Start-ups on global acquisition spree

Seems to reflect a maturing of the segment; Delhi-based Wingify buys US-based entity a day after Zomato's Polish buyout

While technology start-ups in the country rejoice at the acquisition of a young software firm,  ThinkPad, by internet giant Yahoo earlier this week, two other Indian start-ups have gone ahead and made global buyouts, reflecting a maturity setting into the system. Delhi-based website performance testing start-up Wingify said on Wednesday it had acquired

US-based Concept Feedback, a community platform of user experience experts, for an undisclosed amount. The announcement came a day after Zomato announced its acquisition of Poland’s Gastronauci.

The size of the two acquisitions is not known, and would perhaps be much smaller than the average in the technology segment. Still, experts believe such announcements bode well, as they reflect an advancement in the evolution of India’s start-ups.

“In the internet and software industry, the winner takes it all. So, it is vitally important for companies to focus on category leadership. Both these acquisitions are in some sense targeted at  becoming the number one in the chosen category and that is a very good sign,” said Sharad Sharma, co-founder of software product think tank iSpirt. “I think these two acquisitions are a sign of a trend, where several players in narrow categories will look at becoming leaders in their chosen space, either through acquisitions or by building capacities organically.”

Both acquisitions are aimed at strengthening the offerings of the Indian companies.

Wingify’s acquisition, Concept Feedback, gives brands access to 26,000 website design experts, to receive recommendations on how to improve website elements to more efficiently achieve online business goals. Under the acquisition, Concept Feedback’s offering will be gradually integrated with Wingify’s Visual Website Optimizer, a testing solution used for marketers.

And, Gastronauci, a Polish restaurant search service, will help Zomato in its ambition to enter multiple regions. Expansion in Europe has been one of Zomato’s key focus areas. This is its fourth acquisition in three months. It had earlier bought New Zealand-based MenuMania, Czech-based Lunchtime and Slovakia-based Obedovat restaurant search guides.

While the two acquisitions do bode well for young entrepreneurs in India, Yugal Joshi a practice director at Everest Group, said the Indian start-up system is highly fragmented. So, acquisitions by a few entities might not necessarily reflect the maturity of an entire system.  “What this (acquisitions) certainly signifies is their (start-ups’) growing appetite and stature globally,” he said. “Also, that these start-ups have confidence in their abilities to raise the needed funds to finance this acquisition. This stems from the fact that they and their investors realise the fundamental strength in the business models of these start-ups.”

A significant aspect to these two acquisitions, according to several experts, was that both are in different technology segment, reflecting that it is not only the consumer technologies that are in focus in the Indian startup ecosystem. While Zomato's acquisition is in the consumer technology space, Wingify's acquisition is focused on enterprise technology.

"This reflects well on Indian start-up that it's not a one-legged horse and comprise of companies that focus across different technology segments," Everest Group's Joshi said.