Consolidation gains momentum in e-commerce
“We see consolidation when you have got series A and B funding and post that VCs no longer see value in the scale-up. They have a particular time frame to operate in because it is not a lifelong investment and showing returns to their investors becomes crucial,” says Peyush Bansal, founder of online optical store Lenskart.com. “The investor is left with very few options to exit, like IPOs or merging the firm with another or bringing in a third investor who is willing to buyout his stake,” says Bansal. Automobile website Carwale.com was acquired by multimedia firm Axel Springer AG and India Today Group from VC firms Sierra Ventures and Seedfund.
“Other reasons for M&As are that the offer by the new investor or firm is too good or the company is not doing well and couldn’t find more investors, so it gets bought out. Many times their (investee firms) individual existence wasn’t doing any justice to the stakeholder,” says Bansal of Lenskart.com.
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