Mumbai: Canaan Partners, the $2.3 billion (Rs9,453 crore), Menlo Park-headquartered venture capital investor, has invested $5.25 million in digital media company Cellcast Asia Holdings, marking the second VC-backed spin-out deal in the country in two months.
Earlier, IDG Ventures India invested $6 million in ConnectM Technology Solutions Pvt. Ltd, a communications solutions company spun out of Sasken Communication Technologies Ltd. Unlike ConnectM, which will address opportunities untapped by Sasken’s core business, Cellcast Asia will replicate the business model of its parent company.
The Mumbai-based Cellcast Asia Holdings has been spun off from its UK parent Cellcast Plc. Canaan has picked up a 38.9% stake; the employees will hold 23.6% through a trust and Cellcast will retain a 37.5% stake. This is Canaan’s fourth deal in the country since it started investing here in 2006 out of its global $450 million fund.
Cellcast Asia Holdings was formally constituted after the UK company decided to consolidate its almost two-year-old Asia operations—Cellcast Interactive India Pvt. Ltd, a 100% subsidiary set up in 2005, and Cellcast SEA Ltd, a 50:50 joint venture in Malaysia with mobile entertainment company mTouche Technology Bhd, set up in 2006.
The UK outfit, which started operations in 2002, develops and manages interactive content such as contests and auctions across media platforms.
It broadcasts such shows on TV, radio, mobile and Internet, and collects its revenues from user responses through SMS, WAP and voice calls. “Given the size of the market opportunity in India, we would not have been able to fund the company 100%, hence we wanted a strategic investor,” says Bertrand Folliet, COO, Cellcast.
The Indian outfit was set up in November 2005, two months after the parent company listed on the Alternative Investment Market (AIM).
It tied up with telecom operators and broadcasters such as Zee Telefirms Ltd and Sony Entertainment Television India Pvt. Ltd to launch an interactive auction show, Bid2Win, across platforms last April.
It works on a revenue share basis with telecom operators per user response.
Bid2Win has been the company’s chief product here and has generated revenues of $2.5 million till date. “We plan to launch interactive products in astrology, dating, matrimonial and news services,” said Pankaj Thakar, CEO, Cellcast Asia Holdings.