By Kalpana Shah
Two Bangalore-based Internet companies catering mainly to customers in the United States have received funding from Lightspeed Venture Partners, the firm said Monday.
United StatesMercantila, an online collection of specialty stores, received $22.5 million in a first round of funding. The company has a large development presence in Bangalore, India, with the 100-person team building the stores, hosting the support system, preparing web-based catalogs, and doing online marketing.
Bangalore, IndiaBut products sold on Mercantila are currently available only to those residing in the U.S. and Canada. “That might change in the future, but not anytime soon,” said R. Balakrishnan, managing director of Mercantila in India.
U.S.IndiaThe funding will be used to double Mercantila’s headcount in India and build up the inventory of products back in the U.S. The company will also increase the number of specialty storefronts on its web site.
U.S.Mercantila began operations in the U.S. in 1997 with an online rowing-machine store, and has since expanded to the home goods, fitness, and wellness markets. The most popular merchandise sold on the site, according to Mr. Balakrishnan, is massage tables.
U.S.“We think Mercantila has huge potential of being the Amazon of the Web 2.0 age,” said Ravi Mhatre, a general partner at Lightspeed Ventures.
Hooking up Tutors
TutorVista was set up in November 2005 to offer online tutoring. It received a first round of funding of $2 million from Sequoia India in May 2006. While most of the 2,200 students currently registered on the site reside in the U.S., some hail from the United Kingdom, Korea, Singapore, and Finland.
U.S.KoreaFinlandPart of the $7 million will go toward extending TutorVista’s reach to other geographies. The company’s business model is to hire highly educated experts in low-cost countries such as India and connect them with students in developed countries.
IndiaThe company charges a flat fee of $100 a month from students ranging in age from six to 42, giving them unlimited access to an assigned tutor. The service is offered 24/7 online so students can get tutoring any time they need it. Predictably, the subjects most in demand are mathematics and English.
“We are looking for more Indian ventures to finance,” said Mr. Mhatre. Of the $1.3 billion under management, 25 percent of Lightspeed’s funds go to companies outside the U.S, he added.
“We believe this is the beginning of a high-tech wave in India, and it will sustain for a decade or so,” Mr. Mhatre said. “We want to be part of this wave.” Lightspeed would likely invest about $100 million to $150 million in India in the next few years, he said.
IndiaLightspeed typically takes between a 20 to 30 percent stake in the companies it funds, so it might be safe to conclude both Mercantila and TutorVista have parted with those equity amounts.
Matrix Investment in Four Interactive
Separately, Matrix Partners India announced that it had invested in a stealth mode startup, Four Interactive, founded by Kiran Konduri and Shriram Adukoorie. The company is focused on building easy-to-use services that are at the intersection of mobile content and the web.
Mr. Konduri was previously at Microsoft and has founded two companies, including Zephyr Software, which was acquired by Infospace. Mr. Adukoorie was with Microsoft for the last decade and was previously country head for MSN India and South Asia. Most recently he managed Microsoft's portal in the Asia region.
AsiaMPI is a consumer services risk capital fund and focuses on early- to growth-stage businesses in the Internet, mobile, financial services, media and entertainment, food and beverage, hospitality, healthcare, and travel and leisure sectors. In September of this year, Matrix invested $7 million in
Seventymm, India’s version of DVD rental firm Netflix.