Successful startup exits are an indicator of successful startup ecosystem. Incidentally, till a couple of years back there were concerns that India wasn’t seeing too many exits of startups through mergers & acquisitions (M&As) or IPOs. The picture seems to have changed as the country witnessed a third highest number of tech startup exits, in the first half of 2016, according to US startup database CB Insights.
The US led the list with 857 M&A/IPOs in the first six months of 2016, followed by the UK with 135. Indian startups witnessed 86 M&As, down from 96 in the second half of 2015. China, with just 15 M&As, fell to 11th position from 7th in the second half of 2015.
The report said there were over 1,590 exits globally in the first half of 2016, a 17 percent decline from the same period last year. However, the number of exits in the June quarter, at 820, was a 6 percent increase over the March quarter.
Over half, (53 percent) of the exits were at valuations less than $50 million, and 26 percent of the exits was between $50 million and $200 million, according to CB Insights. Only 4 percent of exits were at over a $1 billion - US-based personalized healthcare company Nanthealth topped the tech exit charts with a valuation of $1.7 billion.
While some of those companies saw successful exits (Twilio, Lytx, Ping Identity etc), there were a number of companies that sold for less than their total funding raised. For example, One Kings Lane raised $229M and sold for $30M while Gilt Groupe raised $284M and sold for $250M.
Interestingly, 72 percent of companies that exited didn't raise VC or PE money prior to exit. Given the large number of consumer Internet companies, every country in the top 5 had exits in the space. In India, 28 percent of the overall exits were of mobile ventures, the highest among the top 5 countries. Except for India (28 percent) and Canada (23 percent), Mobile exits have slowed down, reaching a 5-quarter low to account for 15 percent of global tech exits in Q2’16.