How a pre-launch startup acqui-hired a year-old company worth $2MAparajita Choudhury
It is very rare that a pre-launch startup acquires an established $2-million company, but Bengaluru-based DealBerg has managed to do just that. A B2B marketplace for SMEs, DealBerg.com (which went live on September 12, 2016) has acqui-hired year-old WeAreGadgets in the first week of this month.
The amount of the acquisition, which was in both cash and shares, has been kept confidential.
Founded by the former B2B head of Snapdeal, Abhishek Emmanuel, DealBerg is a marketplace for office supplies, general merchandise, electronics and giftcards catering to SMEs. Fundamentally, the startup aims to address the reach and accessibility issues of SMEs in tier II and III cities which cannot afford to access great brands and their product offerings.
We want to help SMEs reduce their calls to the vendors but still avail best products at affordable prices, directly from the brands. With the help of DealBerg, SMEs from tier I, II and III cities can buy authorised and genuine products from brands with no geographical barrier and get it delivered. SMEs can avail 100 percent genuine goods from brands along with warranty support,” says Abhishek, who brings with him 14 years of experience in managing the enterprise customers across regions.
Registered at Registrar of Companies this June, DealBerg raised $1 million from HNIs Mathew Pidathala and Srinivas Guptha, who are currently running multiple ventures in the US.
Abhishek says, “Investors of DealBerg too have played a vital role in making this happen, right from pumping in financial support for the acquisition to the extent of analysing how best this handshake can happen.” He further adds that in the next 18 months they are planning to raise $3 million from the existing investors.
WeAreGadgets was founded by Sree Krishna Seelam, a serial entrepreneur and an MLA contestant of the Aam Aadmi Party. Before WeAreGadgets, Sree founded an NGO called Country Flavours, a manufacturing unit for processed foods and instant mixes.
Founded in June 2015, WeAreGadgets allows companies to buy both brand new and open box gadgets in bulk. With a small team of three people, WeAreGadgets has achieved revenue of Rs 8.5 crore in less than eight months with an investment of Rs 10 lakh.
How the deal happened
Abhishek and Sree had worked together at Dell and Monster.com for more than 10 years. This April, the duo started talking about mergers and acquisitions, one of which finally took place this month.
Sree will now play the role of the Chief Operating Officer at DealBerg and lead the partnerships and business development functions.
After having several discussions with Abhishek and the investors, we are super confident on the mentorship and the direction we are heading in. Thanks to the investors and mentors of DealBerg.com. DealBerg shall concentrate majorly on customer acquisition, category expansion and technology boost over the next two years," says Sree.
Addressing the SME market
More than 40 percent of the global economy is powered by SMEs. In India, around 17 percent of the GDP is powered by the SME sector; manufacturing SMEs cover 7.5 percent of GDP. The Ministry of Micro, Small and Medium Enterprises reported that there are 36 million small units in India. Most of them are buyers and sellers of various industrial goods contributing to the growth of B2B e-commerce.
To address the growth of this market, a few startups have emerged in the past few years. Delhi-based Industrybuying.com is an online marketplace selling industrial products to SMEs as well as large businesses. In January, it raised Rs 12 crore. Bengaluru-based StoreKing, leveraging the power of the vernacular, has introduced more than one million villagers to the world of online shopping. Gurgaon-based Power2SME is an online buying platform that caters to manufacturers for the supply of steel, chemicals and polymers.