1Mby1M Deal Radar 2010: Smart Guard Systems, Ahmedabad, India

Deal Radar’s NASSCOM 2010 Emerge 50 coverage continues with Smart Guard Systems, an Ahmedabad, India–based company that has developed high-definition Internet protocol (IP) surveillance cameras with triple codecs (devices or programs capable of coding and decoding digital streams or signals) using H.264, MPEG4, and MJPEG technologies. It is the subsidiary of eInfochips Ltd, which provides IP-driven design services.

Co-founder and CEO Gurudas Parwani is an engineer with more than eight years’ experience in the electronic security business. The other founder and chairman is Pratul Shroff, the founder of eInfochips Ltd. The pair established Smart Guard Systems because in the video surveillance industry, the use of analog technology is shrinking and IP-based surveillance is growing – at a more than 35% CAGR in some markets. The founders see a vast opportunity for network-based video surveillance solutions. Also, the adjacent field of video analytics is nascent and, the founders believe, holds tremendous potential for early players.

The Indian market for total surveillance is around $222 million. The IP surveillance market is estimated to be around $22 million. Smart Guard Systems’s top target segments are banks & finance, retail & shopping malls, industry, IT & ITES, transportation, infrastructure, logistics, educational institutes, homeland and city surveillance, and government projects. Customers include Japan’s Yamagata Airport and the South Indian city of Coimbatore.

The penetration of IP surveillance in Indian markets is just 10%, compared to 25% globally. However, there are a lot of competitors vying for this market, including Axis Communications, which released the first centralized IP camera; Pelco (Schneider Electric); Bosch Security; Panasonic; Sony; Samsung; LG; Hikvision; Acti Corp.; and Vivotek. Smart Guard Systems aims to compete by developing superior technology, offering end-to-end products, and taking a customer-centric approach.

Smart Guard Systems deals with complete end-to-end security and surveillance systems. It has its own design, development, and manufacturing unit in Ahmedabad. The product range includes IP cameras ranging from VGA to megapixel cameras, video encoders for conversion of analog to IP, recording solutions, video management software, video analytics, and so forth. Prices range from $400 to $2,200 per camera, and for video management software the price is per license. The company operates through a partners’ network and has two national distributors and 150 channel partners across the country. The company gained early traction through these channel partners. It also works with technology partners including Texas Instruments and Maxim.

Smart Guard Systems has been funded internally by eInfochips Ltd. The funding has come in two rounds, one in early 2009 and the other in 2010 for total funding of about $2.2 million. Smart Guard will need funding to scale up in terms of acquiring more IPs and expanding to new regions. An ideal investor is a VC fund that is funding product companies and is interested in providing mentoring and strategic advice. Revenues are just over $1 million.

There are no plans for an exit. Rather, the company plans to grow through a three-pronged strategy: acquire more IPs; in other words, develop more products or acquire the companies that have those IPs; converge and develop solutions around and with new platforms such as the iPhone, Android, and so on, to improve the user experience; and finally, to strategy expand into other regions such as the Middle East, Africa, and South Asia.

Recommended Readings
9 Key Questions About IP-Based Camera Systems (from CEPro, a staring point for learning more about IP-based security)
Q&A: Sony’s Mike McCann on IP video surveillance (from IPSecurityWatch.com)

This segment is a part in the series : 1Mby1M Deal Radar 2010