Startup Merger & Acquisition (M&A) in India May Spill Over to 2023

The number of mergers and acquisitions (M&A) transactions has remained below 164 between 2018 and 2020, exceeding 200 in 2021 and 2022. With 230 M&A deals completed so far in 2022, India’s tech startup sector continues to consolidate. The number of M&A transactions is slightly lower than the 242 reported in 2021, with about a month remaining.

However, experts claim that the funding freeze may cause a greater number of smaller startups to sell out to larger competitors. To increase their cash runway, many of these startups have restructured their cost structures with new retrenchments, and some are doing so now anticipating fewer rounds in 2023.

The investors in the startup space demonstrate that 2023 can see more combination as more small and medium-scale new businesses might find it harder to bring cash up in the ideal terms.

According to Merak Ventures partner Manu Rikhye, the funding crunch of 2022 will drive more M&A activity in 2023 as investors and founders may rush to protect existing valuations. Manu Rikhye went on to say that the founders and investors already think that 2023 will be a tough year, so they may look for deals because the longer they wait, the more value will be lost.

Vedantu, CRED, Zomato, Byjus’s, and other larger companies have chosen to acquire smaller startups as acquisition targets. Aditya Birla, TransUnion, Jio, Reliance, Tatas, Asian Paints, and other major corporations have also capitalized on the crisis to acquire smaller competitors.