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    For more startups, and their buyouts

    Synopsis

    Are large startups pre-empting competition by swallowing potential rivals? Are Indian founders losing control to foreign capital? These are valid concerns.

    1
    Every acquisition generates funds for new ventures.
    BillDesk, one of India’s earliest payment gateways, has been bought by PayU, a global operator and investor in the payment space, owned by Napster’s investment arm Prosus, for $4.7 billion in an all-cash deal. Earlier this month, a Japanese company took over Robosoft, an app developer based in Udupi, for ₹805 crore. These are, of course, just two of scores of mergers and acquisitions in India’s startup space, including by startups of startups. Then there are the mega initial public offerings by startups such as Zomato. But these two are sufficient to tell a very exciting story that should inspire many more Indians, young and old, to start up and make good, whether in big cities or small towns.

    Education, healthcare, finance, entertainment, mobility, human resource management, maintenance and repair, manufacture, logistics — every sector is going digital, and getting disrupted. And turning into gold, as if touched by Midas. Now, Udupi is a town that most Indians would associate with the Mysore masala dosa, rather than with technology. Udupi has more than its fair share of keen bankers, too, but that is a different story. What matters is that innovation and disruption are possible even from relatively small towns. What matters is educated manpower, entrepreneurial flair and sufficient risk capital, assuming the physical infrastructure needed to sustain participation in the global digital economy is available. When new companies are formed, grow big and are taken over, their founders turn venture capitalists and found, fund or acquire new ventures, creating a virtuous cycle of value creation. Edtech major Byju’s illustrates the process.

    Is there a downside to such acquisitions? Are large startups pre-empting competition by swallowing potential rivals? Are Indian founders losing control to foreign capital? These are valid concerns. However, the scope for fresh entry and disruption is so high in India that policy should encourage rather than throttle such consolidation. Every acquisition generates funds for new ventures.

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    Subscribe to The Economic Times Prime and read the ET ePaper online.

    ...more
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