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CASE GAME: P2P The Case Of VC Funding It has the first-mover advantage and great content to boot. But are those enough to ensure Bimabharat.com's success in the online insurance market? Renuka Ramnath of ICICI Ventures, Pravin Gandhi of Infinity Technology Investments, and L.M. Mehta of asiainsurancepost.com debate. By R. Chandrasekhar
''Vikram,'' said Vinay Bhatia, one of the three promoters, ''it is to get our act together that we need the first round of funding!'' ''You may be right,'' remarked Sinha, ''but convince me that you are on track. Where is the focus?''
When it was set up in June 1999, BimaBharat.com had a headstart. It was the first mover, although by December that year, six more insurance portals had surfaced. But unlike the others, BimaBharat.com had the advantage of being promoted by a group of four insurance veterans with formidable domain knowledge. ''BimaBharat.com is a vortal dedicated to insurance and that itself gives it a clear focus over the dead and surviving imitators,'' said Bimal Chatterjee, a director of Tech-Media. ''If you are focused,'' said Sinha, ''how come you haven't made money? You are nearly two years old in the business, with a revenue model in place. But where is the revenue?'' ''Let me provide a recap,'' said Arvind Nair, another director, ''so that we get our perspectives right. We started the vortal when the Internet was booming. Indian insurance was about to witness an era of deregulation. There was the promise of new players, new products, new distribution channels, and new consumers. After all, only one out of every 100 Indians has an insurance cover. As you know, distribution costs comprise over 60 per cent of an insurance business. We had a dream...of an online insurance marketplace. It is still possible. But the market is not mature in terms of an infrastructure that can support that dream-like insurance literacy, pc penetration, and product options. That is what is holding us up. You talked of potential. BimaBharat.com averages 200 hits a day.'' ''That is good for a vortal that has not been marketed at all,'' agreed Sinha. ''But it needs full-time commitment. I don't see any evidence of it. Almost all of you are doubling up regular jobs with the vortal.'' ''We can take on more staff as we go along,'' said Bhatia. ''In fact, we thought it best to moonlight till we reach some semblance of consolidation. That was why we took the less expensive option of outsourcing. We have leased office space and computers. We have farmed out web-hosting and web-designing. We have only a skeletal staff.'' ''Okay, costs are under control,'' said Sinha. ''Let us talk of revenues.'' ''The original model was based on revenue from two streams: advertising and sponsorship, and transactional fees,'' chipped in Vasant Rao, another director. ''Neither has worked out-for us or others who spent aggressively to ramp up hits. We saw the trend early on and were quick to react. We launched a monthly print magazine-BimaBharat. It was meant not only to generate offline revenue, but help us build our online equity. Priced at Rs 100 per issue, it is a niche publication that has no competition at all. We have published a dozen issues so far and the response has been encouraging. It is rich in content, design, and offers value for money.'' "So why has it not worked?'' asked Sinha. ''The magazine is targeted at insurers-not at the vast population of the insured. Even if you include consultants, senior managers, and service providers, you can't hit a circulation of more than 10,000. In fact, we have so far managed a subscription base of only 3,000, and we need numbers to interest advertisers. That is why we need to sign on people in marketing, circulation, and editorial-all of which are now being outsourced. We need to promote the magazine, promote the site...all that needs money." ''I would have jumped at this a year ago,'' said Sinha. ''But now, I am wary of any idea that merely bleeds. Tell you what. You have built up good content. In fact, you are the only insurance website with an offline presence although you have not uploaded the magazine content on the site. Why don't you integrate the two and become a content provider? Any number of financial services sites will only be too happy to buy your content for a fee. That will be a revenue stream.'' ''No way,'' said Bhatia. ''We want to remain a pure play. We want to be exclusive. Our dream is to become a B2C exchange for insurance. We want BimaBharat.com to become a comprehensive database on insurance. We want to help insurance firms plan their product and price strategies, provide information to consumers on various policies, enable them to buy policies and make payments online; encourage both life and non-life insurers the world over to open their online shops. '' ''An insurance portal lends itself to a Net transaction far more than an FMCG firm,'' said Sinha. ''Consumers don't need to touch and feel the product. There is a great deal of standardisation of insurance products and the Net also facilitates customisation. But all that will take time. You need to build a revenue model in the interim.'' ''The reason why there is some urgency in our requirements is that a large publishing house is planning to launch magazines aimed at niche markets-including insurance,'' said Rao. ''We must consolidate the equity we have already built up. Now is the time.'' |
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Vikram
Sinha cut straight to the point. ''I see potential in this venture,'' said
the 43-year-old Director of Sigma Investments, a Delhi-based VC firm, as
he looked around at the team from Tech-Media India assembled on the other
side of his large, mahogany desk. Tech-Media had been in talks with Sigma
to finance its insurance vortal, BimaBharat.com. ''But you need to get
your act together, and then we will have a basis to talk.''
