We had questioned at the time of the sale of Burrp to Infomedia18 on whether this deal was a strategic sale or a distress one! Well now the cat or the amount in this case is out of the bag.
Burrp was sold for 4.25 crores as per the SEBI filing by Infomedia18. This amounts to less than a million dollar valuation and if you ask my first reaction to this its was.. Wow thats CHEAP!
But lets not let first impression affect our analysis but lets instead understand the business and delve on some numbers..
Burrp An Ad Driven Model?
Burrp was always going to be an ad driven model as its lifestyle listings would hardly earn anything even it launched paid listings for restaurants and other lifestyle joints.
Burrp sold of or atleast was announced as being acquired in April 2009 which means that the talks must have started atleast a couple of monthe or more before and that time was the recession time the world over (obviously not a great time for discussing valuations).
Now lets have a look at what numbers did burrp possess.
Burrp Unique visitors
As per sources close to the company we have data of the unique visitors to burrp.com around the time they got acquired i.e. between February and March.
Unique Visitors – 8000 -12000 per day
Monthly Uniques – 2,50,000 – 3,60,000 a month
So if we do the math we find that each unique visitor was valued at about 120 rupees. Thats about 3$ a unique visitor. Im not valuation wizard but id like to think that given the Indian ad market and the situation in which Burrp was sold it can be stated as a fair valuation. Maybe today Burrp would have got a better valuation, But when you consider the fact that Asklaila and sulekha have recieved a ton of funding (in millions of dollars each). You begin to question whether burrp was plain unlucky or just too niche in its focus.
Indian Ad Market Not Conducive For Niche Online Publishers & Content Services?
Our take is that Indian online ad market is not conducive to niche online publishers just yet. While our US counterparts have access to multiple ad networks and also have had funding via Venture funds examples include Glam.com and others. Indian niche content players have struggled for advertiser access and to have their sites valued for the audience rather than the clicks it generates.
Most ad networks offer rates that sound worse than the tips you would give a waiter in a 2nd grade restaurant in mumbai! (yes 10 rupees to 20 rupees a CPM is reality now 
). I feel somewhere an aggregator can play an important role in empowering the publishers. Also VC’s need to value content businesses a little more than they do in India or else such low valuations would continue to exist.
That’s an interesting point you make about aggregators empowering publishers. I’m afraid that is working only for niche publishers, and it takes power away from the larger ones. As you’re probably aware, large publishers (Murdoch, who else?) are up in arms against aggregators. Aggregators are essential for growing a market, but beyond a point, the way they prioritize content is a often cause of strife.
Thanks for your views Nikhil. While what you are saying is correct for a content aggregator what I was really referring to was an advertising aggregator for niche platforms. Most ad networks sell page views or clicks and not audiences which is where niche players have a strong foothold.
Unique Visitors – 8000 -12000 per day
Monthly Uniques – 2,50,000 – 3,60,000 a month.
It is because of this Statistics , the web18 group bought burrp.com or because of a unique website itself.
Suppose I have a movie review site with same statistics mentioned above , will i be able to sell the site for atleast 1 crore ?
You are right sumer – I doubt you will even get a crore. Burrp got what it did because of previous investment from Haresh Chawla of Network18 group.
Damn too expensive!
Hmm, yeah unlucky, it’s pretty easy to get demoralized in Indian market, that’s probably why founders let it go.
US VC’s are much more patient with company growth and a bit liberal with funding as well. When it comes to Indian based ventures for some reason we don’t get that hype or PR associated with the startup-companies. I think, that’s where the disconnect is and sort of kills that fast growth scenarios. And of course, burrp kind of sites are slow growth ventures, you don’t build loyalty among content consumers overnight. Burrp is not a twitter or facebook or bharatstudent or Orkut, where viral is the KING and we do not usually attach lot of meaning to the content in there.
Google is planning to acquire Yelp! (which is a service similar to Burrp) for USD 500M … http://bit.ly/6I0fT4
There could possibly be a backstory to this, but I guess only Haresh and the Burrp guys would know about it.
Otherwise, it is a simple scenario of valuations now moving towards being based on actuals than being based on potential. It is a good correction that is happening, even though it will be painful for the entrepreneurs and investors who are involved. When the amount of cash available to throw around is lower, the propensity for risk also diminishes in the system.
I totally agree to you Rajeev. Its a very cheap rate. 4.25 crore for such a unique and exclusive portal is too less for its novelty. Probably, it was too early a period for the Burrp guys to sell it across. Internet market is yet to be explored and revolutionized by majority of Indians.
Well, “Also VC’s need to value content businesses a little more than they do in India or else such low valuations would continue to exist” – This is certainly a great point. but, I feel VCs finally gets stuck with the ‘Revenue Model’ and today majority of the VC’s needs the business to be ‘Socially Beneficial’ which is actually not possible in case of Burrp (but, certainly not impossible)
Bottom line: Burrp shouldn’t have sold it this early.
Thanks for posting.