 Majority of Mobile user are at bottom of Pyramid . that leave us with Youth and Urban population

    #3 their strategy of following User Generated Content [UGC] for listing Database put another constraint since its a little hard to create and upload content using mobile , mobile is good for consumption of content , so UGC require a big time evangelism from eary adopters [with time , connectivity and knowlege , may work in bangalore or Gurgaon but in Bhopal or Jaipur .. i doubt ]

    #4 since its an open platform so it will always runs a risk of syndicated content masquerading as UGC. in fact initial content in all probability will be syndicated content uploaded by potential beneficiaries .

    so taking all this factor in account $10 Million seems a risky proposition . why did these guys put that much money ... well we can only speculate .

    To began with we need to admit that
    A) this is a deadly combo of seasoned founder + Seasoned Investor B) All VC funds are starving for good deals .

    so they surely have a plan about how this money will be spent .
    It can be used for acquisition of someone like onyomo.com , or making the search voice enable like Tellme [ an indian startup buzzworks might fit there bill ] , making it multilingual , expanding into Location based services like loopt.com

    these are several possible course of action which Four Interactive might take . i am sure it will be interesting to watch . my only apprehension is that they don't resort to Paying user for using their site , which seems to be trend these days . that will be painfull

    I wish good luck to these guys .
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