Mergers and acquisitions have picked up significantly in the startup space with 48 deals in the past three months, according to Xeler8, a platform that tracks startup activity in the country. This is in line with the trend towards consolidation among startups.

Whether it is a strategic move to eliminate competition, or to take advantage of the conducive market situation, startups are looking at acquiring other ventures.

Online fashion marketplace Voonik Technologies recently made three acquisitions — Zohraa, a marketplace for designers and boutiques, Styl and Picksilk — that helped it enter the premium ecommerce segment. "It wouldn't have been possible to acquire them in some other market," said Sujayath Ali, cofounder of Voonik. "They were also looking for a chance of M&A because they weren't able to scale up."

Significant rise in mergers and acquisitions in startup space with 48 deals in past three months

While capital is flowing out of the bigger startups into the smaller ones, industry players believe that their money is well spent as they end up acquiring a technology they otherwise would have to work towards. There are others who spend their money to acqui-hire - that is, buyout for the employee skills and expertise — other startups.

Bengaluru-based online gifting platform Giftxoxo recently acquihired BookMyInterest, a marketplace for hobbies and leisure activities.

Experts in the field say there are a lot of small deals in the markets, and soon mid-size deals would pick up. "Small deals are a good thing, but there are no mid-size deals at the moment," said Sanat Rao, fellow at iSPIRT M&A Connect programme. "Mergers and acquisitions are higher than what they used to be a few years ago, but we need more mid-size deals, which I think will pick up soon."

InnerChef, a Gurgaon-based food technology startup, has acquired two firms in the same space to expand their presence to other cities. Its cofounder Rajesh Sawhney said it is looking at more acquisitions in the future.

Voonik officials said the company is now looking to acquire from the fields of machine learning and artificial intelligence.