Rediff On The Net: Rediff-ining Net Strategies

The current trend among Indian internet
companies, especially the
business-to-consumer (B2C) companies, has been huge media campaigns with a view to attract eyeballs. The credit for ushering in this trend should go
Rediff, India’s first B2C portal. Delhi, Mumbai and other cities and towns have been painted with colorful Rediff hoardings. The company initially came out with advertisements on books, CDs and other products, but the campaign has shifted focus to other dimensions of a complete portal like email and chat. 

The company has been able to take the lead in media promotion since it has received repeated funding and thus has the money to spend on the campaign.

The company has had four rounds of funding, by far the highest in the country. In the first round, Draper International picked up 30% for about a million dollars.

This was followed by an investment by Intel of an undisclosed amount. Next on the list was Warburg Pincus picking up a share of about 10% for a value of about $4 million. Then, in the fourth round, the company sold off its 15% stake to GE Capital, Citibank Private Equity Fund and Pacific Century at $15 million.

During this round, the Rediff portal was valued at $100 million. The valuation was made a shade later than the Indiaworld valuation of $115 million. After the four rounds of venture funding, an ADR issue is proposed and Rediff has awarded the mandate to Goldman Sachs. The company expects to sell its IPO in the current year. 

Though the company intends to go in for an
IPO, market sources suggest that the company is looking for a higher and better valuation in the fifth and final round before it goes for the public issue. After the high valuation of Indiaworld and the eventual rise in Satyam Infoway’s valuation, Rediff expects better bargaining power with the investors with its more than 25 million hits per month.

Rediff’s future strategy revolves around the company tying up with a lot of the retail outfits. However, the only concern about the company is that if investors question its profitability, it could seriously affect the valuation of the company.

This has been the trend in the west where the share prices of net companies like Toy R Us, Amazon and other etailers have been hammered. However, until then the company, which has an early entrant advantage and a high mind share, should continue to sizzle in Y2K.
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