WATBlog Exclusive - Reasons why madhouse got funded for 1.05 crores!
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Well this is not fresh news.. I came to know about Madhouse.in the online dvd video rental company getting funding around the 1st of January this year but this post is not to inform you about the funding its about why did madhouse get funding inspite of there being a Seventymm.com which has already raised 10M$ from venture capitalist.. This post should help all those looking for funding to get the basics right!
Firstly the actual details on the funding..
Madhouse Media (www.madhouse.in) has raised $ 228,000 (1.05 Crore). This investment was raised from the Band of Angels, Delhi (www.boaindia.com), Band of Angels, Mumbai and some private investors. Madhouse is the second investment for BoA Delhi, as well for the group of investors at BoA Mumbai.
Madhouse currently serves customers in DelhiNCR, Chandigarh, Panchkula and Mohali regions. It plans to do a national roll-out in the next two years.
Also Madhouse is the second online dvd rental company to be funded after Seventymm.com which has already raised $10 million in venture capital funding through two rounds.
Here are the reasons why madhouse got funded.. (if you are a startup owner then you should use the same metrics to judge whether your company is ready for funding)
1) Large market opportunity
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2005- 06
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2009-10
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Entertainment & media industry
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Rs 35,300 crores
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Rs 83,740 crores
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Indian filmed entertainment
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Rs 6,800 crores
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Rs 15,300 crores
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Home video
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Rs. 400 -1000 crores
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Rs. 2000 crores
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Home video rental
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NA
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1,880– 3,760 crores 3
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Installed base of DVD players
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11 million (by end of 2006)
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66 million (by end of 2010)
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Seekers+ households
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20 million
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32.5 million households
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2) Pain Points/ Need in the Market
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Quality
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Bad quality discs. Pirated discs
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Service
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Low quality customer service
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Selection
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Limited titles to choose from
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Availability
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Unavailability of new/popular movies
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Access
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Hard to find. Long drives. Parking issues
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Identification
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Hard to identify movies I want to watch
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Economy
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DVD rentals ranging from Rs 60-100 per day. Late Fees Extra
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3) Strong Management Team with Clear Roles.
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Sameer Guglani, CEO & Co-founder
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• 7+ years of leadership experience in startups
• Worked with Sonim Inc, Telephia Inc, wireless telecom startups, and Compaq
• 3+ years of free-lance experience in film making & theatre
• B.E. EE (Thapar Institute of Engineering & Technology, Patiala)
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Role
• Investor Relations
• Strategy
• Business Development and Partnerships
• Finance
• Facilities
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Ankur Agrawal, Chief Operating Officer & Co-founder
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• PGDM (IIM Calcutta), B.Tech CS (IIT Delhi)
• 7+ years in enterprise software development.
• Strong background in project management.
• Experience in organization building as part of middle management at two technology startups.
• Worked with Induslogic, Broadvision, Infosys
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Role
• Operations
• Technology Development
• IT
• Billing and Collections
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Nandini Hirianniah, Chief Product Officer & Co-founder
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• M.S Communications (Bangalore University)
• 10+ years of experience in Print Media, Radio, Television, Films, e-learning, tech writing and theatre.
• Experience in various positions from free-lance writer to director.
• Worked with Times of India, Zee News, IBM, GE
• One of the final 8 Contestants in “Business Bazigaar”, a Zee TV reality show to pick the best entrepreneur with the best business idea.
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Role
• Product Management
• Customer Experience
• Customer Acquisition & Marketing
• Content Acquisition
• HR
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4) A Business model that addresses the Pain points and the Large Market
5) Understanding of Competition (Direct competition is not mentioned here because of the information being sensitive but incase you are presenting to an investor then direct competitor understanding is a must!)
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Madhouse
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Local video store
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Convenience
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• Easy to find
• Home Delivery in all parts of the city
• Well trained customer service staff
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• Hard to find
• Very limited home delivery coverage
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Selection
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• Extensive selection of DVDs
• New hits, old classics, other titles etc
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• Limited selection.
• New releases, other popular titles
• Most stores only have VCDs
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Customer Experience
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• Branded customer experience
• Consistent experience
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Non predictable
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Quality
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Original discs, Excellent quality
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Mostly Pirated, camera prints for new movies, VCDs
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Customer service channels
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Web / SMS / Call center / Kiosks
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•Shop / Phone (in some cases)
• No movie list
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Law & Order problems
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Completely legal
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Need to bribe. High chance of raids and other legal issues.
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Speed of delivery
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Next day delivery
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Delivered with few hours
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New Releases
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Available only after Original Home Video Release
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Pirated copies, camera prints are available as soon as movie releases in theatre
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6) Clear Financial Projections & Time bound Milestones (Actual projections would have 5 years data on costs, profits, subscriber base etc. The actual information could not be published here because of its sensitive nature. But incase you are presenting to an investor make sure your financial projections are as detailed as possible along with 6 month to 1 and 2 year milestones.)
- Raise next round of financing by Q3 07, INR 35-40 Crore
- Launch in 3 cities by Q4 07
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•Full launch in Delhi NCR
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•10,000 subscribers
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•Close 3-4 high impact business deals
The above 6 points are the most important for a Venture capital investor while considering any business plan. So make sure you address all of the above points.
I would like to thank Sameer Gurglani, CEO and Co-founder of Madhouse for sharing parts of his investor presentation exclusively with WATblog.
Hope the above details are useful to all those who are knocking the VC door for funding and for all those who are aspiring to be entrepreneurs.
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Is is similar to Amazon.com DVD rental service..except that they are serving just indian market..
just like paypal is similar to wallet365 (by timesmoney)..
orkut — yaari, minglebox, bigada….
mginger — redalertz.co.uk there are few more websites like this .. ( check out a nice comment on mginger's so called by them as their original idea webtour.wordpress.com/2007/05/27/mginger-advertising-comes-to-mobile-phones/)
(arrow)looking forward for something which will make some indian idea global and which will push investment from foreign customers in india just like indian tutoring company tutorvista is doing….
[...] this is a post from long ago, that showed very well why an entity in the same space - Madhouse (which [...]