Tech startups on M&A route to boost scale, market share

M&As were earlier used to enter new markets or geographies, but that strategy has evolved

- Dipti Sharma

In the latest instance, upskilling company UpGrad Education Pvt. Ltd is exploring a deal to acquire test-prep platform Unacademy.

India’s new-age tech platforms are increasingly taking the mergers-and-acquisitions (M&A) route to achieve better margins, stronger cross-sell potential, broader product offerings, and increased market share, rather than spending years creating demand and burning cash to sustain it.

In the latest instance, Upskilling company UpGrad Education Pvt. Ltd is exploring a deal to acquire test-prep platform Unacademy (Sorting Hat Technologies Pvt. Ltd), underscoring the growing consolidation across the country's digital economy.

“[Though] not every deal is about grabbing market share, that's definitely the flavour of the season in the digital world,” said Sandeep Gogia, managing director and sector lead-tech and digital, investment bank Equirus Capital.

Tech businesses are relatively asset-light and cash-rich, which naturally makes acquisitions a smoother route to scale compared with more capital-heavy industries, he said.