Deep-tech startups become hot targets for global firms

In June, KPIT Technologies Ltd. announced the signing of a definitive agreement to buy a controlling stake in Bengaluru-based Pathpartner Technology. 191 crores. The latter is an expert in providing product engineering services to customers in the automotive, consumer electronics, broadcast, medical and IoT domains. PathPartner has an offshore research facility in California in addition to presence in Germany and Japan.

In May, General Atlantic-owned KFin Technologies, a Hyderabad-based registry services firm, picked up a 17% stake in insurtech startup Artivatic.ai for an undisclosed amount. The acquirer also has the option to increase its stake in Artivatic.ai to a majority stake. The investment is expected to help KFintech venture into insurance technology as it tries to diversify its offerings.

In September, US-based cloud video surveillance firm Eagle Eye Networks acquired Bengaluru-based AI startup Uncanny Vision to boost its capabilities in artificial intelligence (AI) and analytics. Its deep learning algorithms enable detection, detection and prediction to improve business operations, customer service and site security.

A month later, Accenture agreed to buy Bengaluru-based AI and analytics firm BRIDGEi2i. The deal is expected to add nearly 800 tech professionals to Accenture’s applied intelligence practice, which will strengthen its global capabilities in data science, machine learning and AI-based insights.

Deep-tech startups are those whose business models are based on high-tech innovation in engineering or significant scientific advances. According to industry body Nasscom, there were around 2,100 deep-tech startups in India as of 2020.

To ensure this, NASSCOM earlier this year launched the second edition of its deep-tech mentoring program called Deep Tech Club (DTC) 2.0. The initiative aims to nurture and promote Indian deep-tech startups and disruptive technologies enabled by AI, ML, Augmented Reality, Virtual Reality, Internet of Things (IoT), Robotics, Blockchain, Natural Language Processing (NLP) and similar technologies. Searching for startups.

Industry experts and investors said deep-tech companies are being targeted for acquisitions for two possible reasons. “One is, big companies want to fill some technical gaps in their portfolio. The other reason is that a very good technical team of startups is working on the wrong problem. So, that startup should be given a chance to enhance their technical talent. –can be hired,” said Vinay Bansal, founder and chief executive officer, Inflection Point Ventures, an angel investment firm.

Huddle, an accelerator and fund for early-stage ventures, agrees with this view. “Many large companies want to acquire niche deep-tech startups to gain access to a technology stack that they may not be able to build on their own because many of them may not be digital natives. Often Such acquisitions also bring quality talent at an affordable cost,” said Sanil Sachar, founding partner, Hudl.

Kishor Patil, CEO of KPIT Technologies, said that his company acquired PathPartner because it felt that the latter’s capability in operating system software and low-level software and the existing semiconductor partnerships for quicker access to the platform would be better suited for delivering complex production programs. important for. “Together, we (KPIT Technologies and Pathpartners) can differentiate and strengthen our software integration expertise for new-age vehicle architectures,” he added.

Similarly, Ishaan Khosla, founding partner of Hudl, said that one of Hudl’s portfolio, Neuropixel.AI, a deep-tech AI/ML startup, has already seen large companies showing interest in their solutions and potential partnerships.

Interestingly, many of these startups are being acquired in their early stages, when most of the foundational technologies are built. “Large companies, which have not traditionally been tech-first, may want to acquire or partner with these deep-tech firms to gain access to technology or talent,” Khosla concluded.