Global tech majors likely to acquire more Indian start-ups
Venkatesha Babu January 14, 2015
A report that Twitter was in talks to acquire Bengaluru-headquartered ZipDial has created a flutter of anticipation in the start-up community in the country.
While both companies have not confirmed the news, the buzz around a possible deal has understandably generated a lot of interest.
This comes on the same day that Delhi-headquartered Zomato announced the acquisition of US company Urbanspoon.
At the beginning of each year, technology industry analysts send out a list of predictions. While a few are insightful and others mostly fanciful, one no-brainer prediction is likely to come true this year: There will be greater number of mergers and acquisitions (M&As) happening in the start-up space in India than ever before.
Let me stick my neck out and say that global majors are likely to come shopping for Indian start-ups and M&As will not be merely forced consolidation by venture capital and private-equity (PE) investors within their portfolio companies.
The trend, which started last year, is likely to accelerate this year.
In 2014, Facebook acquired Bengaluru-based Little Eye Labs, Google took over cyber security firm Impermium and Yahoo assimilated Bookpad. With almost 800 start-ups in the technology space getting off the ground every year in the country, Nasscom says that India today has the fastest-growing and the third-largest start-up base in the world after the US and the UK.
According to new reports, PE investments in 2014 were the second-highest ever after their historic high in 2007. With an experienced set of founders, several success stories across industry and technology verticals, a talented pool of manpower and a mature investor ecosystem means that start-ups have never had it this good.
While some India-based companies will make international acquisitions and there maybe some consolidation amongst local players, global technology majors are likely to get in on the action here.
So don't be surprised if we see an India-based start-up getting acquired for hundreds of millions of dollars in 2015.