Indiabizforsale, a platform for selling small and mediumsized businesses, is seeing a spate of listings from small startups that wish to divest a part of their business or cash out entirely as entrepreneurs hope to see some return from the code, application or platform they have built even as their ventures didn’t succeed.
“When we began, it was mainly Smbs, but now we are seeing listings from even startups, either to sell some intellectual property or sell their platform because they don’t have the money to take it further, or are moving to do something else,” said Bhavin Bhagat, co-founder of Indiabizforsale.
The platform acts as a listing service and works on a subscription model for people who choose a premium listing. Indiabizforsale currently has over 20 listings for the sale of e-commerce-related businesses on the site, from different states including Uttar Pradesh, Rajasthan and Gujarat.
The reason given for intended outright sale or sale of some intellectual property in most listings is that the founders lack the money to scale up further.
Take Transpose India, an internet-of-things startup that has created a solution which is meant to map traffic congestion. Param Trivedi, chief technology officer at Transpose, said the company does not have the money to scale up the solution and is instead building other offerings that have better business potential.
“We have been talking to Bhavin about the listing. We think our IP could be used by a security company or an infrastructure company or another IT company that wants to develop it further,” said Trivedi.
Some of the startups that have used the platform have also received responses from prospective buyers.
Maqbool, who declined to give his last name, runs a chocolate gifting business in Ahmedabad and has listed his business on the site for over a month. The business has a turnover Rs 3 lakh a year, according to the listing on the platform.
“I want to relocate to the United States and I decided this will be a way to get value out of the business. I have received emails of interest from potential buyers. I am still working on putting together all the paperwork that will be needed to determine a valuation,” he said.
The potential buyers, like the sellers, also come from outside of the large metro cities, according to the platform’s co-founder Bhagat. “A lot of the people who show interest come from the smaller cities and towns. They have money to invest or they have run another business and want to diversify. The buzz around e-commerce makes this attractive for them,” he said.
One company listed on the platform, a Pune-based online library service company has already been sold, Bhagat said. He did not disclose the name of the company, saying the firm did not wish to be identified.
But this way of selling may not always work for startups. “While it is a good thing for the startup industry that the ecosystem is deepening, no successful startup would look to list this way. Also, seasoned buyers would be unlikely to buy just intellectual property, because just the software or code doesn’t work. To maintain it, you need the team that built it as well,” said Sanat Rao, partner-corporate development and M&A at Ispirt.