M&A in startups will see 10x level rise in coming 5 years: Klaas Oskam of Signal Hill

Since January 2016, there has been big news in the Indian startup ecosystem — acquisition of CommonFloor by Quikr. The event opened the floodgate of mergers and acquisitions (M&A) deals in the country.

Gojavas was acquired by Snapdeal, Momoe was acquired by Shopclues, Nowfloats acquired Lookup, Airwoot (acquired by Freshdesk), Tinyowl (by Roadrunnr), Jabong’s acquisition by Flipkart along with the recent acquisition of Citruspay by Naspers and many more.

Besides, large public conglomerates also showed interests in startups to expand their portfolio – Future Group (acquired FabFurnish), Titan Industries (acquired CaratLane), Yatra (acquired Mgaadi), Aditya Birla Fashion (acquired Forever 21 India).

In 2016, India has seen an unprecedented rise in M&A activity with 123 deals in total, with a cumulative deal size of $534.9 million (disclosed value), says the Xelers8’s report, released August this year.

‎At Techsparks2016, YourStory spoke to Klaas Oskam, Managing Director, Signal Hill, who gave his views on the current M&A scene in the Indian startup ecosystem.

“The M&A market is still in the early phase. You need to make real distinction between consumer side and enterprise side of the story,” explains Oskam.

Enterprises look at the uniqueness of the product, quality of team, global traction and others. On consumers’ side, companies seek market access. Achieving scale, larger market share, diversifying products, costs cutting and surviving, among others may be reason for M&A.

Commenting on the recent M&A in the startup ecosystem, Oskam says that the market is maturing and he sees the M&A in the ecosystem will see 10-x level rise in the coming five years.

Sectors such as fintech, artificial intelligence and virtual reality are the hot sectors that will see M&A activities. Besides, Chinese and US-based companies are going to shake up consumer-based startups in the country under M&A deal.

Is this consolidation for good?

“It’s happening out of necessity of the business. In online world, things work differently. It’s not required to address the same issue by many players,” says Oskam.

He adds that consumers can’t adopt all the solutions providers simultaneously. In this case, companies reach a point where they find M&A a better option for many reasons.

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