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A Trend for the economy: Startups & Acquisitions
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India’s startup sector is undoubtedly booming, and so are the interests of many acquirers. Megacorporations are eyeing startups that are making the bigger penny. The startup sector in India has seen many acquisitions over the years, and the game still goes on for many other startups to bode well for their acquisition. Many corporates and companies like OYO, Flipkart, Walmart, and Amazon have enabled and promoted the country’s startup push. It’s favorable that this includes them acquiring some start-ups that could benefit them.

The Start-up industry is flourishing, and the number can prove the growth in such a stimulating way. Over time, start-ups have gained popularity due to their rising efforts at changing the game of the market. These start-ups have been well known to improve consumer relations and contribute to how the corporate sectors work today. If you guess it right, these start-ups are the ones with intuitive solutions and mechanisms. Their working styles differ from what occurs in the corporates, and the way they deal with problems is one of a kind. Start-ups are born as a one-stop solution to the corporate problems that could be difficult to solve with their robust and red-tapism that exists along the systems’ lines.

Nowadays, start-ups are undergoing a very strange and unique process called “acquisition.” An acquisition occurs when a bigger scale and income company offers to purchase and takeover a smaller company known to engage with better operations at a smaller scale. These start-ups, if successful, can easily get acquired and purchased for huge amounts. An acquisition is always the zenith of a start-up and is what every entrepreneur dreams about. Sometimes, they offer their idea to big companies to get acquired or vice-versa. Bigger companies have acquired several such small start-ups that have influenced the market on a bigger scale, and thus, the success follows.

The number of acquisitions that have occurred over time is large. From bigger operations like WhatsApp, YouTube, Twitch, and more from such bigger foreign operations to a smaller scale, they have ruled the market to better purchases. In India, start-ups are common, and it is not easy to comprehend such start-ups in the current sector. Over ten thousand start-ups currently exist in the sector, and only four thousand plus are active and running. Some of them even have closed due to difficult legalities and inability to obtain funds; that’s why the start-up arena is sometimes a death zone fro many such budding entrepreneurs but, for the positives, it takes grit and determination to rise and benefit for the better of yours and the others.

Start-ups in India: a difficult setup of trade

In the Indian economy, start-ups are redefining. India is highly conducive to entrepreneurship through its favorable demographics, open economic environment, and entrepreneurial culture. India’s start-up economy is not fully mature, though, and many start-ups are dying from childhood. Mentoring relations with established firms can help create mutual success and lead India to an increasingly dynamic future (1). Enterprise in India has increased significantly, with start-ups starting to have a dramatic economic impact. Strong demographic and an open commercial culture have enabled new companies to register to rise in 2010 from 15,000 in the 1980s to nearly 100,000. India’s entrepreneurs rank with an average age of 28 among the world’s youngest. Survey results show that start-ups can leverage several Indian-only attributes and benefits (2). 

More than 34 percent of Indian managers (76 percent) said India’s economic openness was a major economic advantage, while 60 percent said that India’s professional workers were well known. And 57 percent said the large domestic market in India offers significant advantages. The Indian economy benefited from rapid start-up activity in the country. And start-ups are starting to extend advantages to regional economies beyond traditional locations. Business models are being developed, and new markets are being created. Start-up companies threaten to disrupt established companies and traditional channels across industries. Throughout India’s business ecosystems, they can act as catalysts for development and collaboration (3). 

Despite India’s entrepreneurship, in the first five years, up to 90 start-ups of start-ups fail. Seventy-seven percent of risk capitalists report a lack of innovative, pioneering new technologies or unique business models for many Indian start-ups. Consequently, India’s start-ups account for only 4 percent of world-renowned unicorns; despite their large market size and strong start-up activity, start-up businesses are valued at 1 billion dollars or more; 70 percent of venture capitalists say start-ups fail because they do not have the right skills to obtain their employees (4). Recent evidence suggests that tertiary education does not always prepare students for employability in India. One study shows that 80 percent of engineering graduates are considered jobless. Sixty-five percent of risk capitalists say Indian start-ups cannot provide the necessary funding. In fact, in 2014 and 2015, of 997 Indian start-ups, 97percent could not obtain external funds.

India’s start-up community’s deeper growth can reap the benefit of growth and development in the Indian economy as a whole well beyond its start-ups themselves. The deepening of business ecosystems is a key part of mitigating many of the constraints identified. Ecosystems offer India’s start-ups an accelerated way to increase their skills, skills, and experience. For India’s enterprise economy to flourish, ecosystems are crucial. Each stakeholder’s involvement and contribution is essential to build a framework in which the entire project is significantly more valuable than the sum of its parts. Start-up managers also recognize significant advantages from deeper cooperation with established companies. Although some established businesses may be weak in innovation and agility, they have experience (5). 

 

How the Government is helping Start-ups

The Indian government is also strongly interested in encouraging both national and regional emerging startup ecosystems. A strong start-up community can support expanded economic openness, improved capabilities, and transformation of the economy into one based on tech and business innovation and increasing economic vitality (6). The Indian start-up community believes that the Government needs to play an active role in developing an Indian start-up ecosystem. India’s start-up community’s deeper growth can profit far beyond its foundations from growth and development in the entire Indian economy. A major factor in mitigating many of the constraints identified is the increase in business ecosystems. Ecosystems provide India’s start-ups with a quick way of enhancing skills, competencies, and experiences. Ecosystems are crucial to the prosperity of India’s enterprise economy.

Every stakeholder’s involvement and contribution are important to develop a framework in which the project as a whole is much more valuable than the sum of its parts. Increased cooperation with established companies also shows significant benefits to start-up managers. While some companies may be weak about innovation and agility, they have experience. In addition to helping the vitality of the Indian economy, a strong start-up community is also a portal for systemic transformation. Benefits are immense for companies and the Indian people as a whole. Ecosystems that involve established companies, start-ups, risk capitalists, governments, and higher education centers can speed up and enhance these advantages and help Indian countries to consolidate their position as a leader in the global economy.

 

Acquisitions that made the big bill

Indian start-ups have a value that pertains to a successful acquisition. Such are the facts of many Indian start-ups that were acquired by Indian and foreign companies as well. Here is a list of those that made the big buck:

  1. Ebix acquires Yatra: Ebix Inc., an on-demand software and e-commerce service provider, said Wednesday it acquired Yatra’s online travel portal for 337 million for a company value in an all-stock transaction. Yatra, however, remains self-run, retaining its brand and status in India. For the insurance, financial, and healthcare industries, Ebix produces software. Its Indian subsidiary, EbixCash, acquired last year from Mumbai-based Mercury Travels and Delhi-based Leisure Corp., a luxury-, event- and sports-related passenger travel division. Ebix offered to purchase Yatra in March in cash or stock for 337 million. Ebix has also acquired a group of travel companies. It spent around 75 million in November 2017 acquiring the Via.com online voyage portal. The company bought 14 million from Mercury Travels and Leisure Corp(7). 
  2. Innov8 acquired by OYO: Innov8, a coworking space provider for 220 crores, has been announced by OYO. The Innov8 investors came out of the deal. After the purchase, Innov8 founder Ritesh Malik, under OYO’s leadership, will continue expanding Innov8. The Innov8 team remains intact after the purchase. Innov8 was founded in 2015 by Dr. Ritesh Malik, a successful entrepreneur. The company has started its trip to Delhi and is currently hosting 350 companies as segments, and calls for a 95 percent ownership of all 15 co-working sites with a merged house of around 5.500 (8). 
  3. PayU acquires Wibmo: PayyU has announced an acquisition of Cupertino, a CA industry leader in digital payment safety and mobile payment technologies, by Wibmo, an online payment services provider and Naspere’s fintech arm. This strategic acquisition brings together PayU’s strong market network and Wibmo’s leadership in security solutions for digital transactions. It offers industry-leading payment solutions for Indian and other high-growth markets. Wibmo will continue working and serving all its customers under Govind’s direction, as a wholly proprietary subsidiary of Naspers’ PayU. Wibmo’s strong management team will also include experts in advanced technology and payment technology, adding value to the combined business (9). 
  4. Walmart acquires Flipkart: Walmart completed in August 2018 its $16 trillion acquisition of Flipkart. Walmart sees itself as 77 percent of the company, acquired several previous investors, and expanded its competition with Amazon towards a new horizon. The capital investment also includes 2 billion dollars in new capital funds to be used for growth during a structured transaction so that Flipkart itself can still go public (10). 
  5. Snapdeal acquires Freecharge: India mobile recharge platform Freecharge was acquired by Snapdeal for 400 million dollars as a part of the deal in 2015. The deal was performed as a 30 percent cash and 70 percent stock with a valuation of 5 billion dollars, which Snapdeal received. Snapdeal CEO Kunal Bahl said that the deal was their biggest to date, and over half of the consumers exist at 40 million and arise solely from freecharge itself. FreeCharge provides a much younger audience with Snapdeal access. While most Snapdeal clients are aged 25 to 35, most FreeCharge clients are aged 18 to 25. This was the fifth takeover of Snapdeal (11). 
  6. Zomato and Urbanspoon: The Indian start-up Zomato acquired Urbanspoon. Zomato has expanded to provide 330,000 restaurant listings in countries including Canada, Brazil, and Ireland, and was founded in New Delhi in 2008. Zomato’s first US acquisition is Urbanspoon, established in 2006 and acquired by Barry Diller’s IAC in 2009. With Urbanspoon’s purchase, Zomato will enter the US market and compete against services such as Foursquare and Yelp, bringing the number of countries Zomato served to 22. The acquisition will take more than three times Zomato’s inventory of restaurants worldwide, between three lakh and 10 lakh (12). 
  7. Practo acquires Insta: In 2015, Practo Technologies acquired Insta Health Solutions provider for 12 million hospital information management solutions. The acquisition provides Practo with an additional stream of revenues and helps the company expand its hospital presence. Within 15 countries, including South East Asia, West Asia. Practo now has access to more than 500 hospitals using information management software. Ramesh Emani established Insta Health Solutions seven years ago. Practo says 10 million searches will be facilitated each month. It has over two hundred thousand physicians, five thousand diagnostic centers, and ten thousand hospitals (13). 
  8. Byju acquires WhiteHatJr: Byju’s acquired edutech start-up WhitehatJr for 300 Million dollars, aiming to expand their dominant reach in the country. WhiteHat Jr. will enable Byju to access top-level families, who can spend a great deal on education. WhiteHat Jr. is the acquisition which, according to a well-known individual with whom the issue has also received interest by several investors in financing its next funding program and is one of the top online learning start-ups in India. WhiteHat Jr. has raised approximately 150 million annually from Omidyar Network, Owl Ventures, and Nexus Ventures (14).
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My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

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Abraham George
Abraham George
My passion is Reading and writing. Basically, an optimistic introvert. Always striving to be better. Writing as a passion leads me to become stronger and focused.

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