Top VC firm backs Indian online travel
IndUS Business Journal - February 1, 2006

PALO ALTO, Calif. - The online travel industry has flourished in the United States and Norwest Venture Partners expects nothing less in India, which is why the Palo Alto firm has thrown its financial clout behind a new Indian company, Yatra Online.

Yatra, which is based in New Delhi, India, will help businesses and consumers book airline, railway and bus tickets, and reserve hotel rooms and car rentals through three options: by phone, through the Web or using mobile handsets.

The company will provide travel-related information, pricing, availability and reservations for airlines, hotels, railway, buses and car rentals across 5,000 large cities and small rural areas throughout India. Yatra's multi-language customer service center will operate around the clock, 365-days-a-year. Yatra will offer first-priority booking, customized travel packages and special deals as a result of partnerships with Indian travel companies. It will also offer free travel-related news and travel advisory services.

Yatra expects to launch its services in the next few months.

To further support Yatra and its efforts, Norwest Venture Partners has teamed with Reliance Capital and Television 18 Group. These companies will provide additional financial backing to the Yatra venture.

Reliance Capital is one of India's top private sector financial services companies. Television 18 Group is a premier Indian news broadcaster, airing CNBC TV18 and CNN-IBN. It also runs moneycontrol.com, commoditiescontrol.com and ibnlive.com.

"We saw an opportunity by using a technology, a centralized system, to build a mass-market travel company for India," said Vab Goel, partner at Norwest Venture Partners and Yatra board member. "We think this is a very unique opportunity to build a successful company."

According to Goel, a company like Yatra - a standard in the United States with the likes of Orbitz and Expedia - does not exist in India, and with the travel industry on the rise an early entry into the market is likely to hit a large pay dirt.

Goel said that India is currently in the midst of a large boom in both business and leisure travel - in 2006 the Indian travel market is expected to hit the $40 billion mark and to continue to surge upwards of $50 billion by 2009.

If you combine this with the increasing availability of the Internet, 17 million mobile phone users, growing middle class spending power and increasing consumer interest in travel and entertainment, the potential for the online travel industry in India is huge, Goel said.

In addition, Goel pointed out that the top travel companies currently in India capture less than 20 percent of the market, with many only focusing on particular regions or cities and, often times, a particular clientele such as only corporate clients. This makes for a very segmented market, he added.

Lastly, most of India's 20,000 hotels and motels are yet to take advantage of technology to promote their business. "They are not online," Goel said. "There is no independent system."

Yatra's founders are non-resident Indians and experienced travel industry executives who have returned to India to launch this first centralized, independent travel reservation system. Co-founders, Dhruv Shringi and Manish Amin, have a combination of 45 years of travel experience and 15 years of online travel experience. Most recently, they worked together to help build and manage one of Europe's largest online travel businesses, Ebookers, which was recently acquired by travel giant Cendant Corp.

"We are thrilled to be funded by such strategic leaders such as Norwest Venture Partners, Reliance Capital, and TV18 Group who have backed our team's vision to make the travel experience more affordable and enjoyable in India," Shringi said in a statement. "With our nationwide reach to consumers across India, we will bring more bookings to hotels and airlines. Even the smallest hotel in the smallest town in India will benefit from more visibility than they have ever experienced before. Yatra is committed to selling and filling seats on flights and hotel rooms that are currently underutilized."

Since announcing the launch of Yatra, Goel said that they have received thousands of e-mails from companies looking to partner or get involved with the venture. The startup is also receiving blossoming consumer interest, which will be bolstered by upcoming marketing efforts.

"The consumers are demanding better service and that will be the goal of Yatra," said Goel. "Whenever people think of travel, they will think of Yatra."

The 45-year-old Norwest Venture Partners, led by renowned venture capitalist Promod Haque, is no stranger to making investments in emerging markets. The company has funded over 350 companies and currently manages over $1.8 billion in venture capital. It predominantly focuses on information technology in areas such as semiconductors, software, services and consumer/Internet technologies.

Previous investments include Actel Corp., Brocade Communications, Cerent (acquired by Cisco Systems), Forte Software (acquired by Sun Microsystems), PeopleSoft and Tivoli Systems (acquired by IBM).

Goel pointed out that Norwest Venture Partners has invested in companies outside of the standard technology area such as Diary Queen, Lifetime Fitness and Select Comfort.

Norwest Venture Partners also has experience in the travel industry having invested in G2 Switchworks, a company that connects airlines with travel agents; GetThere.com, an early online travel Web site in the United States that was bought by Cendent; and OnVantage, a hotel-booking Web site focusing on companies and groups.