Bangalore, India, August 08, 2014: Microsoft Ventures in India today announced the first set of initiatives under the Think Next (https://www.microsoftventures.com/thinknext/india) program, in association with iSPIRT Foundation. These initiatives are aimed at resolving the key issues responsible for the lack of meaningful exits in India’s software product industry, which is a major cause for concern among India’s product startups. Together with iSPIRT, Microsoft Ventures will conduct workshops to prepare Indian entrepreneurs for M&A, focusing on due diligence, valuation and presenting on their behalf to potential acquirers. As part of their M&A connect program, iSPIRT will continue to build deep relationships with Corporate Development teams in large organizations to gain insights into their mandates and priorities, and work closely with VCs and entrepreneurs to help facilitate exits through acquisitions.
Launched in May 2014 by Microsoft Ventures in India, Think Next provides a forum to sharpen conversations in the startup ecosystem by providing a platform for all stakeholders to network, deliberate and take measurable steps to resolve some key issues. A key topic of discussion at the first Think Next event in May was why, despite huge innovation and rising entrepreneurship, most Indian product companies have not been able to achieve meaningful exits. According to global numbers released by E&Y, the first quarter of 2014 saw $66.6 billion in disclosed deal values, the highest in 14 years. However, India presents a rather less rosy picture. According to a recently released study by iSPIRT and Signal Hill, India has seen 159 M&A deals in the timeframe 2010-present, at an overall value of $1.78 billion. This means that the average deal size is $11 million, nearly 10 times lower than that of the Silicon Valley!
At the first Think Next event in May, Microsoft Ventures and iSPIRT had jointly conducted a panel discussion, titled ‘Trends in Corporate Development: The Emerging Landscape of M&A’, which examined the overarching trends that will decide the future of Indian M&A’s in the software product industry. Some of the key learnings from the panel are:
- Most Indian startups fail to show up on the radar of the large acquirers in the US. Discovery is the number one challenge facing India technology product startups.
- Corporate development professionals are agnostic to the location of the company they target. Specific product and technology fit are primary criteria for corporates.
- Acquisitions with the sole intent of adding engineering talent (acqui-hires) are extremely hot right now. The shortage of Big Data, Analytics and Android/iOS engineers are the primary drivers.
- Entrepreneurial readiness is a key challenge during the M&A process. Indian entrepreneurs traditionally are techies and invariably spend limited time building a clear differentiation story or preparing themselves for organizational and financial diligence.
- A new generation of MNC companies looking to establish an India-presence will drive M&A activity in software products.
- Report identifies that potential M&A opportunities lie in areas such as Machine Learning and Analytics, HR and Recruiting, Cloud Infrastructure and Mobility.
Announcing the new set of initiatives, Director of Microsoft Ventures in India Ravi Narayan said, “With Think Next, we are looking to foster talks and open serious discussions on how key players in the startup ecosystem can contribute to its growth. The lack of meaningful M&A’s has been a major deterrent to the growth of software product startups in India. In iSPIRT we found a likeminded partner who was equally passionate about resolving this, and hence we decided to work together. There are many more issues plaguing the Indian startup ecosystem, which are emerging through discussions with our industry partners. We have just launched our Think Next (https://www.microsoftventures.com/thinknext/india) website, where we will continue to publish our learnings, relevant reports and action items. We strongly urge everyone to contribute towards Think Next by sharing their feedback and thoughts on our forum.”
Sharing his excitement at partnering with Microsoft Ventures, Sanat Rao, Partner, M&A, iSPIRT, said: “2014 has been a ‘blowout’ year for global technology M&A so far. However, it’s a different story for India’s software product industry. While Indian product companies are investing in innovation, we need to help solve the discovery problem to ensure meaningful and successful exits. And that’s what we will focus on, in association with Microsoft Ventures.”