Swipe, Match, Acquire: How Done Deal Is Building A Tinder For Startup M&As

The world’s third-largest startup ecosystem is witnessing a spurt in consolidations on the back of the cash reserves of Indian founders running dry, their half-cooked business models incurring heavy losses amid falling revenues, and investors’ reluctance to deploy billions of dollars of dry powder accumulated since last year.

According to data compiled by Inc42, Indian startups witnessed 240 merger and acquisition (M&A) deals across sectors in 2022, the highest since 2015. It is pertinent to note that 2022 also marked the onset of the funding winter. Further, as many as 59 M&A deals have already been inked so far this year.

Despite the rising M&A tide in the country’s burgeoning startup space, the processes that foster such deals are outdated, time-consuming, lack innovation, and are controlled by legacy players such as bankers. The existing standard operating procedures (SOPs) also give little visibility into key due diligence metrics such as product-market fit, market position and valuation of startups walking down the M&A aisle.

“The current M&A market is driven by legacy bankers, who view every deal — from an INR 10 Cr to an INR 1,000 Cr deal — from the same lens. Well, one size cannot fit all. This is where the M&A market was craving disruption, and we saw a first-mover advantage in this space with technology,” said serial entrepreneur Rohit Raj and the cofounder of Done Deal, a one-stop platform to facilitate M&As of all sizes, which was launched earlier this year. 

Founded in March 2023 by Raj, Aneesh Sivakumar and Ankur Jain, the platform has been designed to disrupt and overhaul the M&A space in the country by considerably curbing the time taken to conclude such deals from the current 12 months to under 60 days with fewer hurdles.

So, How To Get Acquired Efficiently With Little Hiccups?

Raj told Inc42 that the question occupied his mind for quite a long time, after being bombarded with several similar queries from fellow entrepreneurs who were looking to exit their startups or merge with larger players. 

The erstwhile cofounder of Glitch and chtrbox.com, Raj, then decided to discuss the problem statement with his old friend and the then KKR India senior executive, Aneesh Sivakumar.

The insights gathered after a long tête-à-tête with Sivakumar yelled but one thing — a tech solution to revamp the country’s antiquated M&A space. This paved the way for Jain, a techie, to join Raj and Sivakumar‘s vision, as a cofounder, to shake up the startup consolidation game.

After spending months understanding the nitty-gritty plaguing India’s M&A space, the trio developed a web platform, which allows startups to input critical business data. This allows investors access to various data points regarding the valuation and market position of the ventures looking to get merged or acquired.

How Does Done Deal Help Forge An M&A Deal?

A key piece of the puzzle for building Done Deal was its anonymous feature, which helps protect the identities of both startups and investors. The platform also refrains the two parties from engaging in side deals, both online and offline, by enforcing legal agreements.

The cofounder, Raj, told Inc42 that the startups are often wary of losing their rapport in the market, and the reports that give the slightest hint of them being acquired could impact their valuations and chances of getting acquired. 

After ingesting real-time data from startups, the platform generates anonymous cue cards, showcasing the information essential for a deal to look valuable from the investor’s lens, before entering into the Done Deal contract.

This is where the cofounders have endeavoured to strike the balance right. According to Raj, the platform allows the two parties to sign an engagement letter to proceed further with the deal. The letter automatically binds the acquirer and the acquiree with an agreement, striking all the right balances into play.

Notably, here, Done Deal plays the role of a tech-driven bookkeeper and gets a fee for any transaction on the platform between two parties in the next 24 months.

“We are building an operating system for startup success and M&A happens to be the first leg of it. And M&As will be our focus for the first two years of our operations… In simple words, we are enabling M&As of all sizes and in a faster manner,” Raj told Inc42.

On how Done Deal ensures quality control on the seller side, Raj said that the platform enables startup founders to get listed only after authenticating their official work email ID or LinkedIn profile.

Following this, the acquiree venture gets discoverable to investors only after the former inputs their company data to Done Deal. This enables investors to sift through actual startups serious about their acquisition.

How Is Done Deal Creating A Differentiation In The M&A Space?

On what differentiates the platform from other market intelligence startups such as Tracxn and CBInsights, Raj said that the platform does not depend on publicly available data but rather sources real-time information directly from startups looking to get acquired. Besides, Done Deal reduces the effort required to reach out to prospective bets, offering acquirers the convenience of contacting ventures interested in getting acquired or merged at the click of a button.

Currently in the beta stage, Done Deal allows startups to find their valuation and then connect with buyers. Going forward, the startup plans to introduce an array of growth offerings such as financing, branding, legal and PR avenues, along with onboarding founders who want to sell their experience to startups looking to get acquired or merged.

Done Deal also plans to onboard debt investors to enable acquirers to easily fund their prospective M&As by streamlining monetary transactions.

The startup currently caters to ventures across six to eight categories, including SaaS, gaming, and creator tech, among others, and is looking to expand into newer territories to cater to the sub-INR 100 Cr companies that are usually underserved by legacy players such as bankers. 

Elaborating on this thesis, Raj told Inc42, “In the case of sub-INR 100 Cr companies, the risk versus reward for bankers is not much, and these banking companies would rather divert the effort to sell bigger companies. In our case, we are using technology to enable M&A. For us, the effort stays the same. This is why we do not want small-ticket size M&A deals to stay behind in the race.”

Curiously, Done Deal claims to host startups pegged from INR 75 Lakhs to even companies valued ‘technically’ at INR 600 Cr on its platform. 

“This is what gives us the biggest moat and the first mover advantage in the tech-driven M&A segment,” Raj said.

How Done Deal Plans To Make Moolah

As of now, Done Deal operates on a freemium model and does not charge the parties to get listed rather makes money when a deal is executed on its platform. It charges 5% of the total deal size if the transaction is processed within six months. For deals that take longer than six months, Done Deal drops its commission to 4%.

The startup is also planning to roll out commission-led services in the near future to tap into the burgeoning market of cross-border investors looking to invest in India. 

The prospective service, as per Raj, would enable Done Deal to offer products such as regulatory overview and due-diligence-related information to early-stage investors, individuals and HNIs, who do not have a battery of resources or expertise similar to legacy players or banks. It already claims to have partnered with entities offering similar services and aims to roll out the features to the public soon. 

Done Deal claims to have more than 400 startups listed on its platform across sectors such as SaaS, gaming, creator tech, among others. 

The startup has already closed a funding round, the details of which it intends to announce in the next few weeks. 

What Surprises Await Done Deal In The Long Haul?

As a short-term goal, the startup plans to scale the number of transactions on the platform quickly and build trust among all stakeholders as the preferred go-to platform for M&As. 

Sharing his long-term plans, the cofounder said that he envisions creating an ecosystem of services to help acquirees and acquirers seamlessly embark on their M&A journey.

Further, the startup aims to close 30 deals by the end of 2023 on the platform. However, the cofounder refrained from sharing the average ticket size and the revenue it anticipates to generate by the end of this year. 

Done Deal, which counts players like US-based Acquire.com as its competitors, faces a tough challenge from marquee bankers who are renowned for protecting their turf. 

Even though the startup is focussed on the sub-INR 100 Cr M&A segment, banking firms could spin off ventures or back smaller players to offset its competitive moat.

While Done Deal currently acts as just an intermediary, it could face regulatory headwinds, going ahead, from market watchdog SEBI, which, of late, has been closely monitoring the M&A space. The regulatory hurdles could also dampen its plans to expand into new territories such as M&A financing.  

Further, even as the startup currently seems to be bullish on the ongoing M&A season, once normalcy returns to the Indian startup space, growth prospects could stagger for Done Deal. 

While Raj believes that M&A will continue to be a facet of the overarching Indian industry, it remains to be seen whether growth pans out, as intended, for the Bengaluru-based company over the next few years.

Overall, Done Deal appears well-poised to leverage the ongoing consolidation wave that is gripping the Indian startup ecosystem. From Nestaway’s fire sale to Ustraa’s acquisition by VLCC, the year so far has seen homegrown players embark on an M&A drive to weather the funding winter and adverse market conditions.