Startup M&As Nosedive 45% YoY To 37 Deals In H1 2024

While investor interest in the Indian startup ecosystem remained muted in the first half of the calendar year 2024, mergers and acquisitions (M&As) also saw a sharp slowdown. 

As per the ‘Indian Tech Startup Funding Report H1 2024’, the startup ecosystem saw just 37 M&A deals in the first half of the year. This was a 45% decline from 67 such deals in H1 2023 and a 34% decrease from 56 M&A deals in H2 2023.

In fact, H1 2024 saw the lowest number of M&A deals in a six-month period since Covid-hit H1 2020, when the number of deals stood at 35.

Talking about the M&A deals in H1 2024, listed gaming major Nazara Technologies was the most active in the startup ecosystem.

In a bid to expand its presence in the global entertainment landscape and diversify offerings, Nazara’s subsidiary NODWIN Gaming acquired Comic Con India in the first half of the year. While NODWIN acquired Publish.Me and Branded in 2023, the Nazara esports arm also took over Ninja Global and increased its stake in Freaks 4U Gaming to 100% during the period.

Besides NODWIN, Nazara’s subsidiary Absolute Sports acquired Pennsylvania-based entertainment news site Soap Central for $1.4 Mn in June. Nazara has continued its acquisition spree in the second half of the year as well. Last week, it acquired an additional stake in Paper Boats apps for INR 300 Cr to increase its ownership to 100%. 

In the gaming space, another major player OneVerse Gaming also made three acquisitions in the first half of 2024. Bolstered by the spree of acquisitions in the gaming space, media and entertainment led consolidation activities at a sectoral level. A total of nine M&As materialised in the sector during this period.

Enterprise tech and fintech trailed media and entertainment at a sectoral level with eight M&A deals each in the first half of 2024. The biggest acquisition in H1 2024 was SaaS giant Freshworks’ buyout of enterprise tech startup Device42 for $230 Mn. Another major acquisition that materialised in this period was the purchase of cloud kitchen Kitchens@ by existing investor Finnest. 

In terms of funding, Indian startups cumulatively raised investments worth $5.3 Bn in the first six months of the calendar year 2024, down 1.8% from $5.4 Bn in the year-ago period. 

However, investors expect funding to go up in the second half of the ongoing year. As per an Inc42 survey, ‘India’s Top Startup Investor Ranking H1 2024 Survey’, about 93% of over 50 startup investors see 2024 as a turnaround year for Indian startups. Investors believe that the funding trends are anticipated to pick up significantly due to the performance of the Indian public market moving forth. 

It remains to be seen if this potential increase in funding also translates into higher M&As in the Indian startup ecosystem.