Why acquisitions don’t always work for startups

Mint report, instead of using mergers and acquisitions to enter new geographies or acquire technology, the current playbook often involves buying other companies simply to scale faster.The report cited logistics services provider Delhivery’s acquisition of SpotOn Logistics, CarTrade’s purchase of Shriram Automall, Zomato’s takeover of Uber Eats India, and online travel portal Ixigo’s buys of Abhibus and Confirmtkt, all helping them “expand market share, build scale, and enter adjacent or complementary segments.”The idea, of course, isn't entirely new, although such activity slowed sharply during the long funding winter after Covid. In fact, many startups are following the path charted by ed-tech company Byju’s, once India’s most valuable unicorn.

Between 2017 and 2021, Byju’s went on an unprecedented acquisition spree, snapping up company after company.With funders beating a path to its door, attracted by its breakneck, and seemingly unending, growth, Byju’s fuelled billions of venture dollars into acquiring as many as 17 companies in the span of a couple of years.It started in 2017 with Pearson’s online tutoring arm Tutorvista, and Edurite, then US-based educational games maker Osmo, kids’ learning platform Epic1, and coding platform Whitehat Jr. The big splash came with the $950 million acquisition of Aakash to enter the exam prep sector, alongside smaller buys like Toppr, Hashlearn, and GreatLearning.These acquisitions helped Byju’s expand into 20 countries, making it a true Indian multinational.

At one point, its website attracted 250 million visitors a month. Things seemed to be going swimmingly—until they didn’t.