Start-ups take the merger route in quest for profitability

For start-ups getting into partnerships in their quest to find success and profitability has become the new big thing. Start-ups with strengths in different areas are joining forces to create a more wholesome ecosystem, strong enough to take on compete.

In a latest development, Freecharge, the digital payments platform acquired by Snapdeal, has partnered with payment gateway solution provider, PayUbiz, to further strengthen its merchant base and help consumers move from cash to digital payments.

This integration allows Freecharge to tap PayUbiz's more than 10,000 online merchants across sectors will also be accessible to the patrons of the mobile wallet. "We want to make Freecharge wallet ubiquitous in both the online and offline space by creating an ecosystem of partnerships. Through PayUbiz association, we will further strengthen our partner ecosystem and enable digital payments across 10,000 more merchants. Alliances such as this will certainly help us move in the right direction," said Govind Rajan, chief executive officer.

Both the stakeholders believe partnerships are critical to scale acceptance and build the habit of digital payments. The user interface and transaction experience ensures that consumers have the swiftest yet safest digital payments experience. Enabling wallet payments with merchants gives the ubiquity and reach that is required to take India to a cashless tomorrow.

Unlikely partnerships have forged between start-ups, some after a long-drawn battle against each other. One of the world's largest app-based cab-hailing services Uber, after a fierce turf war with its biggest rival in China Didi Chuxing, decided to merge the company's China operations. In return, Didi would invest around a billion dollars in Uber's global company.

Start-ups have also managed to get an edge by getting into tie-ups with companies from completely different spheres. Uber recently got into a tie-up with online music portal Gaana.com to offer its riders two months of free music subscription. The pilot project, started in Mumbai, would be applicable across Uber Black, Uber Go, Uber WiFi and Uber SUV.

According to sectoral experts, such tie-ups help start-ups capitalise on each other's strengths and even cut costs. "The point of such tie-ups is to find the cheapest way of using each other's respective strengths, reducing infrastructure costs and optimising on brands. These tie-ups are also a precursor to a larger alliance," said Amarjeet Singh, partner - tax, KPMG India.

Recently, hotel room aggregator OYO announced a strategic partnership with ItzCash a multi-service payment solutions company and part of the Essel Group, to facilitate effortless payments for hotel-bookings across 5,500 hotels in about 170 cities in India through ItzCash's easy money transfer solutions.

According to OYO, with this partnership, it is going aggressive in hotel booking and aims to double its volume and clock Rs 400 crore by FY18. ItzCash is backed by Lightspeed Ventures, which is also an investor in OYO.

Last year, health care booking platform Practo and Uber announced a global partnership to help people reach doctors easily. Under the tie-up that pans across India, Indonesia, Philippines and Singapore, those who book an appointment on Practo's mobile application will be able to view the closest Uber available along with the appointment reminder alert.

Business Standard New Delhi, 03th August 2016

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