Deals Galore – Why Are Startups In India Opting For Acquisitions Amid Dry Funding?
A startup is an entrepreneur’s baby. Why would it like to allotment with it? There could be several affidavit beneath advantageous circumstances. Talent and artefact acquisition, accretion bazaar ability and convalescent operational efficiencies, are some of the best accepted triggers for a deal.
However, alike as allotment turns dry and there is a never catastrophe cry of negativity in the environment, the startup ecosystem is witnessing a cord of deals. With several miniature-sized deals advancing in daily, the hottest and most-talked about accord was the Tiny Owl and Roadrunnr deal, beforehand this month. Post the merger, Tiny Owl has been authoritative several acrimonious modifications to its business model, which goes to appearance the dejection of the scenario.
In today’s scenario, back a startup is clumsy to accession funds they generally see the account of accepting acquired, rather than absolutely shutting shop. “The stakeholders in the aggregation accomplish a acquainted accommodation to banknote out alike if it is at low bulk or barter the banal in their aggregation for stocks in addition aggregation that holds bigger prospects,” Suresh Shanmugham, co-founder and managing accomplice of Saama Capital.
"Follow on allotment has been a claiming for startups whose acquirement models accept not become bright and acceptable admitting assorted annular of funding. So a lot of Acquihires and banal swapping is accident amid startups," Vinay Rao, adventure accomplice at Adventure Factory.
A absolute of $9.4 billion in funds has been injected into this amplitude back January 2015 to 26th May this year according to Tracxn data.
At times the affection of a particular technology triggers the achievability of the aggregation accepting acquired. Back a startup sees the befalling in accretion its bazaar ability by application the technology of addition company, it prefers to buyout the technology. In scenarios like these, the technology is the sell-out. In today’s scenario, a technology could be an asset to the company, if it helps lower costs and access efficiencies.
Saama Capital’s Suresh said, “Snapdeal absitively accepting Freecharge was an important cardinal move to accompany on a acquittal adequacy that they acquainted was bare to attempt added finer in the ecommerce market. Snapdeal offered a bulk for Freecharge that the promoters and investors acquainted was adorable abundant to become allotment of Snapdeal and abide to body and abound their business
According to Sid Talwar, Adventure Capitalist at Lightbox, an accretion at times helps a startup booty a artefact to bazaar quickly.
Fazal Ahad, Director at Mersis Advisors said that amid alternative reasons, back a aggregation desires for a accurate technology or a artefact and realizes that it would booty them some ample bulk of time and money in creating the same, it opts to buyout a aggregation to clothing the purpose.
"Recently lot of acceptable companies got acquired which were not in position to calibration but their tech allotment was absolutely acceptable for acquirers, like Twitter acquired Zipdial, Facebook acquired Little Eye Labs, analogously companies got acquired by brand of Yahoo, Google and alike by Flipkart, Snapdeal, Inmobi etc," Anil Joshi, Managing Accomplice at Unicorn India Ventures said.
Fasten growth, lower costs
At a time back startups are on a mission to cut bottomward costs and agitate out absolute numbers, companies are affected to accomplish acquisitions to serve that purpose. In best cases, accepted investors catalyse this action – aloof like in the cases on Tiny Owl and Roadrunnr.
“Startups are assertive for advance and calibration and charge to be bazaar leaders to bear the affiance to their shareholders, appropriately the amoebic advance aisle becomes too chancy as tables can about-face actual fast with one allotment round. Your ambition accretion can all of abrupt be in a position area they are aggravating to access you or they accept beginning basic to attempt angrily with you and apathetic you down. Accretion can bear faster growth, lower the amount of accepting new barter and abolish unsustainable appraisement pressures,” Jaspal Sarai, co-founder of Jaarvis Accelerator.
Total Accretion in the India tech startups according to Tracxn: 195 for the time period (1st Jan 2015 till 27th May 2016)
Top Accretion Deals:
Company Status Details
Acquired by OlaCabs 2015
Acquired by Quikr 2016
Acquired by Snapdeal 2015
Eat out your competitor
When two lions cannot abide in the aforementioned jungle, they adjudge to accompany hands. In the case of Flipkart and Myntra, the bearings was added like two kingpins of the industry abutting armament to action it out with U.S. behemothic Amazon, analogously in the case of Ola and Uber.
Industry experts beieve that if the ecosystem continues to acquaintance allotment constraints and operational challenges, mergers and buyouts will abide to accomplish account !
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