Netfinex.com plan to offer high-end financial products fails to take off

Anand Krishnamoorthy

Chennai, Jan 4: Netfinex.com Ltd, a high profile venture that had aimed to transform the way in which financial products and services are being peddled to retail customers in the country, has failed to get its feet off the ground and the project has been put in cold storage, according to industry sources.

Netfinex had got a Rs 20 crore funding from SSI Ltd and Nasdaq, the world’s leading exchange for new economy stocks, was to pick up a 10 per cent stake.

When contaced, Netfinex founder Sudhir Rao said, "We have differed the launch and will look for a strategic partner. The cash raised was used to build a state of the art platform and further funds could not be raised for launch. We did not sign up any customers." Netfinex had also employed 70 professionals. "The employees were retrenched," said Mr Sudhir Rao.

Netfinex, was floated in December 1999, had planned an overall investment of Rs 250 crore. "The last year was a difficult period to raise venture capital (VC) funding and things got worse after the September 11 incident. We were unable to raise any venture funding to see us through the launch and operations. An investment phase of three years had been planned," Mr Rao added.

In the quarter ended September 2001, SSI Ltd written off its investments in Netfinex. SSI Ltd chairman and chief executive officer Kalpathi Suresh said, "The investment has been written off on a conservative basis. It does not reflect the business proposition of Netfinex."

Nasdaq had also not picked up a stake in Netfinex. "The proposal of Nasdaq to pick up a stake was contingent on other venture capitalists bringing in funds, which did not materialise," he said.
The original holding pattern envisaged was 49 per cent of the equity with SSI, Nasdaq 10 per cent, founder 10 per cent and VCs the rest. Nasdaq would have provided its brand equity to the venture apart from funds.

The solution was ready and beta tesing was done in July last. Connection with exchanges, banks etc was also established.
"The platform has features that will become a reality in Indian stock markets in the future.

It had made provisions for a T+1 tading cycle. It had incorporated straight through processing," Mr Rao said.