Emerging Trends, Areas & Opportunities in the Online World May, 2009

Increasing Internet Penetration © Copyright 2008 Canaan Partners 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

Internet reach is expanding rapidly

Internet penetration goes beyond top 8 metros

Encouraging Trends and Indicators © Copyright 2008 Canaan Partners 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

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

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 © Copyright 2008 Canaan Partners Source: Alexa

1-2 MN unique visitors

Free SEO traffic

Founder’s skill set

Initial traction at low cost help the start ups achieve funding

Opportunities – Concept Arbitrage © Copyright 2008 Canaan Partners 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

Interesting Areas like Ecommerce , Advertising , Education , Financial Services

Significant localization is needed even in concept arbitrage

Quality of execution is the key success factor

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 © Copyright 2008 Canaan Partners

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

Opportunities – Specific Examples © Copyright 2008 Canaan Partners 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

Deregulation

Increase in disposable income and savings

Product and Pricing fragmentation

Young and career oriented population

Strong long term employment market

Increase in disposable income

Increasing comfort with online transaction

Broadband penetration

Cheaper internet access

Distinct entertainment categories for Indians

Growth of mobile internet

Investment Climate © Copyright 2008 Canaan Partners Source:: Business Today (June 2007) Internet Investments Availability of capital likely to shrink over 2009 Investors backing experienced entrepreneurs and valid business models Examples of Deals Done

Availability of capital likely to shrink over 2009

Investors backing experienced entrepreneurs and valid business models

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 © Copyright 2008 Canaan Partners

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

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