By Shripati Acharya & Bala Parthasarathy

Photos are the most emotional products we use every day and the most important activity done with photos is sharing. Just as the sharing of physical prints was popular, the sharing of photos on the internet naturally became a big success. This is what we did at Snapfish in 1999. Instagram reinvented photo sharing on the mobile phone by blending the social network and photos seamlessly on the iPhone, building a user base of 30 million in two years, unheard of in the photo industry. As a small start-up they ran faster and were more agile.

It is in such new, hyper-growth markets that startups thrive. Succeeding in these areas is like navigating a fast-flowing mountain stream - you need to be in a lightweight canoe, which can change course quickly, rather than in a large ship.

Instagram took just 18 months to build scale in its business; the time to create a product online has dramatically shrunk along with the cost. Consumer adoption of new products online is also extremely high today. These factors, coupled with a number of big companies with deep pockets, are leading to these short cycles from launch to exit for a technology entrepreneur.

The value that a Facebook pays for Instagram is derived from the value they expect to derive. This is true for all start-ups; the revenue potential they offer to a potential acquirer is what denotes their intrinsic value. The value of a photo sharing service that can be accessed on a mobile phone by 500 million users of Facebook is what defines the price paid for Instagram.

If we had to pick the three trends that will impact technology entrepreneurship in the near term, it will be the speed of creating new online products at very low cost, viral marketing and the rise of a new breed of global entrepreneurs - the young, high-energy crowd we interact with in Bangalore or Mumbai is no different in attitude from that in San Francisco.

We are going through an unprecedented era in technology where the cost of both creating and marketing most types of online or mobile products is very low. As angel and venture investors provide capital to entrepreneurs, larger companies have no real advantage. The fact that they have large marketing departments or existing sales channels or even legacy customers can actually be a huge burden in making them move slower. Not to mention the politics, channel conflicts and just more stakeholders in every decision.

On the other hand, venture funded startups can focus on customer adoption first before generating revenues. This is typically very hard to do in larger companies focused on quarterly revenues and profits. In our days, the company to beat was Kodak. This we eventually did - Snapfish has 100 million users now and Kodak is nearly bankrupt.

We strongly believe that small startups can beat giants in most areas, by running faster and being more agile. AngelPrime focuses on startups that use technology and the internet to disrupt huge existing markets. We believe there are phenomenal opportunities today to create very successful enterprises in India and are primarily focussed on opportunities in India and nearby markets. We first look for amazing entrepreneurs. Ideas are almost secondary. We then co-ideate with them, prototype, validate and then quickly launch companies.

(As told to Archana Rai. The authors are co-founders of photo sharing service Snapfish, acquired by Hewlett-Packard in 2005. Their new venture Angelprime incubates start-ups.)

LURED by immense growth potential and high-margin business model, venture capital(VC) and private equity(PE) players are sensing a serious business in the fashion retail space, one of the fastest growing e-commerce category in India.

With increased internet penetration and new modes of payment such as cash-on-delivery coming into vogue, the country's online retail industry, growing at 35% year one year, is expected to touch Rs.7,000 crore by 2015 from Rs.2,000 crore at present, according to a report by industry body Assocham.

Experts feel with rise in disposable income, today's well travelled and fashion conscious Indian consumers are getting more comfortable to shop fashion and lifestyle products online, which has a higher touch and feel requirement than other categories like books and electronics. In the last few months, online fashion retail businesses has witnessed more than half a dozen investments from major VC/PE players.

Early this month online fashion and lifestyle retailer Fashionandyou.com raised $40 million from a group of investors led by Norwest Venture Partners and Intel Capital. Sequoia Capital India and Nokia Growth Partners also participated in the round. The invitation-only shopping site plans to utilise the fund for expansion including acquisitions, starting new business categories and entering news geographies.

"We are seeing a 50% growth month on month, with close to 3 million members shopping with us under 2 years of operations. We're serving around a 1,000 cities pan India and are charting any where between 2,000-5,000 orders daily," says Pearl Uppal, co-founder and CEO, fashionandyou.com.

Recently, early-stage VC firm IDG Ventures India invested $3 million in Chennai-based eShakti.com, an online women fashion retailer catering to the US market. "Women fashion is a major driver in the online space globally. And the India market is also growing rapidly. The company also have plans for India market in the next quarter. eShakti is growing 100% annually," says T C Meenakshisundaram, managing director, IDG Ventures India. The company plans to include accessories such as belts, bags, jewellery in the next few months.

In October, Delhi-based Valyoo Technologies, which runs eyewear e-commerce site Lenskart.com, also managed to raise $4 million in its first round of funding from IDG Ventures. The website sells fashion accessories including, eyewear, shades, watches, bags and belts.

Among other deals in this space include Zovi.com, an online clothing brand, which attracted funding of $5.5 million from private equity major SAIF Partners and angel investors like MakeMyTrip founder Deep Kalra.Zovi, which started with men's formal shirts and belts, plans to expand further in men's and women's categories. Online wholesaler and retailer of shoes, apparel, bags and accessories, Bigshoebazaar also raised Rs. 40 crore from NR Narayana Murthy's venture capital firm Catamaran and Nexus Venture Partners.

"Apparel and accessories are traditionally high margin businesses and therefore can be built profitably on the internet. We believe this could be an area of high return for investors. Helion is actively investing in this space. We already have to investments-Yepme.com and exclusively.in," says Kanwaljit Singh, managing director, Helion Advisors. Yepme.com is an online fashion apparel and accessories brand for men, while Exclusively offers ethnic Indian fashion products. Experts point out that the size of funding varies depending on the stage of the company. Typically it is estimated between $2 million - $4 million.

"Online models are more profitable compared to offline retail as the expenses are much less. There are no store rentals and staff cost. Three years is normally a time to break even in these kind of business models. Brands are also welcoming of the online space as it gives access to a larger market," says Mukesh Bansal, CEO and founder, Myntra.com.

This year, Myntra.com also attracted funding from investors including IDG Ventures. However, the company did not disclose the details of the funding. "Overall we have raised $40 million in three rounds of funding. For the next two to three years we are not looking to raise funds. Currently we are exploring expansion plans," Bansal added.

Experts point out that fashion and apparel is one of the largest e-commerce category in global markets like the US, the UK and China. "E-commerce worldwide is also entering a new major phase. Where products being sold are not just standardised stock-keeping unit(SKU)s such as books, electronics or toys but also products that have an emotional component to them such as fashion clothing. This opens a new frontier in e-commerce which the investor community is excited to tap," says Bala Parthasarthy, Managing Partner, AngelPrime, a business incubator.

With people becoming more used to the convenience of the internet, e-shopping is seeing higher growth in tier II and III cities as well. According to eBay India Census 2010, about 3,296 Indian cities shopped on eBay last year, of which 2,234 were tier II and tier III cities.

Industry experts feel new media such as Facebook and Youtube has raised the awareness among middle-class in smaller cities towards the latest fashion and lifestyle trends. "About 40% of out orders come from tier II and tier III cities. It's all about affordability, quality and accessibility," says Uppal of fashionandyou. For Myntra.com nine months ago about 60% orders were from the top 10 cities, but today it is a 50-50 business between tier II, III cities and the major metros.

-Debojyoti Ghosh

Cultivating Success with Ideas, Expertise and Capital

Veteran entrepreneurs - Bala Parthasarthy, Sanjay Swamy and Shripati Acharya - today launched AngelPrime, a unique "incubator" that plans to launch multiple startup companies focused in three areas: Electronic Payments, eCommerce, Smartphones & Tablet-based applications. AngelPrime brings ideas and entrepreneurs together, fueling this with much-needed mentorship and seed-capital to rapidly create successful startups.

India is at the threshold of widespread adoption of Internet and e-commerce among consumers and in small and medium enterprises. Together with the explosion of mobile data traffic, affordable Smartphones & Tablets and new digitally verifiable identities like UID, there is a unique opportunity for next generation of entrepreneurs to start with a clean slate and build applications and products that can leapfrog existing technologies. While numerous funds pour capital into later stage companies, the very early stage start-ups or entrepreneurs with ideas are highly starved of investment and critical mentorship.

AngelPrime is the brainchild of serial entrepreneurs - Bala Parthasarthy, Shripati Acharya, Sanjay Swamy - who have a proven track record of launching and scaling very successful companies in India and the USA from scratch. Most recently, all of them served as volunteers for the UIDAI, working directly with its Chairman and Infosys co-founder, Mr. Nandan Nilekani in defining the blueprint for the architecture and use of Aadhaar (UID) across multiple industry and government segments.

The entrepreneurial journey for Shripati and Bala began with the launch of photo sharing site Snapfish. They built the site to be the largest online photo site in the world today with over $600M in gross revenue and over 100 Million users. Snapfish was sold to Hewlett Packard (HP) in 2005 for over $300M, where Bala stayed on as the MD and launched the business in over 20 countries, today accounting for $100M in revenues.

"AngelPrime's approach is to use the "lean startup" model in bringing together highly talented entrepreneurs, mentor them through the process of taking an idea, prototyping it, validating the market, building a customer base and in 9-12 months raising institutional investment for the business", said Bala Parthasarthy, co-founder of AngelPrime.

After leaving Snapfish, Shripati Acharya worked at Cisco Systems where he was Managing Director of Cisco's Education initiave in India and emerging markets. Commenting on the introduction of AngelPrime, Shripati said, "We are passionate about working with entrepreneurs to develop ideas that challenge the status quo. In this ambitious journey, we provide hands-on help in technology, marketing, sales and business development, in essence get our hands dirty and work on a full-time basis with the entrepreneurs, until the companies are self-sufficient".

Sanjay Swamy is one of India's leading expert in Electronic Payments. He was the CEO of mChek, a key member in the authentication and payments group at the UIDAI, and the Mobile Payments Forum of India. Sanjay is also the Chairman and founder of ZipDial - one of the most promising startups in the mobile marketing space. Sanjay has also worked in Silicon Valley and, along with Shripati, was an angel investor in Picsquare, a company acquired by Infibeam.

"We are excited both by the caliber of investors and the early entrepreneurs we have been able to attract", said Sanjay Swamy, Co-Founder, AngelPrime. "Our first companies will be coming to market soon. Within the next 30 days we will be launching a Mobile-based Payments company and within 90 days, a Smartphone/Tablet based eCommerce company".

Raj Mashruwala joins AngelPrime as its lead investor and will be on the board of directors of all AngelPrime companies. Raj is a veteran of Silicon Valley - while he is best known for his founding role at Tibco & Consilium, he is widely respected for his contributions to the industry as an entrepreneur, investor and board member of several startup companies. He was also one of the founding members of TiE.

Raj commented, "AngelPrime is filling a key gap in the Indian startup eco-system - enabling entrepreneurs to focus on building great companies while relying on an entrepreneur-friendly, been-there, done-that set of committed co-founders, advisors and mentors whose incentives are squarely aligned with company success".

More information about the CTO in residence program can be obtained by emailing cto@angelprime.com or visiting www.facebook.com/angelprimepartners

Great technologists can now conceptualize disruptive products AND turn them into funded corporations!

Bangalore, November 8, 2011: AngelPrime, a business incubator started by veteran entrepreneurs and former UIDAI volunteers - Bala Parthasarthy, Shripati Acharya (Snapfish) and Sanjay Swamy (mChek/ZipDial) - today announced the first-ever CTO-in-residence program, targeting technologists, hackers and geeks. The initial focus areas for the CTO's would include eCommerce/mCommerce, Tablet applications, Analytics & Business Intelligence, Social Media and breakthrough User Experience opportunities - interested parties may apply for the CTO-in-residence program by emailing cto@angelprime.com.

The program had been successfully developed and used by the first two funded portfolio companies of AngelPrime, and is now being extended to candidate CTO's wishing to make a difference to their careers through entrepreneurship.

"The program provides techies the opportunity of a lifetime", said Bala Parthasarthy, Managing Partner of AngelPrime. "We minimize risk, provide basic salary, a professional fully-furnished and well equipped office space, and a great environment to work with proven entrepreneurs and advisors on a day to day basis, to disrupt and innovate. But most importantly we provide a great opportunity to turn their disruption into a funded product company within a few weeks or months".

With experienced entrepreneurs on the core AngelPrime team, as well as an extended network of specialist advisors, the CTO-in-residence program provides technologists with a unique opportunity to think laterally with business-aware people and apply technology to solve real-world problems in a disruptive manner - both technically as well as business model wise. It also allows them to rapidly test and validate and fine-tune these products in the market quickly - and either pivot to new ideas or ideally turn successfully validated ideas into businesses.

"AngelPrime is about building disruptive companies - not copycat businesses", said Sanjay Swamy, Managing Partner of AngelPrime and Chairman of ZipDial. "Technology-led businesses require time and investment - but more importantly they need GREAT, hands-on thinkers and do'ers who attempt to real-world business problems with a fresh mind".

"We are actively looking for up to five great CTO's who could turn validated business concepts into great companies within 90-180 days", said Shripati Acharya, Managing Partner of AngelPrime. "With our experience, we are able to step in and cover all the business roles in a startup during the early days, allowing the CTO to focus on the core product offering. Over time we will hire an ideal CEO, provide the seed funding for the company, and provide necessary help and guidance as required".

More information about the CTO in residence program can be obtained by emailing cto@angelprime.com or visiting www.facebook.com/angelprimepartners