Konarka Technologies

East or west, Indian start-ups are still the best

[ THURSDAY, SEPTEMBER 11, 2003 11:40:01 AM ]

Startups with significant Indian American founders or key executives in management are continuing to attract significant funding from venture capital firms, even in this difficult economic climate.

A recent article by The Wall Street Journal surveying the hottest investment trends - including alternative energy, medical devices, wireless networking and video chips - featured two companies with significant Indian American involvement.

In the alternative energy sector, Lowell, Mass.-based Konarka Technologies Inc., named after a temple in Orissa dedicated to the Hindu sun god Surya, develops plastic sheeting that can transform sunlight into electricity.

The company was split out of the University of Massachusetts Center for Advanced Materials five years ago. Kethineni Chittibabu and Srinivasan Balasubramanian are two of the startup's principal scientists.

Chittibabu, who has an M.S. in chemistry from IIT-Madras and an M.S. in polymer science and technology from IIT-Delhi, has performed extensive research on the design, synthesis, processing and characterisation of conjugated polymers.

Balasubramanian, who earned a B.S. in chemistry from the University of Madras and an M.S. in chemistry from Case Western Reserve University, develops dye-sensitised, nanocrystalline, semiconductor-based photovoltaic cells for portable power applications.

Konarka says its lightweight power packs or energy-storing plastic rollout tarps could generate electricity in remote areas. Redwood City, Calif.-based Draper Fisher Jurvetson led a funding round for the company in October 2002, at which time DFJ managing director Raj Atluru joined the board of directors. Atluru believes Konarka's technology could push solar cells into the mainstream.

In June, Konarka raised another $6.5 million, again led by DFJ, bringing total funding to about $18 million, including $1.5 million from the state of Massachusetts and $100,000 from the US Army.

Konarka says it will enter the market with a photovoltaic cell in late 2004 that will generate solar power at about $2 per watt. "If we can get below $1 per watt, we can change the industry," predicted Konarka chairman Howard Berke.

In the business-services sector, the Journal cited Los Gatos, Calif.-based 24/7 Customer, which provides call centers for companies needing technical support and telemarketing. 24/7 Customer has 2,000 employees in two centers in Hyderabad and Bangalore and plans to ramp up to 3,000.

The business-process-outsourcing firm was co-founded by chief executive officer P.V. Kannan, chief operating officer Shanmugam Nagarajan and vice president of business development and marketing Sudhakar Kosaraju. Ram Shriram, a former Netscape vice president and managing partner at VC firm Sherpalo, is on the company's board of directors.

24/7 uses an off-the-shelf technology to cut delays and static from phone calls that may originate in the US and are relayed to US networking centers on the East and West coasts before ending up in India.

An even bigger selling point, Kosaraju said, is a proprietary network that allows customer-service managers to track performance in India from their home bases.

The company has signed up 10 large customers that outsource tasks like technical support and help desks. Sequoia Capital took the lead in a $22 million round of funding in July 2003. In addition to expanding its work force, 24/7 Customer plans to use the money to acquire competitors.

Kosaraju told the Journal that outsourcing is a sensitive issue and the company was asked by a major US bank and a major US package-delivery service to sign non-disclosure agreements, fearing negative publicity. "Especially with the economy the way it is, many have requested these relationships stay confidential," Kosaraju added.

Kannan co-founded Business Evolution, which was acquired by Kana Communications in December 1999. Prior to that, he worked in the U.S. and Europe in various leadership posts on IT projects at IBM, Oracle, Novartis and Pacific Power.

Nagarajan co-founded Business Evolution and before that held senior management post at Comsys Technical Services, Churchill Insurance Co. and Tata Consultancy Services. At Tata , he led the development of various versions of the financial accounting software EX.

Kosaraju, a Harvard University graduate, managed business development opportunities for online pharmacy PlanetRx.com. At Jupiter Communications, he led market-forecasting projects related to Internet appliances, Internet access technologies, IP telephony and electronic commerce.

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