Alok Mittal has a broad range of hands-on experience founding, funding and supporting early-stage technology companies. He leads 25-year-old global venture firm Canaan’s investments in India, and focuses on digital media and mobile companies, as well as innovators in managed software services and other IT enabled businesses.

He is a co-founder of Indian Angel Network, on the board of TiE (The Indus Entrepreneurs) in Delhi and an advisor to Adtech India. During the course of his association with Canaan India, he has advised Canaan Partners in their investment in BharatMatrimony (Matrimony.com), Equitas, iYogi, mCarbon, UnitedLex, CarTrade and Happiest Minds.

Prior to joining the venture industry, Alok co-founded JobsAhead.com, a leading web-based recruitment business, which was acquired by Monster.com, the global leader in online recruitment. He also brings strong Telecom experience to Canaan having worked for Hughes Software Systems prior to that.

Speaking to India Digital Review, he opines on the current trends in the online industry, drying up investments and Canaan’s current focus and plans for India.

What are the key features you look in a startup before funding it?

If you look at our current investee company, BharatMatrimony the more people are there on the website the more relevant it becomes for future users. That is one of the things we look in online businesses whether the model offers any kind of purpose, the quality of the team, passion for the business and how are they trying to solve the problem for the consumer.

Do you think this is a good time to b an entrepreneur in India?

Yes specially in the internet space! The number of internet users in India has surpassed 100M mark and expected to grow very rapidly given the increasing smartphone penetration so this is a good time to be an internet entrepreneur. Of course, these businesses are extremely competitive and to that extent one has to be sure of the problem they are solving.

Recent GSF Survey noted that investors are looking at non-ecommerce sectors in 2013. Your opinion on it?

Ecommerce is an interesting area of investment. We have invested in Naaptol but there is much more to internet besides ecommerce. Classified businesses are another area where value has been created and will continue to be so going forward. So, if we look at Canaan’s investment both in CarTrade and IndiaProperty both are at an interesting stage. Basically, ecommerce is also about selling services not just products so that is going to be another interesting area that is coming up and we are interested in it. 

What is the state of ecommerce in India?

The key trends in ecommerce space in India are the cost of acquisition has fallen to sub Rs 1000 across multiple categories with many players already at Rs 500. The product margins range from 40 to 50 percent. Ecommerce companies are standing at a one year payback at a contribution margin level.

The marketplace model is accelerating with brands like FlipKart and SnapDeal shifting towards it. The model has higher scalability due to capital efficiency, but maintaining customer experience continues to be challenging. A positive change is discounting has come down and portals are putting up delivery fee. However, overall market still continues to be highly crowded.

There have been more than 15 e-tailers who have either shut shop, integrate with their parent companies or forced to merge with a rival. What learning existing businesses can take from them?

In business, you will see a lot of people who will not remain invested and then one should expect merger or consolidation. I’m not surprised at the number of companies being shut down. Having said that one of the things on the ecommerce side is the proposition of the portal from the consumer side how do you make sure that  they come back to you site.

What is Canaan India’s current focus in India?

Our area of focus continues to be early stage tech ventures. Within that, we consider Consumer Internet, Mobile medium especially with the proliferation of smartphones recent invest in AdNear, payment solutions is fairly attractive or we continue to invest in the offshore areas like iYogi. 

Are there investments happening in payments?

We are looking at companies in the area. 

Tell us more about your platform ‘StartUp Catalysts’. 

StartUp Catalyst has been launched with an aim to help tech entrepreneurs to reach out to mentors across the industry. We have invited entrepreneurs and investors to share their learning and experiences with these budding entrepreneurs’. We also provide them with content on successful startups, industry insights, polls and relevant data on industry trends. It is a virtual connect platform between an entrepreneur and experts.

There has been lot of speculation on Canaan’s exit in the 6 year long investee company BharatMatrimony. Can you confirm the same? 

We have been there in the market for six years and some of our early investments are approaching maturity, BharatMatrimony is one of them. We remain focused on building the businesses and exit will come as they do. It is not that we are proactively trying to exit from these businesses that is all I want to say.

What about BharatMatrimony filing an IPO. Can you confirm that?

I do not think I’ll be able to talk about it.

One of your investee companies, Naaptol has launched a Hindi Channel Cinema TV, how has been its uptake? Has it significantly added to Naaptol’s business?

Naaptol’s Cinema TV has done extremely well it is a large part of Naaptol’s business and is profitable. In fact it is double the Naaptol’s business.

In US, Canaan invests extensively in Health sector can we expect investment in any of the upcoming health based ecommerce websites in India?

We have been looking at Healthcare space in India as we invest in it globally but not just from online perspective. We have been working on some interesting opportunities there but we haven’t closed anything yet.

What are Canaan India’s broad sectors of investment in the online space?

Consumer Internet continues to be a major area of focus. In ecommerce space, we are looking at estore enablers, Electronic Payments, Marketing and Loyalty (we are looking beyond ad networks) affiliate marketing and couponing space interests us.  In the consumer mobile space, we are looking at ventures which have integrated app plus services model and micropayments. Canaan is unlikely to invest in a single app company.

What would be firm broad plans for India going forward?

We have been in the market for 6-7 years and our investments have been couple of USDs and we want to maintain that and keep investing here. We are targeting 2-3 investments a year.