The Rise of Technology Mergers and Acquisitions in India, in 2015

Between 2010-2014 there were 150+ acquisitions (about 30 per year) reported in the technology sector in India. Of these, 100+ were acquirers from India, and 40+ were from abroad. Most of the acquisitions were in the Internet space (outside of eCommerce).

Fast forward to 2015 and there have been 21 reported acquisitions already, and it is only April. In fact one of the investors, Blume Ventures has had 3 in 3 months. When I spoke with Sanat Rao of Ispirt M&A advisory connect, they are expecting an acquisition to be announced every week for the next 2 years. That’s a 100% increase over the last 5 years.

What’s driving this is a question that often comes up.

The first is the build up of the investor ecosystem over the last few years. From 2008 to 2010, IVCA reports that close to $5 Billion have been invested in Indian technology companies. Compare that to $1 Billion from 2000 to 2008.

That’s a 5 fold rise in 1/4th the time. While investment alone is no indicator of M&A, many of the venture investors have built good relationships with M&A teams to help companies further their cause to “find a home” if needed.

The second, is the growth of new age acquirers – FlipKart, Snapdeal, Komli Media, PayTM InMobi, Naspers and MakeMyTrip, are now the leading acquirers in India with 15 deals in the last 18 months.

Flipkart has acquired LetsBuy, Chakpak, NgPay and Myntra, PayTm acquired PlusTxt and Snapdeal has acquired FreeCharge, while Naspers acquired RedBus. Some of them have stated publicly that they will spend close to a $1 Billion to acquire more companies in India.

Third, older more established companies are finally getting into the act as well, with Havells acquiring Promptech most recently. The primary motivation for them is their strong cash positions are now being put to use to move into newer markets quicker.

Fourth, raising follow on capital has become easier for the larger companies, (series D,E) from external investors such as Tiger Global, which gives them a war chest to be more aggressive and take some risky bets.

Fifth, many early stage companies are getting acquired by US companies keen to expand into the Indian market – e.g. Twitter acquired ZipDial to expand in India. Now that there’s a huge critical mass of Indian Internet users (on mobile), this makes a lot more sense for these large US companies.

Sixth, acqui-hires are becoming more attractive to US companies since they are looking for smart talent and it is easier for them to acquire a team in India and move them to the US than hire a team locally. For example Facebook acquired Little Eye Labs and Yahoo acquired BookPad.

Many may argue that we still dont have the “big” acquirers from the US that are significantly buying Indian startups yet, but given the maturity of the ecosystem, comparing India to Israel is going to be hard.

I think this is among the best times to be an Indian entrepreneur, since India is now the #3 in terms of total technology investments,