In recent times, the Indian startup ecosystem has witnessed a significant shift in M&A trends, as cash-strapped startups and unicorns seek strategic investors to rescue them from a looming down round. One prominent example is PharmEasy, which caught the attention of industry experts and media alike. CNBC-TV18 broke the news, highlighting the entry of a strategic investor as a white knight.

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Anuj Golecha, from Venture Catalysts, emphasised that despite challenges, India continues to witness abundant innovation and possesses a wealth of valuable startup assets. However, valuations have become more rationalised, allowing savvy investors to enter quality companies at attractive prices. This, according to Golecha, creates an opportune moment for investment.

“If you see the current transaction that you are seeing an industry veteran coming in and backing PharmEasy a sector expert, mind you they are all together, putting Rs 2,400 crore approximately, which is huge capital, so the execution capability and the fundamentals of the business are still being backed. So for an investor it is best time for investing, we are very, very optimistic in the scenario.”

Shauraya Bhutani, of Capital Connect Advisors, highlighted two noteworthy trends. First, larger startups are increasingly making strategic moves by acquiring smaller counterparts. This trend indicates the consolidation and expansion strategies pursued by these startups.

Second, traditional corporates, such as Reliance and Manipal, are entering the startup space, particularly in sectors like pharmacy. Previously, there was often animosity between traditional companies and new-age startups due to differing valuations. However, with the recent drop in valuations, traditional players now view it as an entry point to join the digital revolution.

Furthermore, the Bhutani highlighted growing interest in cross-border investments into India. This suggests that international investors recognise the potential and value of the Indian startup ecosystem, making it an attractive destination for their capital.

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First Published:Jul 6, 2023 5:36 PM IST