Many forced marriages will be seen among Indian start-ups in 2017
Start-ups who have merged or have been acquired in the recent past give advice to entrepreneurs to think logically than emotionally.
With the start-up environment getting backed up into a corner, many are choosing to go for mergers and acquisitions in order to continue. Rajeev Shah, MD and CEO of RSBA Advisors said, “Many forced marriages will be seen among Indian start-ups in 2017”.
Speaking at a panel discussion on consolidation of start-ups at the VC Circle Start-up Summit 2017 Shah advised start-ups when a company is heading in for a merger or acquisition both the company’s founders have to keep their egos aside. They need to concentrate on the team what will take the consolidated company ahead.”
Sumit Jain, Co-founder and CEO, Commonfloor.com said that the many start-ups are doing well it is taking them much time to achieve their goal of becoming profitable and as a reason many are going in for mergers. “Many start-ups try to push in investments like steroids to push the growth, but for some categories it will take a longer time. That is what happened to us and a reason why we decided to merge with Quikr recently. We thought that joining with Quikr will add some fuel to the brand,” he said.
“What I think about consolidation going forward is that the game has become more serious. It is not only about innovations and no more about trying to look good in front of investors and no more about PR stories and trying to raise funds from investors. It is about building awareness, customers, and ecosystem,” he added.
Another start-up which was part of the panel which got acquired was Citrus Payment and was acquired by PayU Money recently. When asked whether funding was the only thing required for a start-up to win in the long run by itself Jitendra Gupta, Founder & CEO of Citrus Payment said, “No not necessarily. We were spoilt towards the end due to the funding we received. When I checked the numbers we were doing much better when we had a little funding at the start and then towards the end it had changed.”
“A reason why we choose to get acquired is that we wanted to return the money to our investors in the time that we had promised. In fact some of the investors asked me why we were selling and when I told them this they told me it is alright and that they are ready to wait for some more time. But I told them that I didn’t know whether the target was achievable even after two years. We were in a better position then and the opportunity might not have come later. The decision to sell was because I wanted to keep our promise to our investors,” said Gupta.
He added that for start-ups whether they choose to merge or go ahead alone, it should be a rational decision. “Keep your emotions aside when you are going to sell your start-up. Think about the next 2-3 years and whether you will be able to sustain it on your own,” he said
“When your company is at a good stage it is good to merge or exit if you know you cannot manage the road ahead. When you do it that time you will have many options. If you choose to sell or merge when you are in distress, you won’t find any good options,” Gupta added.
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