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Lightspeed is excited to announce that the firm has led the first venture round in Vee – a mobile application designed to help people discover like-minded partners and build relationships.
At Lightspeed, one of the themes we are investing behind is network-driven businesses that leverage the growing smartphone base in India. When such businesses succeed in driving high engagement and high frequency use within their customer base, they have the potential to become very valuable. Our investments in Snapchat, Whisper, Phonewarrior and now Vee reflect this approach and thinking.
‘People discovery’ is a potentially high frequency use-case that is yet to be disrupted in India. We believe that Indian youth is becoming increasingly independent and open to new experiences and saw this reflected in early user data from Vee, where over 40% of monthly active users use the app daily, engaging in more than 10 sessions a day. While early, we believe that this level of user engagement is world-class and it cemented our belief that Vee has the potential to become an ‘everyday’ app in India helping people make new personal connections.
Traditionally, young Indian women and men have struggled to meet new and like-minded people owing to various socio-cultural constructs. Consequently, most social interactions are limited to friends and family. Online dating, while promising, could not solve this problem. Fake profiles, in-appropriate behavior, cumbersome matching process, low internet penetration were some of the key challenges that prevented online platforms to flourish.
Things have changed now. Facebook has crossed 100M users in India and offers a profile authentication platform. Increasing smartphone penetration has resulted in a large addressable market. Mobile, location enablement, fluid browsing interfaces and other innovative feature sets has made it possible to offer a delightful and frictionless product experience.
Vee leverages the power of mobile along with a product approach that is entirely focused on women. Through features such as anonymous browsing, male loyalty enforcement (limited simultaneous connections), abuse reporting – Vee places the power in the hands of women with an aim to become a trustworthy platform for them. In addition, mobile based hyper-local elements enable instant and relevant matching.
Vee is created by Nitin Gupta – a serial entrepreneur who successfully exited his previous venture – Coinjoos (a book swapping platform) to Homeshop18. Nitin is the brain behind the product and constantly keeps evolving Vee based on feedback from its women users.
Through Snapchat and Whisper, Lightspeed has had the unique opportunity to partner in creation of the world’s most significant and fastest growing mobile phone start-ups. We feel excited to start this journey again with Nitin and his team at Vee.
This morning, LimeRoad announced $15M in new financing to further their mission of building a social discovery and buying platform in the lifestyle vertical. This is a significant raise for a young company and provides additional validation of their differentiated approach to addressing the large and growing online buying opportunity in India. For those that aren’t familiar with the company, LimeRoad aggregates lifestyle products from a network of brands and stores and provides its community of users tools to create and curate lifestyle content as well as to easily discover and buy unique and delightful products.
Here are some brief thoughts on why we originally invested in Limeroad and have continued to support the company in subsequent financings:
- A truly exceptional team that refuses to take short-cuts and instead focuses on finding scalable, long-term solutions to difficult problems. Suchi and Prashant have been deeply involved in architecting and building consumer products of significant scale at companies like Skype, eBay and Facebook and bring similar aspirations to LimeRoad, along with an understanding of what it takes. Every time there is a choice between an ‘easy fix’ or finding a less obvious, long-term solution to a core challenge, they choose the latter, even though that inevitably means stepping into the unknown and facing a higher probability of (short-term) failure. It takes guts to choose the path less traveled, but we believe that this path maximizes the likelihood of substantial value creation.
- An early and intense focus on achieving product market fit. Here are some charts on user growth, supply growth, community activity (scrapbook creation) and marketing expense. We like it when growth and engagement charts are up and to the right while marketing is flat. It tells us that something is working without significant external stimulation (or discounting). (Footnote 1)
- A belief that differentiation will be increasingly driven by front-end experience. Fast shipping, real-time visibility into inventory and responsive customer service are now table-stakes, not a strategy to differentiate. Pricing-led ‘differentiation’ (heavy discounting) is a questionable long-term strategy and can become a dangerous addiction for management teams who ignore quality of growth. Instead, we believe that visual and social experiences that enable discovery and delight (especially relevant in the lifestyle category) will define the next wave of market-leading online companies.
- Visual and social experiences are perfect for mobile. We all know what’s happening on mobile but the question is which types of businesses will benefit more than others. We believe that products that are inherently social and visual will benefit disproportionately from smartphone growth. LimeRoad sits squarely in this category.
- A large profit pool. At the end of the day, valuable companies must all have attractive economic characteristics and the margin pool in the online lifestyle category is perhaps the most attractive in Indian online commerce.
There is a lot more work to be done – and problems to be solved – but the LimeRoad team has already disproved many accepted notions in the world of Indian e-commerce – for example that it is not possible to grow without offering heavy discounts or that Indian users aren’t savvy enough to embrace deeper social activities like scrapbooking, curating collections or sharing. We expect them to disprove many more and wish them all the best in the next phase of their journey.
Footnote 1: In order to preserve confidentiality of company data, absolute scale is not provided in the graphs above. Base scale is sufficiently large that the above data is a representative indication of product-market fit, in our opinion.
Dhingana founder & COO Swapnil Shinde was interviewed by VCCircle in July 2012. Here’s the video!
[Published in Pluggd.in]
I was looking at some stats on growth of consumer social and mobile platforms between 2008 and now. Even though it’s an obvious point, the contrast is quite stark and shows how much the world has changed in a short time. It’s almost hard to imagine a world where Facebook was a startup, LinkedIn and Twitter had very small user bases and iOS and Android each had less than 10M users. But this was the case in early 2008.
The numbers above are based on Crunchbase, SEC filings and news reports – I think they’re directionally correct although there may be some numbers that are not exactly right.
While all these above-mentioned platforms or quasi-platforms (and others I have not mentioned) have impacted startups in the US and Europe, I think Facebook and Android are the real game-changers in India as opposed to LinkedIn, Twitter or iOS.
Why Facebook and Android in India? Here’s why: When I think of consumer platforms (a much abused term), I think of a few criteria:
- a large, engaged and fast-growing audience (100M+ users)
- a developer friendly culture and technology base
- a monetization vehicle that is providing enough return to developers for their time
In my opinion, three platforms stand out today and meet this criteria – Facebook, iOS and Android – in many parts of the world. However, they all fall down in India when it comes to #3 (monetization) and (for now) #1 (audience size). I have no doubt these platforms will get to the right audience sizes in India in the next 12-24 months – Facebook claims ~50M users and Android has <10M in India. In the meantime, Google reigns supreme for reaching users.
So, the upshot is that now is the time to start companies leveraging these platforms in India.
[previously published on Nextwala blog]