Reads: How IndiaPlaza Went Down and Out

A great read by Ashish Mishra, on the failure of an Indian e-commerce firm, perhaps the first big one, Indiaplaza.

Starting 2013, the Indiaplaza story went further downhill. One miserable day. After another. People started quitting, debts piled up and Vaitheeswaran found himself cornered. He had knocked on every door he knew and returned empty-handed. Then came the fateful Monday, 12 August 2013, when Indiaplaza vacated its office. But Vaitheeswaran still had some fight left in him. He hit the road again to see if anyone would be interested in buying whatever remained of Indiaplaza—the brand name, software solutions and even the customer data.

Again, there were no buyers.

Indiaplaza, earlier Fabmall, remains close to my heart as one of the first startups ever. I remember when I bought a book from them, and they sent me the wrong one. I’d paid by credit card, and I called up the company, and surprisingly, a co-founder answered. […]

By |July 3rd, 2015|Categories: Startups|0 Comments

Housing.Com CEO Startup Soap Opera Continues as CEO Quits With Dramatic Letter. Is This The Indian Boo.Com? seems to have yet another drama, with it’s CEO Rahul Yadav quitting abruptly. The company is the India TV of the startup world, going brash and batshit insane on anyone that dare criticize it. (See spat with Shailendra Singh of Sequoia or the CEO calling Alok Kejriwal dumb). Investors apparently find this attitude extremely appealing because holy crow, another site that helps you find properties to buy or rent! And with a brash set of founders, with IIT pedigree! That gave it $120 million in funding, with the latest at $90 million as recently as December.


By |May 5th, 2015|Categories: Startups|9 Comments

What to Make of the Richly Funded Taxi Services, Uber and Ola

Uber’s spending $400m in India. Ola just raised $320m. (Each of those, if you’ve been reading Capital Mind, is greater than all the IPOs in 2014 in India, put together)

This money will go to something, someplace. They won’t buy taxis, but will help finance drivers who would like to buy a car. (Uber, Ola)

I’ve used both services – Ola and Uber – and am watching the landscape change rapidly. From being expensive beasts, they’ve both gone to the lower end of the taxi ecosystem – and Ola even has autorickshaws on its network.

How do they work?

I have been speaking with drivers and in general, the concept is: You pay less (through discounts) and the driver gets paid a lot more. Uber and Ola are funding the difference, largely as “acquisition cost” for customers. I tweeted this lot:

By |November 24th, 2014|Categories: Funding, Ola, Startups, Uber, Valuation|12 Comments

Jama-Kharchi and the Conversion of Black to White

For the uninitiated among us (and I am one) it seems there’s this concept called “Jama Kharchi”, which is about converting black money to white. Jama-kharchi , of “accomodating entry” companies which basically make two kind of entities meet:

  • One that wants to reduce its profits (and thus, taxes) by showing purchase entries
  • Two, that that wants to shore up sales because they will get higher credit

The Jama-kharchi companies will “accomodate” accounting entries that help both these companies and charge a 2% to 4% commission to be the go-betweeen.

Let’s say a company A wants to reduce profits but still wants to have the cash. It buys something from a Jama Kharchi company B, and that company (through conduits into other companies or directly) gives an unsecured loan, or buys shares of Company A. That way the company still has the money and managed to reduce its sales.


By |September 12th, 2014|Categories: JamaKharchi, StartupTax|2 Comments

Off-Topic: RIP, ESOPs. Thank you, Redbus.

Livemint has an inside story on the sale of Redbus.

The development is very sad for the startup ecosystem – because Redbus, at the time of exit, did not let its ESOP owning employees make money. Instead, their ESOPs were converted to ESOPs of the acquirers (Ibibo).

Read this article for more detail.

Update: I have received multiple inputs on this issue, and it seems the details are murky; it’s not entirely true that top management didn’t get anything. The deal they got, as per the above LiveMint article, was that the payout would be as their original vesting schedule (no cliff, no acceleration) but at the end of each financial year. That means Goel, the COO, who joined in October 2012, would only see his first vesting (10% of his allocation of ESOPs) in April 2014. And 20% in April 2015 etc.  While this is not great (why wait?) it is also not as bad as saying they […]

By |July 17th, 2014|Categories: Startups|4 Comments

What I’d Like To See in the Budget For Startups

The Government Budget should not have any real meaning for startups. But startups – and here I mean small and micro enterprises – generate most of the employment in the country. They are also responsible for most of the corpratUnlisted, small companies and entrepreneurs are the backbone of the Indian economy.

We tend to think of startups as the technology startup types. The guys that built Whatsapp. Or Facebook. But these are only one kind of startup; the entrepreneur mindset extends from the local kirana shop to the stockbroker to the fancy we-are-the-next-Flipkart. In general when we talk of startups being important, it is because they build value, and in the process generate employment, increase productivity and solve real problems.

In that context, we should encourage them. But in that context, we should also understand the limitations they work with.

By |July 4th, 2014|Categories: Budget2014, Startups|3 Comments

The largest industry is the one that’s the least disrupted: #FinTech hackathon

This is a guest post by Mukund Mohan, on an event in Bangalore that involved technology and finance. Mukund is the Director of Microsoft Ventures, which runs a fund, an accelerator and startup engagement programs globally. You can follow his blog on startups at Best Engaging Communities.

Mukund is first from the right


On Sunday I had a chance to judge the #hackafin hackathon at the NASSCOM 10K startup warehouse. While many other industries are going through immense disruption globally, (Books – Kindle, Cabs – Uber, Hospitality – AirBnB) the innovation in Finance is largely at the fringes (Second Market, Angel List and smaller companies).

The Yodlee team provided a set of API’s and training for the 100+ entrepreneurs and hackers that attended the 2 day […]

By |February 13th, 2014|Categories: GuestPost, Startups|4 Comments

SEBI Finalizes Angel Fund Regulations

SEBI has notified final regulations for angel funds. I have noted many of these in the past, so for background:

In brief, angel funds are now only allowed as an “Alternative Investment Fund” which requires registration.

By |September 17th, 2013|Categories: Startups, StartupTax|Comments Off on SEBI Finalizes Angel Fund Regulations

Links: Potash De-Cartels, IIP Shadiness, Redbus-ted Exits

Pavan Srinath tells us about the breakup of the Russian-Belarusian Potash Cartel:

Two big cartels control the global potash trade: the first being BPC, a joint venture formed by the Russian company Uralkali and Belarusian Belaruskali. The second is Canpotex: an association of three Canadian mining companies. Together they controlled about two-thirds of the supply and ensured reasonably high prices in the global market. This is now under threat after BPC broke apart. Any rapprochement between Uralkali and Belaruskali was ruled out in late August when Belarus detained Uralkali’s chief executive officer and charged him with abuse of office. This has since escalated into a diplomatic row and a trade war with Russia, with the latter causing disruptions in oil and milk supplies to Belarus.

On the other side of the world, the Canadian cartel Canpotex is in trouble from another source. BHP Billiton, the world’s largest mining company, is looking to […]

By |September 13th, 2013|Categories: IIP, Links, Startups|Comments Off on Links: Potash De-Cartels, IIP Shadiness, Redbus-ted Exits

The Failure Of Financial Web Startups

This is going to be a long post.

Investopresto, a finance portal, shut shop a couple of days back. They follow other illustrious startups to create financial web sites and eventually run out of steam, like , moneysights, moneyvidya and many others. This is tragic, and even more to me as I co-founded and shut down Moneyoga three years ago.

Hasn’t Anyone Succeeded?

Some may say the lack of success is the no product-market-profit fit, and others will say it was the lack of funding. These are strong contenders for reasons, but let’s stop right here and look at the successes.

  • Moneycontrol has won the media battle. With decent , video from its group company CNBC-TV18 and an enormous amount of publicity. While I’ve heard that they are independently profitable, the company they are in (Web18) has been unprofitable for most of the last six years. And they can raise money at the drop […]
By |July 13th, 2013|Categories: Startups|16 Comments

Angel Fund Guidelines: Helps the Superangels, Keeps Out Smaller Investors

SEBI has introduced new guidelines for Angel Funds. As I’ve said recently, this is an absolutely important requirement in order for startups to avoid the “Startup Tax” (, a tax regulation that classifies investment as “income” if it is at a premium to the “par” value of a share of a company.

(Read the free Startup Tax e-Book)

The tax laws allow angel funds to skirt this rule, but what an angel fund actually means was left to SEBI. And this is what SEBI has said, in simple terms:

Angel funds a sub-category of SEBI AIF Cat-1, Like Venture Capital Funds with Only 25 Lakh Minimums

The SEBI Alternative Investment Fund (AIF) regulation is what allows pools of capital to be used in India to invest in anything. AIFs include Venture Capital Funds (VCFs) as a Category 1 player. An Angel fund will be a sub-category […]

By |June 26th, 2013|Categories: SEBI, Startups, StartupTax|Comments Off on Angel Fund Guidelines: Helps the Superangels, Keeps Out Smaller Investors

Speculation: SEBI Angel Fund Rules Could Help Ease Startup Tax

The Finance Minister had in his budget speech mentioned that:

SEBI will prescribe requirements for angel investor pools by which they can be registered as Category 1 AIF venture capital funds.

(Read: Startups in Budget 2013, a Mixed Bag)

CNBC has the news that SEBI might announce the requirements on July 25 (speculation):

In an exclusive to CNBC-TV18, sources say the Sebi board may announce rules for angel funds on June 25. Some of these rules may include angel fund investment to be limited to Rs 50 lakh- Rs 5 crore; angel funds to be invested in a company for at least three years; angel investors to invest in companies not older than three years; investee company to be unlisted and with a maximum turnover of Rs 25 crore; the investee company may not be related to a group with a revenue of greater […]

By |June 20th, 2013|Categories: SEBI, StartupTax|Comments Off on Speculation: SEBI Angel Fund Rules Could Help Ease Startup Tax

Flipkart Won’t Deliver Orders More than 10K to Uttar Pradesh

The online retailer Flipkart has, it seems, decided to stop delivering goods to the state of Uttar Pradesh above Rs. 10,000, including the National Capital Regions of Ghaziabad and Noida, says TOI.

While Flipkart said the decision was "purely business oriented", insiders said there were numerous instances of customers ordering expensive goods on the cash on delivery scheme and refusing to accept their orders. There have also been cases of fraud in which lost or stolen credit cards were used to book orders online.

The portal’s shipment delivery staff in Lucknow, however, gave insight, saying there were incidents in which customers ordered expensive goods and then refused to accept them. Sources said many people logged on to Flipkart and ordered "just for fun".

"It takes a minimum of 10 days to ship a product to a customer and back to the company if it’s […]

By |June 9th, 2013|Categories: Startups|12 Comments

OT: Are Non-Competes Legal in India? Mostly, No.

Employers routinely hand out pre-drafted agreements that contain clauses like: You will not be employed in a firm that competes with for a period of two years after the termination of this agreement.” These clauses are supposed to deter employees from joining competition and taking away years of effort in training and what not.

Some startups are trying to get over this by creating non-compete agreements their employees have to sign.

Not Enforceable?

While this may be legal in some parts of the US, such contracts are almost definitely not enforceable in India. There is an “Indian Contract Act” in which there is a Section 27, which states that you can’t deny a person the right to livelihood. Restricting a person from working, even with a competing firm, for a few years, is a restriction on that right, as many judges have ruled.

You can read these two links to see case history […]

By |May 10th, 2013|Categories: Startups|1 Comment