April 11

In the first quarter of 2022, start-ups dominated the merger and acquisition deal activity, as 35 per cent of the deal volumes was recorded in the start-up ecosystem.

“Demand for new technological capabilities and underlying innovation is anticipated to grow. This is likely to drive M&A deal-making. The start-up ecosystem is expected to continue strong in 2022, fueled by PE activity, with more new-age companies becoming unicorns. Many unicorns will continue to become serial acquirers, causing a wave of consolidation among new-age businesses,” said Shanthi Vijetha, Partner, Growth at Grant Thornton Bharat LLP. 

Retail segment leads

According to the dealtracker report by Grant Thornton, 58 deals valued at $567 million were recorded in the start-up ecosystem in Q1 2022. Retail tech segment led the sector volumes with 24 per cent followed by edtech, enterprise applications and infrastructure and fintech together accounting for 36 per cent  of sector volumes, the report added. 

Vijetha added that despite headwinds from the pandemic and other uncertainties, deal makers in India are notably optimistic about the prospects for a stronger economy in the current year and therefore, the momentum of deal activity is expected to continue in the coming months of 2022.

 In this quarter, Curefoods executed six deals in the direct-to-consumer food brands; Thrasio style companies, such as Upscalio sealed five deals in the retail segment and Evenflow and Mensa brands also sealed four deals each. The good Glamm Group, too, recorded four deals across start-up, media and entertainment and retail sectors. Further, Shiprocket and IndiaMART also recorded four deals each with an aim to expand globally and build synergies.​

PE investments in Q1 2022

Further, Q1 2022 recorded 283 investments in the start-up sector with investments worth $2.9 billion leading the PE sector chart in terms of deal volumes. Retail tech and fintech segment led the investment volumes in the start-up sector with 18 per cent each followed by enterprise application infrastructure segment with 12 per cent and edtech and health tech with 7 per cent each. 

The quarter witnessed the emergence of 11 unicorns - GlobalBees (Thrasio-styled start-up), LEAD school (Education), Darwinbox (IT and ITeS), Mamaearth (e-commerce), Xpressbees (e-commerce logistics), ElasticRun (app-driven logistics and distribution company), Livspace (interior design marketplace), Dealshare (retail tech) and Perfios (data analytics, big data and AI), Oxyzo Financial Services (fin tech) and Credavenue (fin tech).​