2015: The growing up year for Indian startups

download (22)While 2014 was the year when big money became available to Indian startups, this year is an even more momentous one. Big funding deals have been few and far between, but the one thing that is making 2015 a watershed year for Indian entrepreneurship is that companies are buying and selling startups, an absolute necessity if the sector is to flourish. The reason is simple—if investors finds that their money is stuck in companies that have no other takers, it is unlikely that more money will be will be committed. If there was one fly in the Indian startup ointment, it has been the absence of a vibrant market to buy and sell companies. The offending insect is now being removed.

Data from Traxcn, a startup that tracks deal-making involving startups, tell the story. In all of 2014, 43 startups were acquired; so far this year 41 have been bought. And the best part is that startups themselves have been the most acquisitive of the lot. Of the 41, just two deals were struck by large corporates—Godrej and Mahindra & Mahindra were the buyers.

This frenetic deal-making is not just about the money, which is important, no doubt. By acquiring, startups are showing guts and ambition, learning lessons, and starting a virtuous cycle. They are aiming for faster growth, dealing with the challenges of integration and refreshing and renewing their cultures and mindsets, which is the key to survival. It is part of their growing up, and they have done well indeed. Actually, much better than established companies sitting on large amounts of cash.

For example, by acquiring fashion portal Myntra, Flipkart has cemented its position as the market leader. Freecharge was an acquirer before it was bought by Snapdeal in the biggest startup M&A deal yet, demonstrating the dynamism of the market and opening a new revenue opportunity for the Delhi company.

But this is just a chapter and not a bestselling book yet. Established Indian companies, too, need technology and talent, but they are being conservative and tight-fisted. It is time for them to step up, or else they will lose out. Startups won’t.

Source – Economictimes

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