Shutting the business was also not without its fair share of drama. Sharma says after 9 months of running his startup, Wopshop, the founders attempted to sell it to Yebhi.com, Snapdeal and Pepperfry. Sharma met the founders of all these businesses but could not secure a deal. Snapdeal was his last-ditch effort. “Our co-founder and CTO had already chosen to leave by that point. Snapdeal’s Kunal Bahl expressed interest, but he wanted us to join Snapdeal and operate the firm,” says Sharma.
Though those talks did not bear fruit, another business idea dawned on Sharma and his co-founder Vaibhav Odhekar when they were sitting in the lobby of the Snapdeal office in Delhi. “We decided to work on a project that we are most familiar with, which is gaming and advertising,” says Sharma.
That led to the establishment of mobile video advertising platform POKKT.
Odhekar is also one of the founding members of Zapaak.com, a leading games platform in India.
The entrepreneurs had earlier built web and VAS games and they realised that very soon the app ecosystem in India and South East Asia will become big and so will gaming. So came the idea of a tech platform that would help mobile games app publishers monetise through advertising. In late 2012, Sharma and Odhekar again took the entrepreneurial route by setting up POKKT.
POKKT is a full-stack data driven ad-tech platform in India, SEA & MENA offering in-app video ads, rich media innovations, and performance marketing. “In the post-Covid era, there has been a significant surge in the gaming audience both in India and around the world, making gaming the most downloaded app category. As a result, there is a growing need among brands and clients to advertise to the gaming audiences and engage them through rewarded video advertising and rich media advertising in this space,” says Sharma.
During 2018-19, POKKT saw good business growth as the company became profitable and expanded its presence to six to seven markets, including Japan. Several Chinese and Japanese companies expressed keen interest in strategic partnerships, or acquisitions, with POKKT.
Sharma also met Kosuke Sogo, CEO of commerce enablement platform AnyMind Group, during this period and was impressed with the growth of the company and his vision for it. So they started discussing stronger strategic partnerships between both companies and realised that there were synergies that both the companies could explore. That was when POKKT decided to get acquired by AnyMind in March 2020, just before the pandemic. “This decision not only presented an opportunity to scale up POKKT in other markets but also to introduce AnyMind products in India,” says Sharma.
So, what is the right time for a startup to be acquired? “The ideal timing for a startup to be acquired is subjective and depends on several crucial factors. These include the alignment of the founder’s vision, the current stage of the business, and whether a strategic acquisition can not only provide capital but also drive significant long-term growth. When these factors are in sync, a startup may be deemed ready for acquisition,” says Sharma.
Rohit Sharma, COO, AnyMind Group
But what could be the reasons behind an entrepreneur wanting to sell their company? Sharma says many startups and entrepreneurs establish their companies with the aim of building a successful and profitable business. However, it is important to consider the various stakeholders involved, such as employees and investors, and create value for them as well.
“As a startup grows and reaches a certain scale, it often requires significant capital and a rapid growth trajectory to continue expanding. In such cases, entrepreneurs typically consider two main exit options: going public through an initial public offering (IPO) or getting acquired by a strategic partner. These options allow entrepreneurs to find a suitable partner and capital that can facilitate further growth and create value for all stakeholders involved,” says Sharma.
The preparation
Getting acquired is, however, difficult and there is a certain degree of preparation that goes into it — from the information needed to deploying the systems and processes.
Sharma says, usually, companies seeking acquisition would enlist the help of an investment bank or a partner to identify potential acquirers. “In our case, although we were not actively seeking acquisition, we received interest from global companies looking to acquire us. We then engaged in a process where we met with several interested partners and carefully evaluated the best synergies and alignment opportunities before deciding,” says Sharma.
Deciding if the acquirer or buyer is a good fit is also crucial. Sharma says startups must ensure that they opt for a bigger company that shares a similar vision. “During our conversation with AnyMind, prior to the acquisition, we realised they shared the same vision and together we identified complementary growth drivers and synergies. Therefore, before considering a merger, founders must ascertain if there is a harmony of ideas and if there is a larger growth story for both the company and the founders,” says Sharma.
AnyMind’s Sogo says any decision for acquisitions that the group has made in the past is based on various axes — expansion of complementary offerings, expansion of geographies, and expansion of networks/sales channels.
“Another point we take into consideration is the acquisition of management talent. POKKT fits all four areas,” Sogo says. After the acquisition, the company has expanded its offerings into mobile marketing, expanded the business into India and MENA, and expanded the customer base. “And Rohit is now AnyMind’s Chief Operating Officer. In addition, the longer-term synergy is now being seen, as we expand our D2C/e-commerce platforms into India,” he says.
Sharma says there were several factors that contributed to determining the sale price for POKKT. The value of POKKT as a team, including its founders and the product they had built played a significant role. “The sale price was determined based on a multiple of revenue and profits, as well as a comprehensive business plan that outlined the potential for substantial growth as a combined entity. The management skills, business strategies, and product offerings were all taken into consideration, and a multiplier was applied to these key factors to arrive at the final sale price,” says Sharma.
Sharma says it takes anywhere around 4-5 months to close the deal after the term sheet.
Life after
Sharma says POKKT was relatively smaller in revenue than AnyMind and, after being acquired by a larger group with significantly more capital and ambitious goals, there have been direct implications on his life and the trajectory of POKKT. He adds that the acquisition has resulted in significant changes, such as an expanded product portfolio and entry into new markets, which have impacted teams.
“In our case, as we got acquired by a Japanese company, our teams also had to align as both organisations came with different cultures and processes. However, that happened successfully, and personally, my role has also evolved as a result of the acquisition. Previously, I was solely responsible for running POKKT, but after the acquisition, I have taken on the role of Chief Operating Officer (COO) and become a board member. This larger mandate has been a tremendous learning for me, particularly as a board member of a Japanese company and then also being actively involved in taking the company public,” says Sharma.
In 2022, the company launched several AnyMind products in India, including AnyTag for influencer marketing, AnyManager for publishers, and AnyX and AnyShop for e-commerce enablement.
“The fascinating thing was that many negotiations in Japan are over drinks, and language is a major barrier. We used to have drink sessions with people who could not speak English but were still laughing at certain jokes after a few drinks. The key, though, is that we could develop extremely solid business momentum in Japan with all the major clients and agencies. In fact, I first met Sogo in Tokyo during dinner and then a long drinking session, and that is how we started discussing the POKKT acquisition deal,” says Sharma.
Sogo says the M&A of POKKT was completed right as the pandemic hit. “For the first couple of years of the acquisition, we could not meet face-to-face, which is something I did with all the staff of previously acquired companies whenever we completed an acquisition. However, this was one of the first things on my agenda as soon as the borders started opening, and Rohit and team also met their colleagues from other markets across Asia,” says Sogo.
Sogo adds that before making any decisions regarding M&A, he would extensively meet with the management team of the target company and one of the evaluation points is whether there is a direction and culture fit. “This includes the direction and values that the management team of the target company is aiming for as individuals (not just as a team). This ensures that even before we begin the PMI process, we are already fundamentally aligned and have already ironed out most differences,” adds Sogo.
