Cambridge Innovations, a leading investment and technology unit of Cambridge Technology Enterprises (CTE), has invested in Valet Anywhere, a new on-demand valet service transforming the way people own cars in cities, says Aashish Kalra, Chairman, Cambridge Technology Enterprises.
Valet Anywhere has annual revenue of USD 3.1 million and the deal will help the company accelerate and extend its product offering and enable it to enter new markets, he added.
Post the investment, Cambridge Innovations will contribute around 10% to the total revenue of CTE and aims to invest in 50 more companies in the next three years.
The company targets USD 2 million in revenue every month by March 2017. It would also be looking to make 12 investments in US-based early stage ventures by March 2017.
Below is the transcript of Aashish Kalra’s interview with CNBC-TV18's Mangalam Maloo and Reema Tendulkar.
Mangalam: In April you announced an investment in Valet Anywhere which is an on demand valet service. Could you tell us what was the investment that you made in the company, what was the amount and what was the stake that you got and how will that impact your numbers?
A: In December of last year we launched division of Cambridge Technology Enterprises (CTE) called Cambridge Innovations. The whole purpose of Cambridge Innovations (CI) was to find the next generation of transformative businesses and take those businesses to the next level because we are looking to be the leaders in the convergence of cloud and big data, fuelled by artificial intelligence (AI) and machine learning and it is the smaller companies that are going to it, the next generation Ubers, the next generation internet of thing companies and to take Valet Anywhere as an example and we announced also hourly.help through CI as investment.
Valet Anywhere is solving and transforming a major global issue which is parking. You take Delhi for example, 10 percent of all land in Delhi is consumed just by cars. That is almost as much as the forest cover. More land is used in Delhi every year to park cars than to provide low income people housing. So, Valet Anywhere is solving that problem in the US. It is doing on demand parking. So, you can park your car, you can get it cleaned, you can get it fuelled, you can have the pollution check done and it gets centralised because most of the time a car is parked.
You take hourly.help for example. It is an interesting company that is helping children. There is 40 million children in the US, they have a discretionary spend of USD 5,000. How do you learn about money, how do you learn about your next resume, how do you learn about responsibility and it is really helping the parent and the child and the community come up with a way to figure that out and it is really exciting.
So, we have done eight investments so far in Cambridge Innovations since December. When we started we were unsure if it was a business model that was scalable, how it would work, and today we are at a stage where we know we can find the transactions, we know that we can work with the companies and the companies are excited to work with us in this new framework. And for CTE it is a big win because as these companies grow CTE gets the revenue of its own clients.
Reema: So, how much have you invested so far in the eight companies up until now and in FY17, will we see any revenues from Cambridge Innovations and if yes, how much?
A: Cambridge Innovations will contribute a little less than 10 percent of our revenues and we think it might be as much as 15 percent moving forward. What we do say is that our target is for CI to invest, innovations to invest in 50 companies over the next three years and we typically will take 20 percent plus, minus of the seed round which is what we participate in. So, because we are not a fund, we are not subject to just one area. There is no one saying that we must invest USD 10 million this year or USD 20 million this year. As long as we find the right companies, our target is to invest in 50 companies.
Mangalam: The last time we spoke to you, you did indicate that the company is targeting USD two million worth revenue per month coming in by March, 2017. That amounts to about Rs 170 crore coming in for one full year. Compare that to Rs 46 crore worth revenue that you have done in the nine months of financial year 2016, where will the next leg of revenue growth come from considering you believe that Cambridge Innovations will not generate more than 10-15 percent of revenue. Where will that big jump come in from for the company?
A: When we took over the company, January 1, 2015, we set a target that we needed to get minimal scale. And that was USD two million a month by March, 2017 with the interim target of USD one million by March, 2016. So, it is at March, 2016 you get to a million. So, if you take a linear curve, you started at USD 4,00,000, you got to a million, so it is not like USD 12 million of revenue, it is going to be more like USD 8-10 million, something in that range. The same thing holds true for next year. You get to USD two million by March, 2017, but along the way, you will increase from where you are today.
The revenue drivers are really going to be our core business which is cloud and big data where we service large clients. People like Schneider Electric, people like Colgate, it is the largest companies in the world. Cambridge Innovations is one part of it, but the main driver and if you look at it, since we took over in January 1, and compare it to every quarter, the same quarter in 2014 versus 2015, we did 100 percent growth. And it is a seasonal business, so 100 percent growth on the same comparable quarter is a substantial amount of growth. And that is what has allowed us to get to this point. And we remain committed to coming to USD two million in revenue.
And Cambridge Innovations is really a business that is for the future. That is something that really is where the company will be 3-5 years from today.