One of the key metrics of success for startups and investors is exits—whether a public listing or an acquisition. And the Indian ecosystem seems to be maturing in that respect. According to YourStory data, a total of 101 acquisitions and exits took place over the course of H1 2017 compared with a total of 80 acquisitions made in the comparable period last year.
The biggest deals in H1 2016 included Paytm’s acquisition of Noida-based app startup Shifu, CommonFloor’s takeover by Quikr, Travel-logs by Yatra, and Zo Rooms by OYO Rooms.
This year, the online real estate space saw more consolidation, with PropTiger acquiring the much-beleaguered Housing. In the foodtech space, Berlin-based Delivery Hero acquired Rocket Internet’s Foodpanda, while BookMyShow acquired Burrp for a paltry Rs 6.7 lakh—for a couple of these, the exits might well be an opportunity to resurrect their brands or at least scale operations.
Even with 101 acquisitions, the Indian startup ecosystem still has to catch up to several counter parts. A Bain & Company Private Equity Report of 2017 said that PE exits in India rose by 2 percent to $9.6 billion in 2016.
Last year, the combined exits in Israel were in the range of $10-11 billion. And this occurred in the middle of a slump in the Israeli startup ecosystem! In the first half of this alone, startup exits in Israel totalled $1.95 billion over 57 deals. While the Indian startup ecosystem has a long way to go before it can be compared to Israel, it is nevertheless interesting to note that even Israel this year is looking at long-term investments and not quick exits.
From a global perspective, a CB insights report adds that the Valley recorded 3,358 tech exits last year, of which 3,260 were M&As and nearly 100 were IPOs. This number is actually lesser than what it was in 2015.
Exits in the Indian startup take time—SnapDeal’s current situation being a case in point—with IPOs taking even longer. The one that got talked about this year was Jyoti Bansal’s AppDynamics, a B2B Application Performance Management (APM) and monitoring solution that got acquired by Cisco for $3.5 billion. The company had a workforce of more than 400 people and was on the verge of an IPO before the Cisco acquisition.
Parag Dhol, Managing Director at venture capital firm Inventus, believes that Indian startups have a long way to go in terms of exits. Though acquisitions do happen, not all can be considered great exits from an ecosystem or an investor point of view. Cisco’s acquisition of AppDynamics, for instance, isn’t really an exit by an Indian company, he says. While the founder is Indian, the company predominately operated out of the Valley.
Citing the example of Byju’s acquiring TutorVista, he says, “There wasn’t much (by way of) returns. The company was already acquired by Pearsons and was sold because revenues were dropping.” He adds that companies like TutorVista were presumably sold for less than 10 percent of the value for which they were earlier acquired.
“Exits continue to be challenging and they happen to be the biggest question mark in the Indian startup ecosystem. I think it has less to do about the acquirers and more with the fact that we need to create more worthwhile companies. (Either) we are not funding the right companies, or the Indian market isn’t big enough. But the point is that this needs to change for all of us to survive.”
The big acquirers so far this year have been BookMyShow and Byju’s, which acquired three startups apiece. More interesting is the fact that 10 US-based companies acquired Indian startups, three of which were based out of Bengaluru, and another two out of Chennai.
Here’s is a list of some notable startup acquisitions made in the year so far, in no particular order.
Freshworks began the year with its seventh acquisition by acquiring Bengaluru-based data integration platform, Pipemonk. No details were undisclosed. The team of 13 at Pipemonk joined Freshworks post acquisition. The platform allows companies to easily synchronise and move data among different cloud apps. Freshworks made the acquisition to enable seamless integrations between business apps.
After much speculation and time on the grapevine, News Corp-backed realty portal PropTiger acquired Mumbai-based Housing in an all-stock deal. Financial daily Mint reported that the deal was worth $70-$85 million. The joint entity received $50 million in funding from News Corp’s REA Group and $5 million from SoftBank Group.
Post-merger, PropTiger was valued at $270-$285 million, up from $200-$210 million. Housing’s fall from glory was much talked-about in 2016. At its peak, the company had raised $90 million from SoftBank at a valuation of $220-250 million.
Edtech heavyweight Byju’s acquired the Bengaluru-based career guidance and academic profile builder Vidyartha to help it expand its offerings. According to a report in The Times of India, Vidyartha was acquired for close to Rs 50 crore.
It followed this up later in the year with the acquisition of TutorVista and Edurite, both Pearson companies. The acquisitions will help it expand in newer markets and create a diverse product portfolio.
Online ticketing platform BookMyShow acquired Hyderabad-based online ticketing platform MastiTickets for an undisclosed amount and will take over all its key assets, along with existing cinema partnerships.
The company followed this up with an undisclosed strategic investment in Pune-based Townscript, a do-it-yourself (DIY) event registration and ticketing platform. BookMyShow now has a 75 percent majority stake in Townscript, although the latter will continue to function independently.
In early July, BookMyShow announced that it has acquired Burrp, India’s oldest foodtech startup in an all-cash deal of Rs 6.7 lakh with Network18. The acquisition includes transfer of Burrp’s key assets to BookMyShow, including employees and existing restaurant partnerships.
Also read: The rise and fall of India’s oldest foodtech startup – was Burrp served a cold lunch?
Cisco’s acquisition of AppDynamics for a whopping $3.7 billion was quite possibly the biggest in India in a long time. AppDynamics founder Jyoti Bansal is believed to have made $525 million from the deal, a part of which, he says, will also go towards funding startups in Silicion Valley and India.
Myntra founder Mukesh Bansal and former Flipster Ankit Nagori’s startup, CureFit, was one company that created buzz before the app was actually launched. They began with acquiring startups like fitness chain Cult and launched a HRX workout with Hrithik Roshan before launching the app. Early this year, CureFit acquired The Tribe, another fitness centre. The details of the deal weren’t revealed.
Right before Mukesh Bansal quit as an advisor to food delivery service Swiggy, CureFit acquired another Bengaluru-based foodtech company, Kristys Kitchen, for its health food subscription service, EatFit.
Uber’s Los Angeles-based rival Lyft acquired Pune-based FinitePaths for an undisclosed amount. The founders have joined the Lyft team and have shut down their product’s sole offering, Trail Answers, according to a Business Insider report. The product helped consumers get answers to various questions on local, social and contextual references and signals. Naturally, this set the grapevine abuzz about whether Lyft is looking at venturing into the Indian market. The Lyft team has maintained that they want to build transportation systems for the world, but their expansion plans are yet to be fully formulated.
Flipkart was back with a bang in the acquisitions space, acquiring rival eBay’s India operations. An official press release said that eBay was making a cash investment in and selling its eBay.in business to Flipkart in exchange for an equity stake in the e-commerce leader. eBay India will continue to operate as an independent entity.
Also read: Flipkart-eBay India in a $2B tango?
Quikr’s acquisition spree continued in the H1 2017 with its acquisition of home services startup Zimmber for an all- stock deal of $10 million. This is the fourth home-services startup that Quikr has bought out after taking over Stayglad, Salosa and Zapluk.
Quikr then acquired the online classifieds portal BabaJobs for an undisclosed amount. With this acquisition, Babajobs combines with QuikrJobs, thus making it the largest online classified portal in the blue-collar job category.
NestAway acquired rival home rental solutions Zenify for an undisclosed amount. Post-acquisition, Zenify continues to operate as a separate entity though the deal takes NestAway’s number of homes on offer to over 4,000 homes.
Alibaba Group’s entertainment arm, Alibaba Pictures, acquired a majority stake in India’s second-largest online ticketing platform, TicketNew. Although Alibaba Group already has a majority stake in Paytm and a minor one in e-commerce marketplace Snapdeal, this is Alibaba Pictures’ first big acquisition in the Internet ticketing industry outside China.
Given that there were no major exits in the Indian market, a reset in expectations is what the doctor ordered.
“In India, at best, we can support 150 startups. And if you look at the number of startups that are funded, there are clearly more than that (number). And that is why exits also take time. We need to reset our expectations. Anybody expecting 100 exits in India every year needs to get the basics right.”