2014 is already witnessing quite a few funding stories in the big data analytics market. The latest to do so was Germin8, a Big Data analytics company headquartered in Mumbai when it raised USD 3 million in Series-A funding from Kalaari Capital.
With the intention to dig deep in the funding process and what happened behind the scenes of this funding round, I dialed in Ranjit Nair, CEO at Germin8. Before sharing the funding story, Ranjit began by sharing the idea behind setting up Germin8 – to help businesses find insights about what people are saying on social media as well as on emails, chats, online surveys etc.
Germin8 was launched in India with the intention of testing the market and once it grows in the country, the idea was to take it further to the international market i.e. US.
“The funding we had which we had put together internally, me as a promoter and my father who is another promoter, along with a bunch of family friends who believed in the idea, was enough to take the company to a certain point where we could develop products for India,” adds Ranjit.
With time Ranjit also realised that though the Indian market was small to be the preliminary testing ground, it also meant that the market is pretty nascent and customers are yet not ready to make sizable investments in analytical products. “It was very clear that the market that we wanted to be in was the US market and hence the need for funding rose, which would help us build products for US. Additionally to build the sales and marketing team in the US,” informs Ranjit on the main reason for venture capital funding.
The realization for raising money for Germin8 was very clear since January 2013. The first thing the company did was to appoint an investment banker who could carry out the entire process.
“I had never raised funds before and I might have ended up doing things in a wrong way so that’s why I went for expert advice,” informs Ranjit on having appointed Mosaic Capital as the investment banker.
Mosaic Capital, the boutique investment bank specialising in M&A and Private Equity, started pitching for Germin8 and the company got introduced to a half dozen VC firms with a good mix of companies. “It wasn’t an easy road for us since there were VC’s who didn’t want to invest as Germin8 was in its early stage of raising capital and there would be VC’s who are interested only in the Indian market while some felt that the US market is crowded and risky,” he informs about the perception mix of VC’s during the funding pitches.
While the company wasn’t able to raise money at this point of time due to a couple of business reasons discussed earlier, Germin8’s offering as a product was never a question.
“We knew that there are challenges in the US market but we also believed in ourselves. We have a structured plan to hit the US market.” Ranjit informs that quite a few VC’s were interested on the condition that the company focused on the Indian and Asian markets alone.
Germin8 interests Kalaari Capital
It was during early August when Germin8 was introduced to Kalaari Capital, a VC firm that invests in early-stage technology-oriented companies in India.
With Kalaari Capital coming into picture things started rolling for Germin8. “We did a web demo, they liked the product; later on we went to Bangalore to present before the company and after that we continued further engagement so that both ends could get comfortable. By the end of December, we actually signed the term sheet,” Ranjit informs on the deal that finally got completed last month.
For Kalaari Capital, the VC firm based out in Bangalore, social media analytics and big data market has been a space of interest for some time. “Social media market is very large. The ability to gather data and produce insights from both social media as well as internal sources (email, chat, etc.) has a very big need in today’s time for businesses to take actionable decisions,” adds Kumar Shiralagi, Managing Director at Kalaari Capital.
Kumar informs that while there are very few Indian companies that are cracking the space, funding in Germin8 was driven by the reasons of good product, team and great feedback from the customers.
Customer feedback has been excellent for the company, which became one of the strong reasons across the board to provide funding support to Germin8. “The various ways of data mining by Germin8 have been well appreciated by customers along with Germin8’s ability to work with customers and provide business delight to them.”
While sharing his thoughts on Germin8’s foray into the US market, Kumar says the product’s expansion in the US isn’t a concern for Kalaari.
“Clearly Germin8 is not out there in the US market and there are quite a good number of products in the US market but fundamentally we want Germin8 to succeed in the Indian market too. India is a big market waiting to be cracked,” he says.
Further he adds, “As far as expansion in the US is concerned, we are comfortable with the move and along with Germin8 we will lay down a thought-through strategy to compete in the US market.”
Going forward the funds are going to be used for strengthening its position in India by increasing hiring and marketing initiatives, followed by beefing up the product development as Germin8 is planning to launch two more new products in the near future and the third area would be the US expansion.
Today Germin8’s platform is used by more than 100 leading brands such as MTV, Marico, ICICI Prudential, Godrej Industries, along with several agencies including GroupM, Publicis, Dentsu Aegis. Ranjit believes that even though the US market is a crowded space, the company has worked to find existing loopholes in the social and big data analytics US market and would be addressing these.