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Home >Companies >News >Knowlarity raises $16 million, eyes multiple acquisitions

New Delhi: Cloud telephony services provider Knowlarity Communications Pvt. Ltd on Sunday said it raised $16 million from Sequoia Capital and Mayfield Advisors in its second round of funding.

“We will be using this money to invest in technology and international expansion and might end up buying some of our competitors," said founder and chief executive officer Ambarish Gupta.

Knowlarity is eyeing multiple acquisitions both in India and abroad as it looks to expand its presence in emerging markets and reach a target of 75 crore revenue by end of this fiscal.

“We are in discussions with at least two to three companies both in India and abroad," Gupta added. The firm expects to close a deal in the next six months.

Knowlarity, which in July 2013 moved its base to Singapore, is eyeing expansion in markets such as South-East Asia, West Asia and Latin America. The company already has some traction in these markets but given its small customer base it could look at possible acquisitions to build its business over the next two years.

“There is no fixed recipe for acquisitions," Gupta said. However, the firm is eyeing companies in the $1-2 million revenue range. These will be cash and equity swap deals, Gupta said.

The market for cloud telephony in India is consolidating, too, with some companies up for distress sales, said Gupta, who is in talks with some of his competitors for possible buy-outs.

“Some of the smaller companies in this space have found it hard to raise capital," said Mukul Arora, vice-president, SAIF Partners, explaining why there could be room for some acquisitions. However, he does not believe the space is witnessing consolidation and expects it to remain fragmented for some time to come.

Some of the smaller companies operating in the cloud telephony space include names such as Ozonetel and Exotel; and larger companies such as One97 Communications Ltd.

Knowlarity, which raised 34 crore from Sequoia Capital in January 2012, received the last tranche of this funding this year. According to Foreign Investment Promotion Board (FIPB) filings, the company received approval for 2.35 crore in late April.

“Knowlarity is solving a big pain-point for businesses, allowing them to communicate faster, cheaper and better," said Vikram Godse, managing director, Mayfield India.

Knowlarity currently has clients such as Zomato, Via.com, Druva and Zipdial. In December 2012, it acquired New Delhi-based Unicom Techlabs for an undisclosed amount.

The company, reported revenues of about 16 crore in fiscal 2014. Knowlarity said more than 6,500 small businesses currently use its services and that the company adds close to 500 users every month.

“In terms of the addressable market, clearly there is a large market out there," said Arora. However, given these companies offer a service to small businesses for a very small ticket size, the challenge is around scaling of revenues and profitability, Arora said.

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