For startups who want to join hands with the bigger fish, this year can provide them that and make their wish come true. This fiscal year which ended on March 31st saw more (almost double) mergers and acquisitions involving technology startups when compared to last year.
It has been forecasted that this year the numbers will be more than that of last year (146 transactions) with large and better funded companies. The investors and experts tracking the startup world are predicting this since few months. Their primary reasons: The funding winter that has dawned on maturing companies; hyper-competition fueled by investor money; and the hasty floundering of some hugely hyped sectors because of weak business fundamentals. Overall, in terms of funding, “it’s going to get worse,” said Siddharth Parekh, senior partner at private equity firm Paragon Partners. “Ventures that have raised series-A (funding) rounds are finding it difficult to raise follow-on rounds… There will be stress in terms of companies not having cash flows to sustain themselves.” There will be many deals around the corner for these small firms and without the funds they won?t have any other option other than going for merger and acquisitions. Waiting in the wings to swallow up young startups are some of the country’s biggest internet companies. Experts say several of the acquisitions this year will be driven by investors hoping to extract at least marginal returns as their investment cycles near their ends, or as they start culling their portfolios. Entrepreneurs, too, are exploring options as they look to survive in a landscape that has been struggling through a liquidity crunch the past 10 months.
It’s a summarization of an article by Biswarup Gooptu.