A year and a half ago, it would have been hard to point to five or six quality startups in India, says Ash Liliani, head of global sales and marketing at Silicon Valley Bank, the go-to spot for many hot companies seeking financing. That number is now mushrooming as the country increasingly attracts interest from venture capitalists across the world. The well-publicized information technology and IT-enabled services industries are expected to continue to show strong growth.

But India is also starting to exhibit new strengths in areas such as semiconductor design, cleantech, biotech, gaming, consumer Internet, and mobile technology and content. Some startups are offering unique solutions for India’s burgeoning domestic market, others are targeting global markets. Several are going after both. Red Herring has chosen a few below-the-radar young companies that we think are worth watching.

Ascendus Technologies

Location Bangalore

URL www.ascendus.com

Founded 2001

CEO Vikram Narayan

Employees 12

Funding N/A

Key Investors Undisclosed angel investor

Vikram Narayan wants to build the world’s biggest online training platform for business executives. His company, Ascendus Technologies, is currently in talks with several universities and business schools across the globe to aggregate their content on Ascendus’ super portal, and Mr. Narayan is aiming to offer over 5,000 courses to executives by the end of the year.

Ascendus has developed its own back-end technology for on-demand delivery. In fact, Salesforce.com uses Sales-Guru.com—an online platform for creating and distributing online courses—as the basis for its Salesforce.com e-learning service.

“Individual trainers have few means of marketing their skills, yet there may be a huge latent demand for what they have to offer,” says Mr. Narayan. Ascendus plans to offer a Wiki-like response facility where students can rate courses.

Ascendus has some serious competitors, including U.S. companies Saba Software and Sumtotal. But the market may be big enough for several players. In a January 2006 report, Forrester Research noted that technologies for managing performance and learning are among several applications leading the growth of the $9-billion market for HR applications.

ConvergeLabs

Location Gurgaon

URL  www.convergelabs.com

Founded 2000

CEO Amol Patel

Employees 60

Funding $11 million

Key Investors Walden International, Anthellion Capital, Global Catalyst Partners, Dot Edu Ventures, GVFL

ConvergeLabs markets an “m-commerce” platform called M-Bay that enables payment transactions over mobile phones. M-Ticket, ConvergeLabs’ leading application, allows mobile users to buy tickets from their phones. Instead of standing in long lines, concert and theatergoers get a special barcode on the screen of their phone, which they swipe over a scanner at the event to gain entry.

The company also recently signed up Deccan Aviation (India’s first low-cost airline) to do m-ticketing, going a step further than the web-based e-ticketing the carrier has made popular in India.

“Mobile ticketing is very popular in Japan and NTT DoCoMo has some cool applications. But the U.S. has a long way to go,” says ConvergeLabs’ 33-year-old CEO Amol Patel, a Stanford University alumnus who aims to grow his company into the No. 1 provider of mobile applications in India.

But competition abroad is steep. Companies include Mobiqa in the United Kingdom, while U.S.-based PayPal just last month announced its own mobile payment solution.

Drishtee

Location Noida            

URL www.drishtee.com

Founded 2000

CEO Satyan Mishra

Employees 149

Funding $1.5 million, 4 rounds 

Key Investors Angel investor Anantha Nageswaran

Drishtee is a for-profit company that’s aiming to make millions by catering to millions of entrepreneurs in rural India. The company sets up Internet kiosks and trains the owners, who then provide Internet services to mostly uneducated, illiterate, and poor local populations.

Even these residents are willing to pay a small fee (about $0.10) for Internet access, because they have forms to fill out, complaints to make, and even goods to sell online. Drishtee makes a small percentage of that fee. So far the company has installed about 3,000 kiosks in northern India and plans to extend its reach to the rest of the country in the near future.

In a land of villages—government figures say there are close to 650,000 villages across India—the opportunity is immense. But other companies have spotted that opportunity, too. Competitors include ITC, a company well-known for its tobacco products that has diversified into hotels and information technology.

Drishtee is already profitable, says CEO Satyan Mishra, though he won’t disclose figures. Hurdles include limited bandwidth and poor power infrastructure, but these may vanish as a clutch of telcos rush to provide broadband services and mega power projects progress.

Hellosoft

Location Hyderabad

URL www.hellosoft.com

Founded 2002

CEO Krishna Yarlagadda

Employees 85

Funding $28.5 million, 3 rounds

Key Investors TD Capital Ventures, Mitsui & Co Venture Partners, Entrepia Ventures, Venrock Associates, Sofinnova Ventures, Jumpstartup, IntelCapital

What happens when a commoditized—and therefore cheap—microprocessor gets a makeover and begins to function like an expensive digital signal processor? It drives down the cost of the device that it serves. It also ends up sipping power rather than guzzling it.

That’s what Hellosoft’s software did for mobile phones, and what it soon hopes to do for PDAs, IP phones, set-top boxes, game consoles, wireless LAN access points, soft switches, and mobile base stations. Broadcom, Ericsson, Sharp, LSI Logic, Sandbridge, Flarion, and Fujitsu are already customers.

The company sees promise in improving the performance of all mobile devices. “In a few years, every terminal will be Wi-Fi-enabled, using VoIP,” says CEO Krishna Yarlagadda. “Cellular phones will rely on VoIP because the per-minute charge for a call will be a fraction of what it is today,” he says.

Hellosoft has attracted financing from top VCs and won the 2006 Frost & Sullivan award for product innovation of the year, but it faces stiff competition from U.S. companies Intellisync and Openwave Systems.

IBS

Location Trivandrum

URL  www.ibsplc.com

Founded 1997

CEO V.K. Mathews

Employees 850+

Funding N/A

Key Investors Family-held company

IBS, a software services company, specializes in transportation and logistics. Its clients include airlines such as Emirates, Cathay Pacific, Nippon Cargo, and Qantas, as well as London’s Heathrow and Gatwick Airports. It also has completed projects for SITA, which provides IT and communications service to the air transport industry, and EDS.

IBS’ products include aiRES and iCargo for the air transportation industry. aiRES replaces the traditional legacy architecture common in the industry with a modular, customizable system for applications such as passenger reservations, check-in, baggage control, ticketing, and fares. WestJet Airlines, the low-cost carrier from Canada, is aiRES’ launch customer.

With revenues of over $30 million in 2005, IBS is a profitable company in its chosen niche. That niche is pretty large: the United States alone spends $1 trillion a year on logistics software. For that reason, competition is thriving too. Companies like India’s Kale Consultants and Luxembourg-based Decartes can offer IBS stiff resistance. 

NowPos Online Services

Location Secunderabad

URL www.nowpos.com

Founded 2004

CEO Ayyappa Nagubandi

Employees 45

Funding N/A

Key Investors Teva Pharmaceutical Industries, Pitango Venture Capital, Giza Venture Capital, Star Ventures, Hadasit, The Jerusalem Development Authority.

Ayyappa Nagubandi, 28, who started his professional life as a receptionist at the office of Satyam Computers, soon discovered his talent for web design and decided to launch his own company, TrulyIntelligent Technologies. NowPos Online Services, the company’s first subsidiary, offers free voicemail over the Internet, aimed at users in developing countries with connectivity but little literacy. Tens of thousands of users in countries like Vietnam, China, and South Korea have already registered for the NowPos service.

Revenues are expected to come from advertisers that want to market products and services through NowPos. The company is banking on the fact that listening to a short sales talk before accessing a voice mail is a small price to pay in developing countries, where many cannot afford to phone faraway loved ones.

“This service has the potential to challenge text emails, at least in the personal email space,” says T.R. Madan Mohan, an analyst at Frost & Sullivan. But whether enough advertisers will sign up to make the service profitable remains to be seen.

Ocimum Biosolutions

Location Hyderabad 

URL www.ocimumbio.com

Founded 2001

CEO Anuradha Acharya

Employees 130

Funding Internal

Key Investors Founders Subash Lingareddy, Anuradha Acharya, Sujata Pammi

Tracking the progress of biotech research can be a painful procedure, as Anuradha Acharya, CEO of Ocimum Biosolutions, discovered when still a student.

She created Ocimum to sell software-tracking tools to research labs around the world. Among its customers are the University of Toronto, University of Washington, Cerrilliant, Max Planck Institute for Infectious Diseases in Berlin, Geno-type Biotechnology Center in Athens, and Taiwan’s Yang Ming University.

Ocimum, which competes with U.S.-based LabVantage, has two other business lines: contract research and the supply of microarrays, or tools to examine the intertwined interactions among genes. To shore up its microarrays offering, the company acquired the genome diagnostics division of German company MWG Biotech for €3.6 million in July 2005.

According to International Finance, the private funding arm of the World Bank that is currently evaluating whether to invest $5 million in the company, Ocimum could potentially use its products to address various environmental and social issues, including minimizing the use of organic solvents, decreasing animal experiments, and improving wastewater waste treatment.

In 2005, Deloitte ranked Ocimum 55th among the 500 fastest-growing technology companies in the Asia-Pacific region.

Softjin Technologies

Location Bangalore

URL  www.softjin.com

Founded 2000

CEO Nachiket Urdhwareshe

Employees 80

Funding N/A

Key Investors Co-founders, friends, family

Semiconductor designers have long depended upon tools from electronic design automation (EDA) vendors such as Cadence, Synopsys, and Mentor Graphics. But these off-the-shelf tools can’t always meet the demands of new types of chip design.

Much like designer cars made for a single customer, Softjin Technologies’ EDA tools are custom-designed for a single customer. Normally, next-generation chip designers would have to develop these tools in-house—a costly and time-consuming endeavor. Softjin claims its tools help semiconductor design firms cut production time in half.

Many of Softjin’s customers hail from Japan, though CEO Nachiket Urdhwareshe won’t name them. “We were profitable almost from day one since we offer a service, even if it’s an extremely high-end one,” he says.

Although off-the-shelf EDA is estimated to be a $4-billion market, there are few estimates of how much companies invest in building tools in-house. And this is the space Softjin is after. Mr. Urdhwareshe assumes this market might be worth $1 billion a year, of which companies may be willing to outsource 10 percent—representing a $100-million business. But Softjin has competition. U.S.-based competitor Verific plays in the same field.