Deal Sourcing Platform Growthpal Aims For $10 Mn ARR After Crossing Its $1 Million Milestone In Global Operations

Mergers and Acquisitions (M&As) in the technology sector has seen significant rise in the last one and half years. As big technology companies are sitting on sound cash reserve, they are deploying it to acquire companies for strengthening their capabilities apart from widening their client base in key geographies like the US and Europe. However, selecting a right company for M&A activity has always been a difficult task. There are some technology startups, which are trying to solve the sourcing problems for companies by providing them with many choices in selected domains. GrowthPal is one such technology platform that provides multiple of opportunities across technology domain, consumer and other sectors to buyers for undertaking M&A activities. In a conversation with the Bizz Buzz, Maneesh Bhandari, Co-founder and CEO of GrowthPal said it is providing rich data base on many promising firms across the globe for doing M&A activities. The company, which counts many marquee names of the global IT services and SaaS industry as its clients, is also onboarding PE & VC funds to enrich its data base. According to Bhandari, Indian technology industry will see many more M&As in coming quarters on the back of rising adoption of AI and GenAI in recent years.

What is your view as far as the M&A space is concerned in the global technology industry as of now?

There's a lot of activity happening. We ourselves are growing 3x this year and most companies we know, are considering some form of either acquisition or investment. One is that there are companies which are very cash rich. Secondly, it's also a good time to add what is typically called as a bolt-on kind of acquisition- areas where they have gaps, because the market expectations are also more realistic now. As the market is more realistic, we are seeing many more transactions which are closing. Thirdly, in the technology (space), everybody talks about AI and Gen AI. Even traditional industries are looking at leveraging AI in some shape or form. And that's another reason (driving M&As) So, these are the three reasons, I would say, why we are seeing a lot of activity right now. And it's not limited to only technology sector. We are seeing it in consumer space quite a bit.

Can you provide some view on the Indian tech industry? Will the pace of M&As seen in recent quarters by Indian IT firms increase in coming quarters?

Yes, it (the pace of M&As) will increase. It has already increased between last year and this year in India. There are a few things happening. Those companies, which are cash rich or those companies which have raised large amounts of VC funding; they're definitely looking at acquisitions to grow. Another trend we are seeing, is that a lot of Indian companies are looking to acquire (firms) outside of India. And the maximum interest we are seeing in acquiring US-based companies or have large part of their business coming from US, followed by UK and Germany among others. We are also seeing some Indian companies, especially in the fintech or consumer space, are also looking at Southeast Asia, Middle East for expansion.

In the IT services sector, not just tier-I or tier-II firms, but we are also seeing companies as small as $10 million of revenue (looking at acquisition). On the software side (SaaS firms), we're seeing companies as small as series A looking at M&As. But, those are looking at more cross-sell kind of opportunities or capability-led acquisition.

What is the motivation behind starting GrowthPal?

We formally started in early 2020, just when the Covid lockdown was starting. However, I've been doing experiments with this since 2015. And this has been on my mind since 2011. So, I started investing in startups in 2009. And starting 2011, I was fairly active in the startup ecosystem. I saw that there was a complete lack of exits. You could invest in 100 companies, or 100 startups, and even after five years, you would barely see exits. That's when I started thinking about this that how do you create an exit ecosystem for early stage companies? Startups need to give exits to existing investors for raising bigger funding rounds for scaling up. Even those companies which do well, they still need to give equity to their investors. Moreover, founders only make money when there is a liquidity event. This liquidity comes largely through acquisition. This is such an important part of the ecosystem which has been neglected for decades. So, that was the motivation behind starting GrowthPal.

Can you provide an overview about your operations?

We work with larger companies which want to acquire smaller companies. For instance, we may work with large and mid-size IT companies to help them finding a right match for acquisitions. In case of fintech, many companies in this space are continuously looking to acquire smaller firms. So, we work with the potential buyers and we give them a pipeline of target, which they can consider acquiring.

What is your experience so far in the M&A space? Are the number of complete buyouts more or a strategic investment or even minority stake buying?

We play across the spectrum. As a sourcing engine, it's up to the client whether it wants to go for 100 per cent or 80 per cent or 30 per cent. But across four and a half years, the 400 buyers that we've worked with; we've seen predominantly full 100 per cent acquisition. I would say, at least 80 per cent requirements have been for that. There are a very few for minority investment, which can be pegged less than 10 per cent. In few cases, we have also enabled reaching strategic partnerships, which is not an acquisition. So, we work across the spectrum.

How many enterprise clients do you have at this point of time? Can you give us some view on your turnover? Will you enter into new areas in coming quarters?

Today, we would have more than 30 active clients who are actively working with us. More than 50 per cent of the businesses from outside of India that are working with us.

Like any technology product to a company, it's a journey. So, we have crossed $1 million ARR and that's a big milestone for us. We hope to reach 10 million soon.

We want to be known as the sourcing engine (for M&As) for the whole world. kay. So, that's how, we are positioning ourselves. Sourcing (of good companies which can be acquired) has been a very big pain. Now, we are also looking at private equity firms. There's a lot of interest from VCs as every VC wants to sell their portfolio. Then, we are planning to add different sectors. We already have four or five private equity firms as clients out of which some are top-tier and some are mid-tier firms. We will probably look at investment bankers as our clients in a few quarters.