The budget coming from a government with a strong recent electoral mandate was expected to bring in bold reforms. What we saw instead was a pragmatic budget which was inclusive in nature (while not overtly populist). Overall it was a good budget that addressed many critical areas of the economy while missing a few opportunities for much needed change.
There were no sweeping reforms in the budget. The finance minister has clearly played a delicate balancing act – balancing increased spend, reduced tax and increased fiscal deficit.
The budget increased allocation towards infrastructure spends including highways, railways and power projects as well as urban development. This commitment will help both short and longer term sustenance of our GDP growth. And, with significant investments committed to infrastructure through increased allocations, I am optimistic that the investment climate will pick up again. Increased outlay towards rural housing and NREGA scheme will undoubtedly drive rural spend. The elimination of surcharge on personal income tax will put more money in the hands of the consumer and lead to discretionary spends. The planned rise in spending and consumption will have a multiplier effect and is aimed at returning India to the high levels of economic growth it enjoyed before the global financial crisis.
On the private equity side, there isn’t much that has been done. Some of the concern areas particularly for private investors are – a higher level of fiscal deficit (6.8%, Rs. 400,000 Crores) which will lead to increased government borrowing, crowding out of private investment, and higher inflation and interest rates. What was also unwelcome status quo as far as the PE/VC world is concerned was no clarity on disinvestment, no enhancement of FDI percentages and no pass through benefits for additional sectors. There are certain measures in the right direction such as outlining the commitment to commodity investment and entrepreneurship.
As an Indian there was reason to cheer. As a Private Equity investor there is little benefit in the short term as more could have been done to specifically aid the fledging industry, but the actions will bring benefits in the longer term.
However we must realize that the Budget is just a start and is a promise for further action/intent. How the government really executes on the promise will determine what benefits both short and longer term it will bring to the economy.
Harish Gandhi, Executive Director
BharatMatrimony.com, India’s No.1 matrimony portal, recently conducted a survey and shared an interesting trend on – ‘Prospective brides from across India’ on July 17, 2009. The most intriguing statistic from the report is the significant growth in usage of online matrimony by women in Tier II and Tier III cities. The report states that the number of registrations from Tier II and Tier III cities has risen by 34.6% over the previous year outpacing the 16% growth in registrations from Tier I cities. Apart from the increase in Internet penetration, this growth has been the result of a conscious effort made by BharatMatrimony.com to make the traditional process of matchmaking easier for its users and educate them about its benefits.
iYogi, a global direct-to-consumer and small business remote tech support provider that Canaan Partner has invested in, was recently named as a finalist in the Customer Service Department of the Year category in The 2009 American Business Awards on July 09, 2009. More than 2,600 entries from companies of all sizes and in virtually every industry were submitted for consideration across categories. With more than 70,000 customers across USA, United Kingdom, Australia and Canada, iYogi is setting new standards for the remote tech support industry with a customer satisfaction rating of 95%. iYogi’s Annual Unlimited Support Plan for $139 per-year that includes subscription to McAfee’s anti-virus and anti-spyware software and other tools for networking, recovery and management drive the company’s growth.
Relievant Medsystems Inc., a California-based medical devices company, recently raised $20 million in its Series C round of funding. Canaan Partners, an existing investor, also participated in the round. With this latest investment, the company would focus on funding clinical research and the launch of the company’s product, Intracept System. The Intracept System technology, which comes from Baylor University’s College of Medicine, is intended to treat chronic back pain with a minimally invasive surgical procedure, in order to avoid more invasive surgery or increased medication.
Canaan Partners invests in entrepreneurs and works alongside them to turn visionary ideas into valuable companies. Since 1987, the firm has catalyzed the growth of disruptive technology startups and healthcare companies revolutionizing the practice of medicine. With $3.4 billion under management and more than 95 acquisitions and 55 IPOs to date, Canaan has funded companies such as Acme Packet, Associated Content (acquired by Yahoo), CommerceOne, DoubleClick (acquired by Google), ID Analytics (acquired by LifeLock), Match.com (acquired by IAC), SandForce (acquired by LSI), SuccessFactors (acquired by SAP) and Virsto Software (acquired by VMware), as well as notable healthcare companies such as Advanced BioHealing (acquired by Shire), BiPar Sciences (acquired by Sanofi), Chimerix (NASDAQ: CMRX) and Elevation Pharmaceuticals (acquired by Sunovion). Current technology investments include Blurb, Kabam, Lending Club, Performance Marketing Brands, SOASTA, Tremor Video (TRMR), and Zoosk in the U.S.; BharatMatrimony, Loylty Rewardz and UnitedLex in India; and PrimeSense and LiveU in Israel. The Canaan healthcare portfolio includes emerging leaders such as Liquidia Technologies, Civitas Therapeutics and DICOM Grid. Canaan maintains a presence in the global innovation hubs of Silicon Valley, New York City, India and Israel. For more information visit www.canaan.com or www.facebook.com/canaanpartners. Follow us on Twitter @canaanpartners.
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