Startup Street: A Merger Of Uber And Airbnb Or Spotify And Netflix? This Report Says It’s Possible In 2020
Here’s what went on this week on Startup Street.
This week on Startup Street, a report that explains why a merger between uncirons such as Uber and Airbnb or Spotify and Snapchat is not just a good idea, but also likely. Housing rental startup NestAway acquired security solutions provider Apna Complex. One of the Infosys co-founders has a problem with Indian startups.
The Year For Unicorn M&As
Mergers and acquisitions between small- and medium-sized unicorns such as Airbnb, Uber, Netlix, Snap and Spotify are more likely than they might appear, according to CB Insights.
Apart from business synergies, these types of deals are likely to get quickly green-lighted by the U.S. and European regulators who will “smile on” any marriage that will provide stronger counterweight to the big tech—Amazon, Facebook, Apple, Microsoft, Google, Baidu, Tencent and Alibaba, CB Insight's 2020 Trends report said.
The report mentions 10 unicorns that are arguably incentivised to either combine in some form or face seeking an acquirer or go public. The list includes Uber, Airbnb, eBay, Spotify, Twitter, Snap, Lyft, Pinterest, Dropbox and Box.
This comes at a time when the big eight technology companies of the world are aggressively expanding into more sectors and acquiring monopoly-like market shares, leading to a debate on anti-trust issues. For instance, Apple and Google control more than 95 percent of all mobile app spending by consumers in the U.S., which means that most developers must work with them to reach millions of smartphone users. Spotify Technology SA is among those that have long complained about the 30 percent cut Apple takes of each app, claiming it amounts to an effective tax on competitors.
Similarly, Facebook and Google together control 60 percent of consumer spend on digital advertising in the U.S., garnering and storing personal data on around 2 billion users.
These companies are facing anti-trust cases in the U.S. and Europe, with the governments looking to break them up to limit their power over crucial industries such as digital advertising, mobile operating systems and user technology.
In such a climate, Big Tech’s bid to acquire unicorns or ex-unicorns may not be received well by lawmakers, the report said. “2020 will be the year of small- and medium-sized fish gulping one another up in a bid for any incremental scale advantage they can digest.”
Arguing that a merger between Uber and Airbnb is less odd that it might first appear, CB Insights points out that the two have complementary two-sided marketplace models which run on ratings of drivers, hosts, guest and riders.
“Trust is core to both Uber and Airbnb’s value proposition as marketplaces, which is why even internally a richer ‘trust graph’ would be immensely valuable.”
A combination between Snapchat and Spotify, the report said, would not only see business model harmonies and data synergies, it would also result in a worthy competition to the China-based Tik-Tok phenomenon which is building on the merged video and music entertainment space.
“An alternative scenario to the above is Netflix joining forces with Spotify,” it said.
On the business-to-business front, the report suggests a merger or acquisition between Atlassian and Slack.
Recruitment Platform Raises Funds From Xiaomi
Blue-collar recruitment platform WorkIndia on Monday said it has raised Rs 42 crore from Chinese tech major Xiaomi.
“The cutting edge technology developed by WorkIndia, utilising geo-positioning and dynamic algorithms, is one of the best in class that we have seen,” Xiaomi Global Vice President and Xiaomi India Managing Director Manu Jain said in a statement. “The company has created a massive dent in the Indian blue-collar segment within a short span of time. It is inspiring to see WorkIndia leverage the high smartphone penetration in India and provide an opportunity to people from all segments, working as an equaliser.”
Other marquee investors of WorkIndia include Beenext Pte Ltd. and a Japanese hedge fund Asuka Investments, among others, the company said.
The five-year-old startup claims to be India’s largest blue-collar recruitment service with 2.1 crore unique app sessions per month, 1.5 crore registered job seekers and presence in 763 cities across India, it said.
The platform allows users to search for jobs for house helps and delivery boys to telecallers and salespersons which are matched based on the skills and location of aspirants. They can then apply through the app itself and get a call from prospective employers.
The white-collar segment's behaviour is well documented, however, the blue-collar segment behaves very differently and very little data is available on this segment, said former Goldman Sachs banker Keshav Sanghi in the statement. Sanghi is an angel investor in the startup. ,
“This fact coupled with unique insights on the blue-collar segment and the massiveness of WorkIndia's impact, make it a highly exciting time to be part of what the team is building today,” he added.
NestAway Acquires ApnaComplex
Home rental startup NestAway Technologies announced the acquisition of ApnaComplex this week, hoping to expand through synergies with the apartment management and security services provider.
The synergies of the combination will accelerate the growth of both the companies by enabling offerings with much better value for the target customers, the firms said in a joint statement.
“Our association with ApnaComplex will enable the residents of these societies to not only an easy, seamless and trustworthy way to rent their apartments to families but also get better offers in a range of high-value home services including painting, pest control or deep cleaning at fraction of the market rate that NestAway has been delivering in its network,” Nestaway Technologies Co-Founder and Chief Executive Officer Amarendra Sahu said in the statement.
NestAway, which began its operations in January 2015, has been backed by some of the marquee investors including Tiger Global, Chiratae, Goldman Sachs, Ratan Tata and Yuri Milner. It currently manages 150,000 units across 15 cities.
ApnaComplex is a 10-year old company that manages over 20,000 societies spread across 80-plus cities with a bulk of homes in major cities including, Bangalore, NCR, Mumbai, Pune, and Hyderabad.