US VC majors pick up 33% in PayMate

Kleiner Perkins Caufield & Byers (KPCB) and Sherpalo Ventures, the US-based venture capital (VC) majors, are close to picking up about 33 per cent stake in Mumbai-based wireless transaction solutions company PayMate India.

The IT start-up company, which has launched its mobile payment technology a couple of months ago in India, has already received a commitment of $5 million (Rs 7.2 crore) funding from the VC companies.

PricewaterhouseCoopers was the advisor to the deal.

KPCB, promoted by Vinod Khosla and his partners, is currently one of the leading VC funds globally. Together with Sherpalo, it is likely to invest another $25 million (Rs 90 crore) in the Mumbai firm depending on the progress of the mobile-commerce technology initiative, said sources close to the deal.

At present, the promoters of Coruscant Tec hold the majority stake in PayMate India. The company had launched the latest mobile payment technology, PayMate, in collaboration with Citi Bank. This secure method of payment is used by Citibank for its customers.

PayMate will also soon finalise tie-ups with two-three leading banks for this service in the country.

PayMate CEO Ajay Adiseshan said the company had received a part of VC funding from KPCB and Sherpalo, but declined to comment on the exact size of equity holding that the US majors would have in the company.

"KPCB and Sherpalo are our partners in this latest and promising technology business in the mobile commerce space and the relationship is something more than a VC funding," Adiseshan said. However, he refused to give specific details about KPCB's future investments in the company.

Sources close to the deal said KPCB was keen on investing in PayMate India as it was interested in the new mobile commerce technology (PayMate) developed by the company. With the technology, PayMate India has created a viable ecosystem using a simple, secure and seamless system.

According to the current service model with PayMate, a Citibank customer needs to sign up with the bank for the service by simply sending "PayMate" as an SMS to 2484. Once successfully registered, he can shop at Rediff, Naukri, Cleartrip, Jeevansaathi and 99 Acres for their products. After selecting the product, the user sends a single SMS with pin, which is provided by the bank, to confirm the transaction.

Some other IT and e-commerce companies in which KPCB and Sherpalo Ventures have already invested are Google, Amazon, Netscape, Naukri.com and Cleartrip.com.