Internet and digital commerce avendus capital
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Internet and digital commerce avendus capital Internet and digital commerce avendus capital Presentation Transcript

  • ^Internet and Digital Commerce Seedfund LP meet February, 2012 Private & Confidential -1-
  • ^Agenda I Investment activity in Digital Consumer Industry 3 II Eco-system 6 III Digital Commerce 11 Private & Confidential -2-
  • ^ Investment Activity Private & Confidential -3-
  • ^Investment activity (1/2) Deal Volume Deals by Segment Volume Value ($ Mn) 4% E-tailing and Deals 39 485 9% E-tailing Travel 4 109 Travel Online Services Online Services 14 87 15% 42% MVAS MVAS 6 28 Entertainment / Content / Classifieds Entertainment / Content / Classifieds 14 61 Online and Mobile marketing 7% Payments Online and Mobile marketing 8 287 17% 6% Payments 3 10 Total (Jan 11-Feb 12) 85 1,067 E-tailing investment landscape Digital consumer companies funded in Jan 11 – Feb 12 by categoriesGross margin * Size of the bubble indicated total amt invested during Jan’11 – Feb ‘12 Fashion - Mass e-tailing High Private Label Apparel e-tailing Fashion- Fashion- Deals Medium Deals Apparel e-tailing Fashion -Private Label Mass e-tailing Baby Deals Low Electronics products Baby Products Travel Low Medium High Addressable market size Marketing Segments that enjoy healthy margins have found favor with investors Others even if it is at the cost of slower scale-up Private & Confidential -4-
  • ^Investment activity (2/2) E-Tailing – Deals Volume breakup Apparel - Handicrafts Deals Private 3% 13% Label  Apparel as a category in E-tailing gained high traction with various categories 10% such as Multi-label, Private label and Flash salesportals accounting for 38% Apparel - of the deal volume Flash Sales Mass 13%  Despite being of the largest segments, only one deal happened in Home 15% furnishing / independent electronics portal (Letsbuy,com ) while a number of new Baby Bed and Apparel e- Products portals were funded during the period Bath tailing 3% 15%  Untapped categories like Home furnishing, Bed and Bath, Lifestyle etc. may Baby become early stage investment avenues for this year along with growth Health Products funding of the existing models products Lifestyle / 13% Elec 5% Beauty Jewellery 3% 3% 5% Deals by Rounds Jan 2011 - 2010 Feb 2012  With the increase in deal volume, the average deal size has increased Round 1 47 16 for the investments from Round 2 onwards Round 2 17 12 Round 3 13 3  Large size transactions happened in Digital Marketing, E-tailing & Travel Round 4 and > 8 0  InMobi ($200 Mn), Flipkart ($150 Mn),  Ybrant ($48 Mn), Yatra ($45 Mn), Snapdeal ($40 Mn), FnY ($40 Mn) Average Deal size by Rounds ($ Mn)  MapmyIndia ($30 Mn), HomeShop18 ($22 Mn), Myntra ($21 Mn) Jan 2011 - 2010 Feb 2012 Round 1 4.0 4.5 Round 2 12.1 5.9 Round 3 21.3 4.8 Round 4 and > 56.9 --- Private & Confidential -5-
  • ^ Eco-system Private & Confidential -6-
  • ^Connectivity: Access & quality Internet connections by Type (in Mn) Connectivity likely to hit an inflection point in the next 12-24 months PC Dial-up (Mn) PC Broadband / Cable (Mn) Mobile 2.0 - 2.5G (Mn) Mobile 3G-4G (Mn) Internet users in India are estimated to reach 376 million by 2015 – close to 5X the current number. PC broadband penetration is estimated to reach ~16% by 2015 - 0 1 2 2 2 3 13 Mobile connectivity (3G and 4G) is expected to drive internet connectivity in the 4 51 coming years and is estimated to reach 22% penetration 6 120 7 196 288 11 Increasing penetration of smartphones / tablet devices, affordable 3G data plans and 7 11 introduction of 4G in 2012 to drive the premium data consumption 7 15 15 6 19 6 20 21 Challenge include lack of affordable and accessible broadband services and the 26 32 39 6 5 4 4 potential risk of lack of regulatory clarity dethrottling investments in the sector 5 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: TRAI,Avendus estimates The stakes are high.. Telcos will push for monetization3G Penetration in India PC broadband connections in India (mn) Airtel has more than 7 Mn 3G Telecom and internet services Cable providers paid nearly $23 bn to the subscribers out of which ~26% use 22% 45 39 Wireless fixed Govt. for 3G/4G spectrum data on a daily basis 40 4G - PC 32 2 35 Dongles 15% 9 Launch of 3G services, network TATA DoCoMo – 1 out of 7 30 DSL 26 2 4 deployment by new operators & rollout subscribers is a 3G customer 10% 25 20 1 1 13 of long distance network will drive an 20 15 1 12 Reliance claims more than 3 Mn 3G 9 investment of around $55 bn over the4% 15 11 0 subscribers with plans starting at next 5 years (Crisil Research) 10 0 INR 65 and has recently launched 12 14 15 15 5 10 free mobile TV service 8 Govt. has launched a National2012 2013 2014 2015 0 Broadband plan through which it would 2010 2011 2012 2013 2014 2015 As a comparison, China’s 3G mobile spend ~$45 billion to build National Source: TRAI, Avendus estimates Source: TRAI, Avendus estimates subscriber base is already at 128 Mn Fiber Optic Network Private & Confidential -7-
  • ^Internet Users Unique Internet Users (In Mn) Penetration (%) 100% Internet Penetration - 2011 400 30% 35% 82% 78% 78% 350 30% 80% 22% 300 376 25% 250 20% 60% 15% World Avg : 31% 200 273 36% 37% 10% 15% 40% 150 7% 5% 190 10% 100 120 5% 20% 7% 50 60 80 0 0% 0% 2010 2011 2012 E 2013 E 2014 E 2015 E India China Brazil US Japan UK Source: Avendus estimates Source: Internet world stats, Comscore World’s youngest internet population with >75 percent of all users under the age of 35 years 2011 2015 Age group Internet connections in India – geographic breakup 80 Mn 376 Mn 55+ 2 14 Top 8 metros* Other Metros 0.5 - 1 Million Less than 0.5 million 45-54 4 34 29% 30% 36% 37% 35-44 10 12% 12% 63 12% 11% 21% 21% 18% 18% 25-34 25 104 38% 37% 34% 34% 15-24 22 101 2007 2008 2009 2011 Source: IMRB I-Cube 2010-11 0-15 17 60 Source: Comscore , 2011 Avendus estimates Private & Confidential -8-
  • ^Payments: At an inflexion point, still requires a significant push Transitioning towards emerging payment modes.. Debit Cards (Mn) Credit Cards (Mn) 260 228 Will continue as the significant payment 182 Credit cards haven’t grown and e- acceptance mode. 360Buy has >90% 137 payments have largely been driven COD Transactions 102 through Credit cards 28 25 18 18 18 In-store prepaid e-wallets / vouchers Will gain acceptance with trust2007-08 2008-09 2009-10 2010-11 2011-12* Banks have given a good thrust on issuing Large merchants will push this Debit cards and there has been gradual adoption towards debit card payments Spending by cards Multi-purpose Prepaid Cards Debit Card (USD Bn) Credit Card (USD Bn) Net banking has grown seven fold in last 4 Freedom Card: Itz Cash, DCB, Visa years. 7% of the account holders access Can go the GreenDot route as well Net Banking – This translates in to a user 15 14 17 21 13 base of ~15-20 million 4 6 9 12 32007-08 2008-09 2009-10 2010-11 2011-12* Mobile wallets will gain momentum Spend per card holder p.a. has been NGPay has experienced good traction increasing steadily. Spending through UK player Wonga has ambitious plans Debit cards has been on the rise Telcos could give this a thrust Spend per card holder per annum INR 2009-10 2010-11 2011-12* Market outliers: Debit Cards 1,452 1,698 1,992 •OTAs primarily operate only on e-payments Hybrid Kiosks / Trust Points •BookmyShow will sell tickets worth Rs 190 Touch models could drive the growth in Credit Cards 33,728 41,860 52,997 Cr this year only through Cards Tier II / Tier III centres*2011-12 – Annualized data as per Nov’11 figures Private & Confidential -9-
  • ^Online Advertising Share of Online Advertising Online advertising market (USD Mn) Online advertising is leading consumption and several leading Time spent (%) Ad spend (%) advertisers in India are now spending 5-10% of their 15% advertising budget on digital advertising 9% 7% 1600 2% 410 Some of this difference can be attributed to the extra-ordinary success of online classifieds and the visibility in evaluating 2011 2015 2011 2015 digital advertising performance Online advertising includes online classifieds which contributed $167 mn in 2011 Other factor is the favorable demographics of the online population – most of whom are the focus target group for marketers Current composition of Indian advertising market (% share of total revenues) Major portion is occupied by Google and Facebook, and a Includes: Includes: significant portion of the remaining is through advertising Yahoo! Naukri networks Rediff Bharatmatrimony Web 18 Shaadi Times group Jeevansathi Cricinfo Carwale MSN Motorexchange HT Media Justdial The dominance of these players seems to suggest that there is 29% Sulekha a significant untapped potential for advertising lead content portals to expand 22% *Available advertising pie 100% for rest of the players There continues to be opportunities for Indian advertising 41% service providers which include advertising networks and 9% agencies Total Facebook + Google Portals Classfieds Others* Direct + Google Adsense Private & Confidential - 10 -
  • ^ Digital Commerce Private & Confidential - 11 -
  • ^E-Commerce: $24 billion market opportunity by 2015 E-commerce is expected to leapfrog in India due to increasing broadband penetration leading to high number of transacting users Increasing PC broadband and Mobile 3G and 4G penetration to enable higher e-tailing penetration Correlation between broadband and e-tailing India – Transacting Users 5% India China 2% Users transacting online (mn) Broadband penetration (% of households) % of total internet usersE-tailing/ Total retail (%) 4% Broadband penetration (% of households) 1.4% E-tailing/ Total retail (%) 14% 14% 2010 2% 40 16% 2015 13% 3% 11% 10% 0.9% 30 38 12% 1% 2% 2008 2014 0.6% 20 2009 2010 2011 28 10% 8% 2009 0.4% 1% 2006 1% 2013 21 0.2% 10 15 4% 2005 2007 0.1% 0.1% 2012 9 11 0% 0% 2006 - 0% 0% 10% 20% 30% 0% 5% 10% 15% 20% 2010 2011 2012 E 2013 E 2014 E 2015 E Source: CNNIC; Worldbank;, 2011 Source: TRAI, Avendus Estimates Source: TRAI, Avendus Estimates Total Online Consumer Revenues (USD Bn) India % of share of Online Travel E-tailing (USD Mn) 15,000 Penetration of e-tailing (%) 2% 30 90% 87% 100% 1.4% 78% 69% 80% 0.9% 11,778 60% 10,000 20 51% 60% 0.6% 6,933 0.4% 1% 24 40% 5,000 0.1% 0.2% 3,844 10 17 12 20% 1,933 9 800 467 5 6 - 0% - 0% 2010 2011 2012 E 2013 E 2014 E 2015 E 2010 2011 2012 E 2013 E 2014 E 2015 E Source: IAMAI digital commerce 2011; Avendus estimates Source: IAMAI digital commerce 2011; Avendus estimates Private & Confidential - 12 -
  • ^Evolving landscape – how the e-tailing industry will hit the $12 bn mark by 2015? Top 5-10 players Horizontal market leaders and select could command a vertical leaders will grow rapidly 40-50% market Consolidation is on the anvil share Offline players / Brands will come-up in a 80% of the Top 20 strong way with respect to their online US e-tailers are strategies offline retailers Marketplaces / Marketplaces and e-commerce platforms platforms will hand- will help bring a large population of mid hold retailers to size merchants online come online Non Internet users / Inclusive e-commerce could potentially non card holders take-off need to be covered Regulatory Key risks to the growth Subsequent capital infusion Eco-system keeping pace with the growth Private & Confidential - 13 -
  • ^Information : Search, Portals, Classifieds Share of Search websites in Search Market Size of online Online advertising - 2010 advertising on search 57% websites (USD Mn) 60%  Google rules the Indian search market with >90% market share leaving 42% 46% few opportunities for local players 40% 300 - 24% 100 470  Mobile and Vernacular Search may emerge as next growth opportunities 20% but Google is well covered on these fronts as well 0% India Japan US UK 2010 2015 Market Size of Portals Portals (USD Mn) 180 110  Portals continue to attract high traffic, ~46% of total internet users access the top portals with concentration of users in top 5  With over 200 million mobile-only Internet users in India in 2015, there will 2010 2015 be several opportunities for mobile based portals Market Size of online Composition of investments in online Classifieds classifieds (USD Mn) classifieds space in India (2006-11)  Jobs sites with $90 Mn in revenues and Matrimonial sites with $55 Mn 100% 55% revenues in 2010 accounted for 65% of overall classifieds market 220 510  Horizontal classifieds are growing and seeing the entry of foreign players 18%  Local search presents a sizeable opportunity and is dominated by local players 27%  Mobile classifieds, currently at $45 Mn market size are growing rapidly 2010 2015 Total Local Horizontal Vertical Private & Confidential - 14 -
  • ^Online Services : Financial Services, Education, Healthcare Online Insurance Urban Online Insurance Demand Financial Services (Demand v/s Internet Density) Personal Loan Online Enquiries Claimed Internet users  There is potential for movement of simpler products like credit cards, Home Loan 42% personal loans and term insurance to the online medium 35% 37% In (USD Mn) 580 22% 25%  Utility payments including online payments for home utilities and online 18% 244 11% 11% mobile recharge sites have seen a good traction over the last 6 months 310 44 410 170  Banks, Financial Institutions and third party sites are all making a run for 2010 2015 E Top 8 Other Big 5-10 lac Less than 5 the online insurance market. This market is expected to double by 2015 Metros Cities towns lac towns Source: Insuring India Report Education Global E-learning  Supplementary education segments - tutoring, test preparation and market (USD Bn) distance education are the ones that have gained the most traction in the B2C e-learning segment so far 50 32  Early stage models (lead generation and hybrid teaching) are doing well, but pure online models are still struggling for scale  At this stage, having an offline presence seems to be an important factor 2010 2015 to facilitate adoption of e-learning. Some players have integrated e- learning with physical mediums such as tablets Top health portals in India by unique visitors - September 2011 (in‘000) Healthcare WebMD Health 1,326  Top health portals in India are dominated by international players Livestrong 763 Everyday Health 689  Telemedicine remains the Holy Grail. Several policy initiatives in this area including the establishment of the National Telemedicine task force have About.com Health 624 aided in the development of the private players Caring.com Alliance 271 Your Total health 254  Hospital management and Electronic Medical Records (EMR) space has been seeing some action as well Source: Comscore , Private & Confidential - 15 -
  • ^Entertainment : Gaming, Music Gaming Mobile Games Online Games  With the growth of mobile Internet and the popularity of casual games, mobile gaming is expected to lead the growth of the gaming market in 89 In (USD Mn) India 71  Online games with localized content such as Cricket and Bollywood are 56 509 being offered along with premium content licensed from EA, Mircosoft etc. 44 36 380 29 284  Online gaming is affected by the micro-payments problem. This has 158 211 118 meant that companies have had to depend on advertising as the primary 2010 2011 2012 E 2013 E 2014 E 2015 E revenue stream. Some of this problem is now being addressed by the top players through COD and mobile based subscription Size of Digital Music industry in India (USD Mn) 328 Music 262 202 161  Digital music’s share in the overall music market in India is expected to 115 grow from the current 49% to 79% by 2015 92  MVAS products such as Caller Ring Back tones and Mobile Radio contributed more than 90% of the Digital Music revenues in 2010 2010 2011 2012 2013 2014 2015 Private & Confidential - 16 -
  • ^Contact Information AASHISH BHINDE KARAN SHARMA Executive Director Associate Vice President Email: aashish.bhinde@avendus.com Email: karan.sharma@avendus.com Mobile: +91 98200 45814 Mobile: +91 77380 92973, +91 98677 37779 Landline: +91 22 6648 0901 Landline: +91 22 6648 0967 KANCHAN MISHRA ANSHUL AGARWAL Associate Associate Email: kanchan.mishra@avendus.com Email: anshul.agrawal@avendus.com Mobile: +91 77381 56368 Mobile: +91 77381 56367 Landline: +91 22 6648 0030 Landline: +91 22 6648 0040 SANCHIT SUNEJA Analyst Email: sanchit.suneja@avendus.com Mobile: +91 98670 30991 Landline: +91 22 6648 0995 Avendus Capital Pvt. Ltd.Mumbai Bangalore New Delhi New York LondonIL& FS Financial Centre # 1 & 2, The Millenia Suite 22A/B, The Aman 100 Park Avenue, 16th fl. 32 Brook StreetB Quad, 5th fl, Bandra Kurla Complex Tower A, 10th Fl, Murphy Road, Lodhi Road New York London W1K 5DL, UKBandra East, Mumbai, India 400051 Ulsoor, Bangalore, India 560001 New Delhi – 110003 NY 10017 Phone: +44 20 7647 7700Phone: +91-22-6648 0050 / 0950 Phone: +91-80-4115 0000 Phone: +91-11-4535 7500 Phone: +1-212-351 5066 Fax: +44 20 7647 7710Fax: +91-22-6648 0040 / 0940 Fax: +91-80-2555 0868 Fax: +1-484-231 2343 www.avendus.com Private & Confidential - 17 -