Norwest invests $10 mln in Indian social network

A top Silicon Valley venture capital firm has invested $10 million in Indian Internet community Sulekha.com on a bet the social network site can become a much bigger player in the fast-growing market.

Norwest Venture Partners, led by Indian-born managing director Promod Haque, said the $10 million in Series A financing would fund the expansion of Sulekha's focus beyond India's top eight cities and into new business segments.

"Suffice it to say that the goal is to go into smaller Indian cities," he said in an interview on Tuesday, adding the English-language site may eventually offer regional dialects.

Sulekha encourages social networking and local commerce in 25 cities in India and around the world. Beyond self-published blogs and online directories, users can buy and sell classified advertising, as on Craigslist.com, or do other transactions.

Founded in 1998 in Austin, Texas, by electrical engineer Satya Prabhakar, Sulekha first targeted non-resident Indians, before spreading to Indian cities. It had funding from Indian early-stage Internet and mobile investor Indigo Monsoon Group.

Haque, who ranks among Silicon Valley's top deal makers, is joining Sulekha's board.

Already this year, Norwest, a $2.5 billion venture capital firm based in Palo Alto, California, helped fund the formation of Indian travel services site Yatra Online.

"We are very bullish about the macro trends driving consumer Internet businesses in India," Haque said, citing explosive broadband Internet and mobile phone use and vibrant consumer spending by Indian's growing urban middle class.

Ninety-five percent of Sulekha's 10 million pages are user-generated material from hundreds of thousands of member contributors. It counts 1.5 million members, Sulekha said.

Sulekha, which has spent little on marketing, ranks behind Rediff.com (REDF.O: Quote, Profile, Research) and global names like Yahoo, Google and MSN in Web page-views, a key metric for advertisers, but outpaces any site in India in classified ads and yellow pages look-ups.

It has offline partnerships with book publisher Penguin and newspaper companies DNA and Indian Express to distribute the work of tens of thousands of bloggers, and plans to spend more on marketing with partners such as mobile carriers.