Many entrepreneurs let go of their fledgling business rather than build them …

Only 18 out of the 50 odd e-commerce startups were able to raise follow-on funding in 2014.Ganesh believes that’s more true for startups in `winner takes all’ categories.”Sectors like education, healthcare and food can have multiple players. Still, raising capital can be tough based on challenges in those sectors , scalability, margins, operating leverage etc,” says Ganesh Echoes Radhakrishna of Taxi For Sure: “It was a fair call (to sell to Ola) keeping everybody’s interest in mind.

All startups may not take a similar route. Like, for BigBasket, an online grocery startup, there is no global competitor in India and they could take a different route.”B2C Trap Startups eyeing B2C spaces need to be careful that they will need plenty of cash to scale. And in some categories like taxi business, e-tailing and ad driven sales platform there are already two three large players, Uber-Ola, Flipkart-Amazon, Quikr-Olx in the three categories.

“There are often unwilling mergers pushed by investors like, exclusively.com and TFS,” says an investor who wished not to be named. “They were B2C startups who burnt cash to gain market share, it was too much and too soon. TFS Rs 49 scheme taxi ride was supposed to create stickiness and repeat rides , but perceived loyalty was being bought at a discount,” he adds. On the other hand, getting talent can be dearer if the startup is not among the top players. “A Flipkart or Ola can easily double an offer made by smaller rivals making talent expensive and putting growth at risk.

It’s a brutal market out there,” says the person quoted earlier. Besides, says Srivastava, as a sector starts maturing, the 80:20 rules come into play. Eighty per cent of the business goes to 20% of the players,this makes it expensive for the smaller players to scale and they look for exits faster then they planned.” Global or Local buyer Taxi for Sure, Myntra and Exclusively were acquired by local rivals. While Little Eye Labs, a Bengalurubased developer of performance monitoring tools for mobile apps, Nimbuzz, a Gurgaon-based telecom messaging and ad platform and ZipDial, a Bengalurubased missed-call marketing company were acquired by global companies,Facebook, New Call Telecom and Twitter respectively. “They become part of a global platform”.

In their case it’s like 1+1=22,” says Anandan. “Given Twitter’s ambition in India and emerging markets, our team and platform can achieve more, faster and at a bigger scale by being part of Twitter,” says Valerie Wagoner, founder CEO, ZipDial. ZipDial makes Twitter content accessible to everyone,for example users could get the ICC world cup Tweets by giving a missed call to a ZipDial number, even without being on Twitter. Says Wagoner: “ZipDial platform is being integrated into the core Twitter platform.” For the 2006 startup Nimbuzz, funded by Nasper and Mangrove Capital and acquired by New Call Telecom in November 2014, it’s a case of getting scale which the founders may not have been able to build on their own.

Says Vikas Saxena, co-founder, Nimbuzz: “New Call telecom shared a bigger vision with us. New Call is putting up the largest public WiFi in India. Now we can grow further and faster.” For Little Eye Labs taking the startup to IPO was never an ambition. It was acquired by Facebook in 2014. Says Kumar Rangarajan, co-founder, Little Eye Labs: “We wanted to prove that we can build awesome global products from India.

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