Malavika Velayanikal · · 3 min readWhat’s behind the acquisition of Lookup by NowFloats?
India has over 50 million small and medium businesses according to the last official estimate [pdf]. But their digital presence is minimal.
Hyderabad-based NowFloats, founded in 2012, is one of India’s hot software product startups. It provides a platform to help local businesses get discovered by online users. Large enterprises too can post content on NowFloats to connect with local customers.
Bangalore-based Lookup, floated in 2014, takes another route to help small businesses leapfrog into the mobile age. Its chat commerce app connects consumers with local businesses.
Today Lookup and NowFloats have announced a merger, on the premise that the whole will be greater than the sum of the parts.
“Over the past year, NowFloats has conducted three research sprints across India, and it was clear that chat is one of the most pervasive behaviors followed by search and apps,” says Jasminder Gulati, co-founder and CEO of NowFloats. He hopes the acquisition of Lookup will make the connection between businesses and consumers “frictionless.”
Mighty market forces
Deepak Ravindran.
Lookup has attracted considerable attention since its launch towards the end of 2014. Its colorful founder Deepak Ravindran was a college dropout, serial entrepreneur, and an MIT top innovator under 35. And Lookup’s investors included Japan’s leading social games company DeNA and Teruhide Sato, founder of BEENOS group, a global conglomerate with ecommerce holdings and a business incubator, Infosys co-founder Narayana Murthy’s private investment firm Catamaran, Oliver Samwer’s Global Founders Capital, Vindo Khosla’s impact fund, and Twitter co-founder Biz Stone.
In an AMA with Tech in Asia barely eight months ago, Deepak said: “We are solving the hyperlocal puzzle one by one… The idea is to become the number one player in connecting businesses with consumers using messaging. This is a very big opportunity in India since we have over 45 million local businesses.”
Much water has flowed under the bridge since then. The exuberance of 2015 has subsided with investors turning more cautious. A plethora of chat commerce apps have come up to make the waters muddy. There have been rumors of Lookup struggling to raise its next round of funding at a good valuation.
To a question from Tech in Asia on whether the state of the market influenced the buyout, Deepak was as candid as he could be under the circumstances: “It’s a tough market and we all know it. NowFloats wanted to invest in us and continue building the future for small and medium enterprises. Our vision was to bring small and medium businesses online to form the biggest local shopping network, while NowFloats’ vision is to make small businesses bigger. After several rounds of internal discussions, we consulted with our investors and decided to accept the offer.”
Post the stock and cash deal, the core members of Lookup were offered equity at NowFloats, Deepak said, denying layoff possibilities. “Lookup will continue to run independently from Bangalore. All the technology team and customer support team will be maintained,” he said.
Jasminder is yet to get back to Tech in Asia on the influence of market conditions on the acquisition. We will update this post when he does.
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