11 big startup acquisitions in India and what they mean for entrepreneurs

Photo credit: Kaustubh Naik

Observers of an emerging startup ecosystem look for exits as a sign of maturity. That is because exits in the form of mergers and acquisitions (M&As) or IPOs give VCs a return on their investment. They can then launch new funds to invest in fresh startups. It completes the cycle of venture capital.

Indian tech IPOs are rare. So the approval given in September by the Securities and Exchange Board of India (SEBI) to ecommerce firm Infibeam to raise INR 4,500 million (US$68 million) breaks new ground. Rivals Flipkart and Snapdeal will be watching what kind of reception the public listing by an ecommerce firm receives. So far in India, we’ve only seen sky-high valuations and mega funding rounds, not blockbuster IPOs.

Before Infibeam, listing and search services firm Justdial had a successful IPO in 2013 and travel firm MakeMyTrip listed on the Nasdaq in 2010. Info Edge, which runs portals like Naukri for jobs, Jeevansathi for matrimonial classifieds, and 99acres for real estate, had an IPO in 2006.

A changing ecosystem

Photo credit: David Gil

But while an IPO may still be as rare as a comet in India, it’s been raining acquisitions. Industry body Nasscom had counted 65 acquisitions of startups by mid-October. But more than the number of deals, what’s significant is that they’re happening within the country, such as the acquisition of FreeCharge by Snapdeal and TaxiForSure by Ola. Well-funded Indian startups are thus contributing to building the ecosystem.

Most of all, VCs will be encouraged by the size of some of these exits. The FreeCharge acquisition has been pegged at US$400 million while that of TaxiForSure at US$200 million.

Amounts are rarely disclosed in mergers and acquisitions by unlisted companies, but one can get an idea from a startup’s funding and valuation. Here are 11 acquisitions that shook up the startup ecosystem in India last year. Some were made in desperation, while others were a consolidation of forces against big rivals. Either way, it kept the pot boiling and we can expect it to get frothier in 2016.

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1. Snapdeal acquires FreeCharge

Ecommerce firm Snapdeal’s buyout of mobile top-up site FreeCharge for an estimated US$400 million in April is the biggest acquisition in India to date. Snapdeal has used acquisitions for what it terms a “string of pearls” strategy. FreeCharge, with its large user base, is the mobile payments pearl. In September, Snapdeal and FreeCharge launched a digital wallet to rival that of Alibaba-backed Paytm.

Snapdeal had a number of other major acquisitions last year, including loans platform RupeePower, mobile tech firm Martmobi, artisanal marketplace Shopo, mobile app designer Letsgomo, sports etailer eSportsbuy, gifts recommender Wishpicker, group-buying platform Grabbon, luxury fashion estore Exclusively, and Doozton, a niche fashion site for special occasions like weddings. Amidst this churn in Indian ecommerce was Chinese giant Alibaba picking up a stake in Snapdeal.

See: Alibaba now has 2 weapons in India for a proxy war with Amazon

2. Ola acquires TaxiForSure

3. Twitter acquires ZipDial

4. Practo acquires Qikwell

5. CarTrade acquires CarWale

6. PropTiger acquires Makaan

7. Capillary acquires MartJack

8. Grofers buys Spoonjoy, Townrush, and My Green Box

9. Shadowfax acquires Pickingo

10. MakeMyTrip buys MyGola

11. Mahindra Group acquires Babyoye