Matchmaker for startups: How GrowthPal helps companies make the right acquisitions

The incessant news cycles about startups raising millions in funding can give any entrepreneur FOMO. However, the reality is different.

"Out of a thousand startups, maybe a hundred manage to secure some form of angel or seed funding. Of those, optimistically, perhaps ten will reach a Series A. But these numbers are on the generous side; reality might be grimmer. What happens to the remaining 900 companies? And for those that do secure Series A funding, there's no guarantee they will successfully scale,” Maneesh Bhandari, CEO and Co-founder of GrowthPal tells YourStory.

Several companies end up looking to be acquired by larger players in the ecosystem. The reasons are many—from a lucrative exit or scale to the next level to survival.

However, traditional M&A processes are often time-consuming, costly, and limited by the reach of personal networks and the biases of intermediaries like investment bankers.

In 2020, Bhandari launched Pune-based GrowthPal, an M&A deal-sourcing platform that facilitates small and mid-size M&A transactions for startups.

The push for becoming a matchmaker in the startup industry came from his experience in building a company as well as investing in other businesses.

Bhandari’s identity management firm SENA Systems was acquired by Aurionpro (listed in India) in 2008, and the SENA division later became part of KPMG USA in 2018.

After a successful transaction, the founder moved to Pune and started investing actively in startups. Over about seven years, Bhandari invested in over 45 companies.

During this period, he noticed a common trend: momentum was building in India for fundraising. More investors were entering the Indian market, including top-tier VCs and new seed stage firms, alongside an increase in the number of angel investors.

This gap in the market became apparent to Bhandari during his incubation and acceleration work with IIM Ahmedabad’s CIIE.CO in 2015, leading him to experiment with data-driven matchmaking between startups and corporates.

And that’s how GrowthPal was born.

The startup was launched by IIT Kharagpur alumni Bhandari and Shalu Mitruka.

With over 30 years of experience, Bhandari has worked in various sectors, serving roles at Citigroup, leading his own venture for a decade, and holding active investor positions on multiple boards. Mitruka has previously worked at Deloitte and MindTickle, a SaaS platform for enterprises.

Data-driven approach

While there are various data platforms tackling M&A in different ways, Bhandari notes that the traditional approach involving investment bankers has limitations, particularly in smaller or mid-sized transactions—those that fall between $1M and $50M.

“You can't really scale that unless you use some technology. Bankers generally don't pay attention to smaller transactions. They are more excited by large-sized transactions. We wanted to make it economically viable and scale for the smaller size transactions. And that's how the whole idea of building a technology-driven platform came up,” Bhandari explains.

GrowthPal says it collects data from more than three million small and medium size companies, from over 60 data sources in multiple geographies.

“We employ a highly data-driven and funnel approach, focusing on both buy-side and sell-side parties. Initially, we work closely with buyers, gathering detailed criteria regarding their preferences for potential acquisition targets. We then leverage our extensive database and advanced algorithms to identify these companies,” he notes.

Customers begin receiving these options within two weeks of outlining their specific buying criteria. The startup is witnessing a surge in growth-stage companies seeking to scale up through a series of incremental acquisitions. These include bolt-on acquisitions, tuck-in acquisitions, capability acquisitions, and strategic investments.

The company has sourced two deals for payment processing firm Razorpay, including risk tech SaaS firm TERA Finlabs, seven deals for roll-up ecommerce startup GOAT Brand Labs, including trueBrowns, NutriGlows and Doggie Dabbas.

Product offerings

The initial scan involves looking into each company, assessing parameters like financial health, team size, quality and product fit. This rigorous screening process narrows down the list to a select few companies that meet stringent criteria.

GrowthPal maps the customers’ detailed requirements to the datasets, search patterns and inputs for its proprietary AI models, which helps to build a large funnel for further screening.

The main challenge, Bhandari says, is due diligence in early stages of the process, before the deal is finalised. This is because the acquiring company often has to rely on the information and data provided by the target company's sellers.

To tackle this, the team has built checklists and cross-checks to identify potential issues early on.

GrowthPal also assesses the intent of the sell-side companies, ensuring they are open to discussions about potential transactions. The recommendations, Bhandari says, are screened and curated by business analysts and sector experts for exact fit to the buyer’s mandate.

The AI-based tools help filter out ‘ready to transact’ candidates by taking into account buyer preferences like for instance team size, revenue, current investors on board etc. GrowthPal’s expertise is in off-market deals both locally as well as internationally.

Future plans

GrowthPal has secured $1.4 million in funding from Ideaspring Capitaland prominent angel investors including Anand Deshpande from Persistent, and Mukul Kumar from Pubmatic among others.

In the past three years, the 30-member team has built over 150 curated M&A pipelines.

Currently, GrowthPal serves approximately 90 buy-side clients, which span across various regions, with over 25 based in the US, along with several in Europe, Singapore, and the majority in India. “Interestingly, many of our clients engage in cross-border activities, seeking acquisition opportunities not only within their domestic markets but also globally,” he adds.

Focusing on IT services, fintech, SaaS and consumer, GrowthPal plans to venture into other sectors such as outsourcing, marketing agencies, and financial services.

Moreover, the startup is gearing up to launch an enhanced version of its product that allows its clients with extensive sourcing capabilities.

“This new version will serve as a co-pilot to scan the market, identify suitable targets, and assess their growth trajectory and intent signals. By offering a streamlined process for building a target funnel, we want to facilitate faster decision-making for buyers,” Mitruka says.