Acquisition of Start-ups by Multinationals- demystified

mncs-acquiring-startup-header-image-hiresIndia’s ranking in the start–up ecosystem worldwide has leapfrogged in the past few years and it is now third in the global start-up ecosystem. This reflects the presence of a huge opportunity for both the entrepreneurs and the investors alike in India for setting up start-ups. Sensing the regulatory stumbling blocks for start-ups and also to make India’s economic conditions favourable for start-ups, the Government of India has commenced initiatives to reduce the regulatory obstacles and has even provided tax incentives and other benefits for start -ups. Multinational companies which acquires and drives the start-ups as a vehicle to boost the innovative offerings to their end clients have emerged as the messiah for the start-ups. These acquisitions in turn increases the company’s revenues and the shareholder value. A total of more than 100 start-ups were acquired by multinational companies in the recent years.

The acquisition of Little Eye Labs (a start-up based in Bangalore, India) by Facebook for a whopping $9 million is testimony to the quality Indian start-ups possess. A lot of people may not be aware of the recent acquisition of Curadev (another start-up) by the global oncology leader Roche. The start-up was developing a potent tool that could fast forward its immune-oncology push.  India has over 4200 start-ups and 72% of the founders are below 35 years of age has indeed made the multinationals understand the scope of this energetic community.

MNCs have been acquiring start-ups in India with the positive mind-set of Innovations can come from anywhere.  India’s economic conditions have become favourable for start-up business ventures, Multinational companies like GE India and Cisco have indicated that they may acquire young Indian ventures with innovative technologies in the near future.

Changing ecosystem

In the year 2016, the M&A in the start-up boomed with a total of 123 deals with an overall deal size of $534.9 million (disclosed value). According to the reports by Xeler8 , the number of acquisitions and their size are both going up which in turn would be able to cater the large needs of Indian population by expanding their reach in the market and even globally.

India is now increasingly seen as a destination for innovation and digital transformation and hence it was of no surprise when the following start-ups were acquired by multinationals:

  1. Target acquires Discover Dollar
  2.  
    Discover Dollar was acquired by Target in order to develop a data analytics solution that helps retailers stop overpayments and revenue leakages.

  3. Apple acquires Tuplejump
  4.  
    Apple acquired Tuplejump that helps companies to store, process and visualize big data.

  5. FullContact acquires Profoundis
  6.  
    FullContact acquired Profoundis in order to use the technology of Profoundis to build dramatically smarter products and services.

  7. Twitter acquires ZipDial
  8.  
    Twitter found the ZipDial platform a perfect fit for its plans to grow its user base and engagement in emerging markets. ZipDial, thus, became Twitter’s first acquisition in India.

  9. vMobo acquires Binge
  10.  
    vMobo acquired Binge that enables users to pay bills via the App which will help to solve the problems the customer face while paying the bill.

There is now greater hope for a better future than there was in the past. Indian start-ups are now looking to open their wings wider and more and more investors and companies are looking to take a leap of faith with start-ups. At the same time the recognition from abroad for the work being done in the country in the field of start-up is quite commendable. Indian start-ups are ready to take on the world and make India a more prosperous country, the land of opportunities and the heart of innovation. The growing trend in acquisitions of our start-ups is proof of just that.

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