India Technology Product M&A Industry Monitor - An iSPIRT & SignalHill report. Tech Product M&A in India is on the rise with both US & Asian strategics starting to dip their toes in the water. On account of the increasing pace of innovations and scale of the Indian Product Tech eco-system,

1. India Technology Product M&A
Industry Monitor
November 2016

2. 2
Executive Summary
Fundraising environment for technology product companies1 has seen a major slowdown after the 2014 & 2015 boom
 After nearly $4.8bn and $6.2bn raised in 2014 & 2015, Tech Product PE/VC funding in Q1-Q3’16 has come down to $2.4bn
 Growth-stage crunch driving slower VC/PE activity, which in turn has been driven by a sharp decline in hedge fund deals
M&A activity saw an uptick in 2014 & 2015 including a sharp surge for smaller deals (sub $5m) in 2015
 M&A activity saw a surge in 2015 with deal value of ~$1.35bn (up 70% over 2014) across 137 deals (up 130% over 2014)
 Nearly 80% of the deals during 2014 – Q3’16 were <$5m driven mainly by acqui-hires & restructuring
 7 large deals (>$100m) also took place during this time period including 2 landmark cross-border transactions
For a healthy technology product ecosystem, further acceleration in later stage M&A and buyouts is required
 The long-tail in tech product M&A in India kicks in very early with many deals below $5m and a steep drop thereafter
 Both from an M&A and a PE buyout perspective, the India ecosystem is still relatively nascent and far behind the US
As companies mature and scale, the future offers brighter M&A and IPO prospects
 Secondary transactions have already picked up; Macro and fundamental factors bode well long-term for the India story
(1) Note: The scope of this report covers fundraising and M&A activity of IP-driven companies with a significant product component across both consumer and enterprise tech, but excludes IT services companies

3. 3
VC/PE Funding Peaked In 2014 & 2015 With ~$11bn Raised Across 500+ Deals
 In 2014 & 2015, ~$10bn raised across 397
deals in Consumer Tech and ~$1bn raised
across 109 deals in Enterprise Tech
 Deal volume in Q1-Q3’16 (223 deals) almost
in line with Q1-Q3’15 (250 deals) but deal
value in Q1-Q3’16 (~$2.4bn) down by 54%
compared to Q1-Q3’15 (~$5.29bn)
 Consumer Tech continued to dominate in
Q1-Q3’16 with a 78% share of transaction
volume
 2016 number of VC/PE funding rounds is
exceeding 2014 and not far behind 2015,
hence the significant drop in deal value is
really on account of sharp reduction in larger
funding rounds
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
India Technology Product VC/PE Investment Deal Value ($m)
India Technology Product VC/PE Investment Deal Volume
143 171 377 661 382
658 850
4506
5594
2,037$801 $1,021
$4,883
$6,256
$2,419
2012 2013 2014 2015 Q1-Q3'16
31 29 49 60 47
116 94
127
270
176
147
123
176
330
223
2012 2013 2014 2015 Q1-Q3'16
Enterprise Tech Consumer Tech

4. 4
164
665 1150
2691
890 750
235
959
$986
$1,267
$2,855
$900 $793
$380
$1,133
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16
Enterprise Tech Consumer Tech
43 44
56 58 55 55
39
33
37 37
22
18 21
35
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16
<$5m >=$5m
 Deal volume in the >$5m category has fallen ~30% in Q1-
Q3’16, as compared to Q1-Q3’15 although volumes in Q3’16
have caught up with Q3’15
 Deal value for the >$5m category in Q3’16 was just ~40% of
the peak reached in Q3’15
 Absence of mega-rounds in ecommerce & consumer internet
unicorns primarily responsible for the growth stage crunch;
Enterprise Tech deal volume reasonably steady
India Technology Product VC/PE Deal Volume by Size
Deal Value by Segment (For Deals >$5m) Deal Volume by Segment (For Deals >$5m)
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
~36%
drop in
volume
6 7 6 2 3 6 9
27
30 31
20 15
15
26
33 37 37
22
18
21
35
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16
Enterprise Tech Consumer Tech
There Has Been A “Growth-Stage Crunch” For Deals >$5m since Q4’15

5. 5
9
7 8
3
1 1
5
4
7
1
3 2
14
11
15
4 4
3
2
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16
Tiger Global Other Hedge
190
88
922
535
175
318.
837
475
730
1759
569
130 62
225
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16
Disappearance Of Hedge Funds Largely Driving Drop in Deal Activity…
 Hedge fund participation in funding reached
its peak in Q3’15 when hedge funds
collectively were responsible for ~$1.8bn in
deal value (60% of total deal value in that
quarter)
 Hedge fund deal-making has fallen off a cliff
in 2016 with an 86% decline in overall deal
value in Q1-Q3’16 compared to the same
period last year
 Tiger Global, which led the charge in 2014 &
2015, has pulled back almost completely so
far in 2016, with just 3 deals ($305m) in Q1-
Q3’16 vs 24 deals ($1.8bn) in the same period
last year
India Technology Product Deal Value by Hedge Fund Type ($m)
India Technology Product Deal Volume by Hedge Fund Type
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
~87%
drop in
value
~87%
drop in
volume

6. 6
Fund Q1-Q3 ’15 Q1-Q3’16
3 0
2 0
2 0
1 2
1 1
96%
4%
Consumer Tech Enterprise Tech
…And Consumer Tech, Once A Darling of Hedge Funds, Has Been Hit Hardest In 2016
 Hedge funds invested ~$3.9bn in technology
product companies in the 2015 – Q3’16 time
period with 96% of those going into
Consumer Tech
 80% of the hedge fund investments during
this time period were absorbed by just 8
companies highlighting the disproportionate
concentration of these deals among the
unicorns, or “baby-corns”
 Virtually every hedge fund active in 2015 has
pulled back on India investments with only 10
deals involving hedge funds in Q1-Q3’16 as
compared to 50 deals in Q1-Q3’15
Consumer Tech Hedge Fund Deal Volume Comparison
Hedge Fund Tech Product Investments (2015 – Q3’16)
Fund Q1-Q3 ’15 Q1-Q3’16
24 3
6 0
4 0
4 2
3 2*
~80% (~$2.9bn) of Consumer Tech
hedge fund investments were
absorbed By Just 8 Companies
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed. * Includes follow on rounds in existing investment

7. 7
233 174
419
1,063
136
76
617
932
276
$205
$308
$792
$1,350 $1,339
2012 2013 2014 2015 Q1-Q3'16
M&A Activity Suggests A Strong Uptick In 2014 and 2015…
 M&A activity saw a surge in 2015 with deal
value exceeding $1.35bn (up 70% over
2014) across 137 deals (up 130% over 2014)
 M&A deal volume thus far during Q1-Q3
‘16 has been robust with 113 deals and full
year 2016 M&A deal volume is likely to
equal 2015 levels
 M&A deal values thus far during Q1-Q3’16
have increased 55% from Q1-Q3’15 (mainly
by the $900m Media.net acquisition)
 Share of “Inbound” M&A volume for the
time period 2014 – Q3’16 is ~15% and M&A
value is ~48%, suggesting M&A continues
to be largely driven by domestic deals
India Technology Product M&A Deal Value Trend ($m)
India Technology Product M&A Deal Volume Trend
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
11 10 17 10 19
32 29
42
127
9443 39
59
137
113
2012 2013 2014 2015 Q1-Q3'16
InBound Domestic

8. 8
…However 74% Of M&A Deal Value Since 2014 Was Contributed By Just 8 Deals …
 Of the large M&A deals several were driven
by industry consolidation (eg. Ola-TFS,
Quikr-Commonfloor, CarTrade-Carwale,)
and others driven by strategic product or
market access (eg. Snapdeal–Freecharge,
Wirecard-GI Retail)
 Snapdeal acquisition of Freecharge in 2015
was one of the largest buyouts in the
domestic Consumer Tech sector
 Mediat.net’s acquisition by Miteno is one of
the largest global adtech deals till date
`
India Tech Product M&A Deal Value 2014 – Q3’16 ($m)
Source: Signal Hill analysis and research, Venture Intelligence, Mergermarket, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed.
74%
26%
8 Major Deals
Rest

9. 9
Number Of Deals In 2015
…And ~80% Of Deal Volume Since 2014 Contributed By Smaller Deals <$5m
 250 deals were <$5m out of a total 309 deals
during the 2014 – Q3’16 time period
 A substantial portion of the deal volume in
the <$5m category driven by restructuring as
well as acqui-hires (early stage companies
being acquired by larger players)
 In 2015, Enterprise Tech (with ~25% of deals
being >$5m) had a greater share of larger
deals as compared to Consumer Tech and
ecommerce
India Technology Product M&A Deal Volume Trend
35
112 10324
25
59
137
113
2014 2015 Q1-Q3'16
Consumer Tech Enterprise Tech
10
30
>=$5m <$5m
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
15
82

10. 10
The Missing Middle In The India Technology Product M&A Ecosystem
 Whilst any M&A market will always follow a
long-tail distribution, the long-tail in Product Tech
M&A in India kicks-in very early with many deals
below $5m but a steep drop thereafter
 Given the evolving stage of the Product Tech
funding environment the number of large scale
(>$100m) M&A deals is still modest, however it
has seen an uptick with 7 such transactions taking
place since 2014
 However with only 52 deals between $5-100m
with a total transaction value of $892m there is a
missing middle in the India Product Tech M&A
market
 As the eco-system matures we expect a significant
uptick in both volume and value terms in the mid-
size and larger deal categories
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
$97
$892
$2,492
250
52
7
0
500
1000
1500
2000
2500
3000
0
50
00
50
00
50
Small Deals (<$5m) Mid-size Deals ($5-100m) Large Deals (>$100m)
Deal Value ($m) Deal Volume
India Technology Product M&A (2014 – Q3’16)

11. 11
Acceleration In M&A Activity Is Required For A Healthy PE/VC Ecosystem…
Comparison Metric USA India
VC / PE Investments – Volume 8,025 251
VC / PE Investments – Value ($bn) $45 $1.5
M&A - Volume 5,862 340
M&A – Value ($bn) $473.2 $2.9
Average M&A Deal Size ($m) $80.7 $8.4
 Although India has been amongst the fastest
growing start-up ecosystems in the world in
recent times, when it comes to M&A activity
and exits, India still has a long way to go
 During Jul’05–Dec’09, the US saw $45bn in
Tech VC/PE investments and during Jan’12–
Jun’16) there was $473bn in Tech M&A
 This suggests a ~10.5x capital exit ratio
(assuming it takes ~7 years to scale a tech
product company post funding); In
comparison, this ratio for India is only 2x
 As India’s start-up ecosystem starts to evolve
we expect this ratio to go up considerable,
however for the ratio to be healthy (>4x)
M&A activity will have to pick-up multi-fold
to give returns to the large amounts of
VC/PE capital that were raised in recent years
M&A : VC/PE Ratio Comparison
10.5x 2.0x
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed
Jul’05
To
Dec’09
Jan’12
To
Jun’16
Ecosystem Comparison Of US & India

12. 12
…And The Buyout Market For Technology Product Companies Needs To Catch Up
 Tech product buyout market in
India is still in its early days but as
companies mature, founders are
more open to ceding control
 IT Services buyouts in India have
seen a sharp rise recently with
several assets being in play of late
 In comparison, there were 100+
Private Equity Tech product
buyouts in USA since 2014 and
the top 10 deals alone accounted
for ~$102bn in deal value
Source: Signal Hill analysis and research, Venture Intelligence, Mergermarket, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed.
Tech Product Buyout Market Much More Nascent Than IT Services…
…And Clearly A Long Way Behind The US
Tech Product Buyouts
Since 2014
IT Services Buyouts
Since 2014
$102bn
Top 10
Product
Buyouts
Since 2014

13. 13
Pick-up In Secondary VC/PE Transactions Since 2014 Is A Positive Sign
Company
Entering
Investor(s)
Exiting
Investor(s)
Amount Involved
($m)
Undisclosed IDG,Helion 175
GeneralAtlantic,
Temasek
Clearstone,
TAAssociates
171
Blackstone GeneralAtlantic 170
Softbank,
TeachersPensionPlan
Sequoia,Kalaari,
Saama,Bessemer
99
Kinnevik,FalconEdge,
Coatue
Warburg,Matrix,
Norwest,NokiaGrowth
60
Temasek,Norwest IDG 40*
PremjiInvest IDG 20
 Secondary deals on the rise with
buoyant supply
 Many VC/PE investors sitting on
significant paper gains are
motivated sellers driven by fund life
dynamics and some of those have
already booked healthy returns on
some of their unicorn bets
 In addition to the listed select deals
there might have been several other
deals not in the public domain
 Even if the IPO market for Tech
Product companies improves, given
demand / supply dynamics we
expect a further uptick in secondary
deal activity
Source: Signal Hill analysis and research, Venture Intelligence, YTD as on September 30th, 2016; Deal volume includes deals where values are not disclosed. * Includes the primary portion of the transaction as well
Select Secondary Transactions In India Tech Product Space (2014 – Q3’16)

14. 14
Long-Term, The India Technology Product Story Has A Bright Future
Can’t Eat Paper
Profits – More
Exits Needed!
 The technology product ecosystem needs to see more exits through increased M&As,
IPOs and secondary activity
 A healthy “exit” environment is a necessary condition to build a robust ecosystem
VC/PE Boom Has
Provided A
Strong Impetus
To India Story
It Takes Time To
Build; Major
M&A/IPO Uptick
2-5 Years Away
Near Term,
Companies Need
To Go Back To
Basics
 The recent VC/PE funding boom has filled up the tanks of many companies and created
several unicorns – India clearly on the map of global tech product investors
 Continued innovation and strong macro tail-winds will further enhance India’s attraction
 A technology product company typically takes >7 years to be built out fully
 Hence one needs to wait for another 2-5 more years to see the fruits of the 2014 & 2015
funding boom play out in India Technology Product M&A and IPO activity; early signs are
positive with both 2015 & 2016 being record years for India Technology Product M&A
 Mature management and great execution is required at companies which have taken in
substantial amounts of capital during the 2014 & 2015 funding boom
 Current challenging private funding environment is likely to persist for several more quarters
with VC/PE investors focussing on unit economics, cash burn and path to profitability

15. 15
This document has been prepared by Signal Hill Capital Advisory India Private Limited (“SHI”) & Indian Software Product Industry Round Table
(“iSPIRT”) for discussion purposes only. The information and opinions contained in this document are derived from public and private sources
which we believe to be reliable and accurate but which, without further investigation cannot be warranted as to their accuracy, completeness or
correctness. This information is supplied on the condition that SHI or iSPIRT and any partner, employee or affiliate of SHI or iSPIRT are not liable
for any error or inaccuracy contained herein, whether negligently caused or otherwise, or for loss or damage suffered by any person due to such
error, omission or inaccuracy as a result of such a supply. SHI and its affiliates and iSPIRT are also not liable for any loss or damage howsoever
caused by relying on the information provided in this document. In particular any numbers, initial valuations and schedules contained in this
document are preliminary and are for discussion purposes only and does not constitute an opinion.
Signal Hill is a leading independent advisory boutique serving the M&A and private capital raising needs of growth companies. Signal Hill’s
experienced bankers provide deep domain expertise and an unyielding commitment to clients in our sectors: Internet & Digital Media, Internet
Infrastructure, Services and Software. With over 700 completed transactions and offices in Baltimore, Bangalore, Boston, Nashville, New York,
Reston and San Francisco, Signal Hill leverages deep strategic industry and financial sponsor relationships to help our clients achieve Greater
Outcomes®.
iSPIRT is a non profit think tank that builds public goods for Indian product startups to thrive and grow. iSPIRT aims to do for Indian startups what
DARPA or Stanford did in Silicon Valley. iSPIRT builds four types of public goods - technology building blocks (aka India stack), startup friendly
policies, market access programs like M&A Connect and Playbooks that codify scarce tacit knowledge for product entrepreneurs of India.
Report Authors
Signal Hill India: Klaas Oskam, George Anthraper, Arun Thathachari, Varun Potturu
iSPIRT: Sharad Sharma, M. Thiyagarajan (Rajan)
Thank You