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IYogi raises $15 mn from US-based VC firm, three others

Jan 6th, 2010
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Bangalore: Gurgaon-based iYogi Technical Services Pvt. Ltd that offers computer support to individuals and small businesses said on Wednesday it had raised $15 million (Rs70 crore) in its third round of funding.

One of its four investors credited the five-year-old venture’s year-on-year growth for its success in raising capital at a time when most early-stage firms are struggling to generate revenue.

“The capital that we have raised in this round would be utilized for enhancing services and expanding our team of global tech experts,” said Uday Challu, co-founder and chief executive, iYogi.

He added that the firm may look at a public listing after 24 months.

Founded in April 2005, iYogi had raised $3.1 million in 2007 and $9.5 million in 2008.

Draper Fisher Jurvetson, or DFJ, a US-based early-stage venture capital firm, contributed $9 million in the latest deal.

DFJ, which recently said it would look at growth-stage deals as well in India, joins continuing investors in iYogi—Canaan PartnersSAP Ventures and SVB India Capital Partners—in iYogi’s latest round of fund-raising.

“In this market, people raise capital in two cases. First, when their plans fail and they need capital for sustenance. Second, when their growth exceeds expectations,” said Mohanjit Jolly, executive director, DFJ India.

“iYogi is growing (at) 300% year-on-year. Not many companies can boast of this kind of growth,” he said.

iYogi’s primary markets are in the US, the UK, Australia and Canada. It has at least 100,000 annual subscribers and expects to end fiscal 2010 with revenues of $21 million.

According to iYogi, the global on-demand personalized computer support market is worth around $30 billion and is growing at 25-30% annually. Research firm IDC estimates global personal computer sales will grow at 10.3% in 2010, suggesting that more people will be shifting to new computers.

But Milan Sheth, partner, technology practice, Ernst and Young, raised a note of concern. “While iYogi’s B2C (business-to-customer) model ensures its high scalability,” he said, “the firm needs to ensure how it would service large number of customers in a seamless manner.”