Bangalore: Software product think-tank iSpirt, which was formed this year by 30 Indian software firms and individuals, has signed a partnership with US-based investment bank Signal Hill Capital Llc to drive more acquisitions of Indian start-ups by large Silicon Valley-based technology firms such as Microsoft Corp. and Google Inc.
iSpirt, or the Indian Software Product Industry Round Table, said it had identified 10 product start-ups that could serve as potential acquisition targets in the near future for Valley-based software firms. iSpirt added that it was close to helping finalize a deal between a Western Europe-based technology firm and an Indian product start-up.
“We have done business with companies like Microsoft, Oracle, Google and Cisco. We know that our contacts from the past will help us in India,” said Ira D. Cohen, managing director and board member of Signal Hill, which has closed 63 deals over the past five years globally.
Those who formed iSpirt include home-grown accounting software maker Tally Solutions Pvt. Ltd, as well as product veterans Sharad Sharma, former head of Yahoo Inc.’s research and development facility in India, and Naveen Tewari, founder of mobile advertising firm InMobi.
As part of iSpirt’s mergers and acquisitions programme, the think-tank is looking to address challenges faced by Indian software start-ups in getting global visibility. It wants to help start-ups get to a position where they can be attractive targets and help bridge the gap between entrepreneurs and top US software firms.
In May, core members of iSpirt met several top M&A executives from companies such as International Business Machines Corp. and Intel Corp. to discuss ways in which visibility for Indian start-ups could be improved and understand what top Silicon Valley firms were looking for when seeking out potential start-up acquisitions.
According to research and advisory firm Zinnov, there are more than 3,700 software product firms in India.
“There are three reasons why a big company buys a smaller company,” said Sanat Rao, an iSpirt member and director of corporate business development at Intel
“The number one reason is that they have a gap in their product portfolio. The second reason is that they are trying to enter a new market. The third reason is called acqui-hire (where a big company buys a smaller company and so you are buying the headcount and bringing in the engineers). We want to help Indian companies to find acquirers by being the platform to make the connection.”