Eyeing buyouts, global majors scout Indian start-up world

Retailers are looking at big data and analytics space while others evaluate start-ups with machine learning and financial tools

Acquisition of Indian software product start-ups by Facebook, Google and Yahoo! over recent months might just be the tipping point for Indian entrepreneurs. According to several sources, Walmart, Target, Microsoft, Thomson Reuters and Goldman Sachs are among those looking for suitable matches.

Retail giants are looking at Indian start-ups in the big data and analytics space and several start-ups with machine learning and financial tools are being evaluated by others.

The heightened interest in Indian start-ups among multinational companies was evident last week when Google Senior Vice-President Sundar Pichai attended a roundtable organised by Nasscom to showcase some start-ups. “There were eight companies that met Pichai at the roundtable,” said a person who was present but did not wish to be named. “The companies that met Pichai were related to his interest, Android and applications.”

GIVING IT A GOOD START

• Walmart, Target, Microsoft, Thomson Reuters and Goldman Sachs are said to be eying Indian start-ups
• Big data, analytics, machine learning, financial tools hot areas for acquisition
• Google’s Sundar Pichai met eight start-ups at a private roundtable in Delhi last week
• Nasscom may showcase a few start-ups for Microsoft’s Nadella in Delhi next week
• At least 30 global majors have screened potential targets at Nasscom warehouse in the past year

Nasscom is also looking to organise a similar roundtable for Microsoft Chief Executive Officer Satya Nadella, who is scheduled to visit India later this month.

The interest was triggered by technology majors, which led in acquisitions here. Social networking major Facebook acquired Bangalore-based Little Eye Labs in a $10-15 million deal this January. The same month, Google acquired cyber security firm Impermium, co-founded by Vishwanath Ramarao, Naveen Jamal and Mark Risher, for an undisclosed amount.

More recently, internet major Yahoo! acquired Bookpad, a Bangalore-based start-up, for Rs 50 crore. While it has not yet made an official announcement, this will be Yahoo!'s first technology buyout in the country.

"Triggered by some recent acquisitions, there is a concerted effort by large global companies to look at the Indian start-up ecosystem," said an executive in the investment arm of a multinational company who did not wish to be named. "Until a year ago, global companies were not even aware that such solutions were available in India. But with Facebook and Google having made some investments, interest is much higher."

Several global majors are engaging with industry bodies like Nasscom and iSpirt, to reach the right start-ups. This arrangement works for the start-ups, many of which cannot afford investment bankers. The Nasscom warehouse in Bangalore, where the industry body incubates start-ups, has been visited by at least 30 global majors to screen potential acquisition targets over the past year.

ISpirt, which has been working to facilitate mergers and acquisitions (M&As) for Indian software product companies, held a second roundtable at Palo Alto, California, in February to showcase Indian start-ups to acquirers in Silicon Valley. The roundtable, which was also aimed at understanding the requirements of companies when they look at M&As, was attended by corporate development and other senior executives from Google, Microsoft, Intel, Qualcomm, Groupon, VMWare, Intuit, Box, Cadence, Docomo and LG.

“A year ago if I asked a multinationals based out of the US to visit India and look at the work being done by software product start-ups, they would ask me why should they come down to a place that took two days to reach. Nothing much was known about the ecosystem,” said Ravi Gururaj, chairman of Nasscom’s product council. “But the few deals that have happened this year have increased the visibility for Indian software products. And, people are now curious to see what we are doing.”