M&As in the Indian start-up ecosystem

Strategic acquisitions within start-ups are on the rise both in terms of the number of deals as well as exit value for investors, the data available indicates. Another important aspect of the evolving M&A landscape are companies acquiring bootstrapped entities with a strong performance track record and global companies buying Indian start-ups to strengthen their tech products and expand in the Indian market. Over the coming years we will see more start-ups consolidating their energies and resources to either survive the growing competition or to become market leaders. This will also result in lesser number of Start-ups closing shops. As the Indian Start-up ecosystem continues to grow and attract greater foreign interest, we may expect the value of M&A deals to increase commensurately in times to come. India has been a fertile landscape for innovative and globally

The right environment, regulatory support and consolidation will allow start-ups to embed themselves as key components of India's rapidly evolving, technologically-oriented economic growth story.

The payment infrastructure developed in India over the last eight years is second to none. Additionally, there is a massive digital drive taking place in India as a result of the Pradhan Mantri Jan-Dhan Yojana, an increase in smart phone penetration and demonetisation. India also happens to be the largest remittance receiver in the world. In the “

” series this month, we review a FinTech company with a twist. Co-founders of Yooz - Arunjay Katakam and Lara Gilman - recognised the need for having low-value money transfers within minutes, with no hidden fees and most importantly without hassles. The Yooz team is made up of people who live far from home, hence understanding that sending money can help one feel closer to family and friends, as well as to one's goals. Arunjay Katakam, CEO & Co-founder, is a payment expert and consulted with the GSMA′s Mobile Money programme for three years, where he provided a comprehensive understanding of the evolution of mobile money, including analysing the impact of new technologies and business models. Prior to the GSMA, Katakam built and sold two businesses and invested in another, which was acquired by Twitter. He spent the first five years of his career counting beans at Ernst & Young. Gilman, the COO & Co-founder of Yooz, has also joined from the GSMA Mobile Money team. At GSMA, Lara provided operational support to more than 25 operators across 18 countries, including eight in-depth consumer research projects focused on driving adoption. Prior to GSMA, she worked in financial services and, in 2009, earned her MBA from INSEAD. The software that powers Yooz has been developed by an in-house team based in Bangalore, India. Yooz aims to be the world's first remittance company that does not rely on transaction fees and focuses instead on ecosystem-based revenue streams. Their mission is to help migrants send more money home, whenever they need to and as fast as possible. Yooz believes that

should do more for financial inclusion and reducing the poverty trap. The cost of remitting from the UK varies per destination country and transfer method. The major money transfer operators in the UK typically charge from 7 to 11 per cent of the total amount remitted. In international remittance, people who send the lowest values often pay the highest fees as business models cater to high-value senders. As a percentage, it can cost up to 10 times more to send £50 than it does to send £1,000. Therefore, instead of sending money when they need to, migrants bundle their funds or use risky informal channels to make the economics work. Yooz focuses on the UK to India corridor worth $3.6-billion. According to the latest figures available from the World Bank, the UK's biggest remittance corridor is to India. The amount of remittances each year, works out to roughly 16 per cent of the total remittances from the UK. Considering India is the second most common country of birth among migrants to Britain, this shouldn't come as a surprise. In addition to the market size, it is one of the few corridors that allows for instantaneous cross-border transactions. By reinventing the business model and leveraging new payment infrastructure, Yooz aims to unlock the commercial and social value in the long-tail of cross-border transactions. It is a single corridor (UK to India) focused start-up, looking to leapfrog its competitors using new payment infrastructure available in India. The company plans to build deep links with Indian recipients and help them on their journey to financial inclusion by offering micro-credit and micro-insurance products through their partners. While UK to India is their first corridor, as the company grows it will open other corridors such as Singapore to India, Australia to India, Middle East to India and the US to India. The company is developing the Yooz proposition to test the following hypotheses in 2018:

It would be interesting to closely monitor the progress the company makes in testing the hypotheses and change the remittance landscape. What would be more important to see is the impact the company makes in financial inclusion of the recipients and stand out from the competition.