The reasons for such mergers and acquisitions include taking advantage of the conducive market situation or making a strategic move to eliminate competition. However, irrespective of the reason, startups are looking at acquiring other ventures.
Voonik Technologies, the online fashion marketplace, recently made 3 acquisitions — Styl, Zohraa, a marketplace for designers and boutiques & Picksilk. This helped Voonik Technologies enter the premium e-commerce segment. “It wouldn’t have been possible to acquire them in some other market,” said Sujayath Ali, co-founder of Voonik. “They were also looking for a chance of M&A because they weren’t able to scale up.”
While there is a flow of capital from bigger startups to smaller startups, it is believed by industry players that their money is well spent as they don’t have to work towards a technology that otherwise required efforts on their part. For instance, recently an online gifting platform Giftxoxo based in Bengaluru acqui-hired BookMyInterest- a marketplace for hobbies and leisure activities.
However, experts states that there are a lot of small deals in the markets, and soon mid-size deals are expected to pick up. “Small deals are a good thing, but there are no mid-size deals at the moment,” said Sanat Rao, fellow at iSPIRT M&A Connect programme. “Mergers and acquisitions are higher than what they used to be a few years ago, but we need more mid-size deals, which I think will pick up soon.”
Another instance is of Inner Chef, a Gurgaon-based food technology startup that has acquired 2 firms in the same space in order to expand their presence in other cities. Rajesh Sawhney, the co-founder of InnerChef, said that they are looking for more acquisitions in the future.
Voonik officials said the company might go for further acquisitions from the fields of machine learning and artificial intelligence.