most of the funding is done to companies where the founders are friends of the managers of the funds

the VC fund managers have a unofficial agreement with the founders for a particular percentage of the funding as a commission to them.

that is the reason why only companies which got funding are again and again getting investments.

The fund managers are looking for a quick money and they are constantly looking for companies who have experienced in giving the cut they require.

From an invested amount only 30-35% of the amount reaches to the company for further growth plans and this is the reason why there is a huge requirement funds.

Say for eg, if you a funding of say $5 million, the fund managers cut may be around 10% which is around 500,000$ , isnt that a big money ??

This impacts the more promising and the adventurous start ups in the internet space as the VCs get extremely conservative and apprehensive as a consequence of the above.

mGinger is a diff model – they’d still rock because their ‘target grp’ has been fixed (students/housewives).

And lets remember one thing : Funding !=Success

And btw .. mginger is one more such company .. spamming all over the place … wait .. aren’t they funded by the same people? May be there is more than meets the eyes.

I would not be too surprised if they go offline now and open up some stores. 50 crores is a lot of money in India.

The buggers just don’t give up. So impressed was I by the girl trying to sell me the “Discounted package” (if I made the decision right then in 30 seconds) that I couldn’t resist asking her the reason behind her extraordinary persistence and motivation.

I’ve often picked up DVDs from my local store at the spur of the moment, on the way home from work – I just walked into the store, saw the DVDs that were on display and picked even a mediocre movie, just because I felt like watching *any* movie. On the other hand I’ve often lamented them not having an online catalog, which makes browsing and booking movies much easier. Big Flix’ model fulfills both needs.

Read my post on why I think Reliance will emerge victorious in the ‘DVD rental wars’ at: http://www.moneyvidya.com/blog/?p=369

Gautam Kshatriya
gautam.kshatriya@moneyvidya.com
http://www.moneyvidya.com

We’ve had terrible experience with SeventyMM as well. We were members for about 4 months and then we stopped the service. Quality of DVDs were poor — scratchy, some where not even DVDs (VCDs) etc. Customer service sucks. Now one can buy a new DVD from Moser Baer at a much cheaper price.

If NEA has put it in 50 Cr and assuming SeventyMM diluted 20%. Then pre-money valuation of this business is around 200Cr ($50M). At 70K customers, value/customer is around $700. That just seems quite high to me.

Considering that 70k sucbscribers and has 400ppl workin on the ground to deliver the crap that is any way played on the gazillion TV channels, or on the net for free, along with the net piracy, it is a doomed investment for sure. Indian intenet VCs are deadbeats – it’s quite apparent from the track record of them in intenet space. When they can dump $8mil in minglebox, $20mil in asklaila, why should it matter that any of these companies really got funded (Ashish, it’s not your fault buddy).

I think getting VC funding for beaten down, uninnovative, execution and scale based business in the internet space in India is more like a hex, and seems like a spell of imminent doom. VC funding is a buzz killer for sure, at least based on the past history.

Based on 70k users and 250rupees per month,with Rs.43 for $1, the total revenues are about $405k per month and about $5mil per year. Even if the delivery guys are getting paid Rs.10k, the cost is about $100k/mo. Who is gonna pay for the inventory, offices, executive salaries, advertising etc. This seems to be a VC play about getting the company getting bought out by one of these fat publicly listed companies. Believe me, many of the majore players are still way over valued based on the current financials and future prospects.

PS: Most of the Indian VCs handling your operations don’t really understand the internet landscape. Moreover, none of them have really built, or were involved in any worthwhile or successful internet or new media venture in India. The only two notable deals that amount to anything like a payout were the Indiaworld and bazee deal, back in web dog years of the new millenium. Believe it ot not, nothing since then. So lets stop pretending like you really are looking for a real payout. For the damn millions you burned here, should naukri.com save face – don’t think so.

Lifeblob was another investment that never made any sense, and it just happened last week. Let the madness continue – Web2.0 bubble has hit the final act in India. Excuse me.

My suggestion: If you planning to subscribe to seventymm, please research all other options and if you dont find anything else, research again.

P.S: guys i spoke to at the call center.. Santosh Acharya and his manager.. received only well rehearsed apologies.

I think the investors should be worried if this is how the company works.