Add American investment capital, market experience and business expertise to the imagination, drive, innovation, ideas, execution skill and relentless energy now bursting from India and the world begins to change. And notice. Nowhere else can this combination leverage so much talent as in India today. It makes possible company-building the way we like it: a partnership between capital and entrepreneur that leverages our guidance, engages our mutual imaginations, and drives success for everyone involved.
At Clearstone, we're builders. We seek, find and develop large opportunities for scalable markets and life-changing outcomes. Overture invented performance-based targeted online advertising models that now underpin the economics of the Web. PayPal takes the worry out of online payments between strangers, contributing to the boom in online shopping and eBay itself. United Online bridged the "digital divide" in America by making high-performance internet connectivity affordable for more people. Cars Direct helped to shift the balance of knowledge to the consumer automotive purchasing. All these companies changed old practices, and all were built to do so with guidance from Clearstone Venture Partners.
Now we're funding dreams and building companies in India. We built our partnership with India carefully, first by attracting Indian business professionals to our team in the United States. Then we developed deep roots in TiE, the leading Indian entrepreneurial organization in the US. And we extended our reach through our US portfolio of companies, many of which operate development or services offices in India. And now we're on the ground in India, with Indian advisors, actively investing. Which of your dreams are you ready to build?
Clearstone believes participating in the Indian investment climate is imperative for ongoing success in technology venture capital. We believe we are uniquely equipped among American venture capital firms to create wealth in India, with networks, insight and qualified personnel. Our current portfolio includes 15 companies with 5 years of experience using India as a service or technical resource. Our combination of India-born staff with Indian company-building experience, extensive networks in the pan India-US business community, well-established early-stage company experience, and proven consumer-market know-how, makes Clearstone an enlightened partner to help Indian technology and market innovators to build companies with global renown.
Why Clearstone, Why India, Why Now?
Clearstone believes that India's potential as an engine for creating new wealth is even greater than the measurable economics suggest. Two recent changes in India speed the country's investment potential. Indian consumers are rapidly taking on the habits of consumers in the west. Rich in ideas and ambition, India has an emerging consumer population that is fashion-conscious, information-hungry and full of inveterate communicators. Like people on the move everywhere, books & music, apparel (including footwear), eating out, movies and mobile phones are among the top ways India's middle class is spending its money.
The second change in the Indian market that attracts us is a change of attitude. For the past 30 years, the flow of Indian intellectual capital to the US has been a familiar phenomenon in California and other regions of technical innovation. However, over the past dozen years much of the business and technical experience acquired in the US has been transferred back to India, and new graduates are contributing their own ideas. There is a new generation born in India now accustomed to success. This generation does not believe it has to emigrate to succeed. Indians have engaged the world and found confidence in their country's contributions. While in the past, Indian expertise helped to create value in the US, now many Indian entrepreneurs are convinced they can create value within the Indian market and from there export their ideas to the rest of the world. We believe they're right.
India Switches On.
With its large, rapidly-growing population of ambitious, educated people, India has achieved ignition as a wealth-creating economy and innovation engine. This development is a long time coming, the product of many social, political and economic trends that converged since 2000 to make India a powerhouse player in global knowledge assets.
Today's India's solid middle-class of at least 250 million people is lynchpin for the country's per capita GDP doubling from 2003 by 2008. Recent and current annual GDP growth has been in the range of 8%, with few obstacles in sight to slow it. Already, the proportion of India's economic value from services stands at 51%. Industrial share of Indian economic output has now passed the proportion devoted to agriculture, roughly 28% and 21% respectively. Nearly half a billion people are in the productive labor force, more than the total population of North America. Clearly India is a country on its way to permanent status as a global economic power.
Communications & Connectivity Leapfrog Slower Rivals
Internet access is pushing into the furthest corners of India. We're watching the mobile phone, with fast wireless connection to the internet, become for many Indians their digital window to the world. The determination by Indians to engage the world and plug in to the latest information streams by whatever means are convenient and possible breeds ideas. Where personal mobile phones are not yet common, the array of alternatives in remote towns is impressive: internet cafes and even cycle-mounted wireless internet access kiosks keep people from being left out.
Text messaging is the new glue tying Indians together, and use of SMS drives about 15% of mobile carrier revenues, with use exploding along with new mobile phone adoption. Indian market mobile handset adoption grows by 6 million new units per month! 85 million mobile phone users are projected to reach 250 million by 2009. Imagine the potential to tap from a market where mobile phone marketers have to think in terms of "the next 100 million customers."
India is rich with technology-based opportunities. Only 5 million households have PCs and the bulk of the population wants but has yet to buy mobile phones. With the youngest demographic of any large country, India is mad for games. People age 12-30 comprise 40% of the country's population, and they are highly enthusiastic about casual and intensive online games. This voracious demand for entertainment and social interaction propels large opportunities in content, devices and the backbone infrastructure to fully network the activities they will be used for. It's also a population that seeks and respects credentials. Education is revered in India, and people there readily accept remote access to and delivery of education services, to supplement traditional in-class instruction.
Entertainment isn't just games. Content also drives explosive growth in India, as it expresses local cultures and bridges them at the same time, contributing to India's gathering national unity just as it did in the United States. India's Bollywood produces the largest number of movies per year, outpacing Hollywood production. The country boasts the world's second-largest TV market and the most numerous digital theater conversions & new construction projects, along with the largest IPTV roll-outs to consumers.
Behind all this commerce in India is the financial system to enable efficient transactions. The challenges to scale financial services to keep up with burgeoning demand and rapidly evolving consumer habits, are considerable but also ripe with opportunity. Mortgages, credit card activity, and consumer loans support only a sliver of India's economic activity. The financial infrastructure for payments, especially those between strangers, is inefficient. However, a blend of online, mobile-phone-based and offline facilities are being woven together to build trust and speed into the Indian economy's payments systems.
