The acquisitions that signal India as a mature start-up ecosystem

New data shows more exits and bigger deal sizes, as start-ups scale up faster, which will warm the hearts of all stakeholders, reports Tech in Asia

A mushrooming smartphone market bringing hundreds of millions of people online, thousands of cool start-ups with top notch tech talent, and an improving environment for doing business – these are the main reasons for a rush of venture capital into India over the last two years. Now there’s another pull factor growing stronger: exits.
 

Exits, mergers, and acquisitions are important for investors. They keep the pot boiling with tangible returns which VCs can reinvest into new start-ups. Their risk appetite goes up too as exits mitigate worries over getting caught up in a valuation bubble. And it’s not just the number of exits that matter, but their size too.
 

 

So here’s the best news from the latest report on the Indian start-up ecosystem released yesterday by software industry body Nasscom. There have been over 65 M&A deals already this year, worth close to $800 million (which excludes several deals with undisclosed value). More importantly, some of these have been big ticket exits instilling confidence in investors.
 

The most high profile of them were the $400 million acquisition of Freecharge by Snapdeal, $200 million acquisition of TaxiForSure by Ola, and Twitter’s acquisition of ZipDial for an undisclosed amount. Big exits are covering new ground too, such as the recent $40 million acquisition of Qikwell by healthcare start-up Practo.
 

Another sign of a maturing ecosystem is that most of the M&A activity is happening within the country, shows the Nasscom report prepared in association with consulting firm Zinnov. Indian companies were the acquirers in 90% of the deals, led by heavily funded start-ups such as Snapdeal, Ola, and Housing looking to rapidly scale up their customer base and market share. Older companies like MakeMyTrip and BookMyShow, on the other hand, sought to consolidate their position with acquisitions.

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This is an excerpt from Tech in Asia. You can read the full article here.