Guwahati: The Indian technology startups specialising in artificial intelligence (AI), data analytics and proprietary software are increasingly attracting acquisition interest from US and European technology companies, signalling a shift in global investment priorities towards intellectual property-driven businesses.
According to buy-side network data compiled by Pune-based technology-focused M&A advisory firm TermSheet Capital, AI and data businesses account for 56 per cent of active acquisition requirements targeting Indian technology companies. Cybersecurity and other technology segments constitute the remaining 44 per cent.
The growing interest reflects a change in cross-border mergers and acquisitions (M&A), with international buyers increasingly seeking to acquire established technology platforms, specialised talent and proprietary intellectual property rather than relying primarily on India's cost-effective IT services sector.
The firm's data indicates that 43 per cent of more than 150 buyers from North America and Europe in its network are actively looking for acquisition opportunities in India. Notably, 15.7 per cent are specifically targeting technology product companies, indicating growing interest in businesses with scalable products and ownership of core technology.
"The shift is from acquiring cost-efficient delivery capabilities to acquiring technology that strengthens a buyer's competitive position," said Amol Rathi, Founder and Chief Executive Officer of TermSheet Capital.
He said Indian companies with proprietary intellectual property, specialised domain expertise and technologies that complement existing businesses are increasingly positioned to attract strategic acquisition interest.
The emerging trend could create opportunities for Indian technology entrepreneurs seeking international partnerships or exits. However, potential buyers are also placing greater emphasis on intellectual property ownership, customer relationships, operational capabilities and the strategic value of an acquisition, alongside conventional financial performance.
Rathi said successful transactions depend not merely on securing a buyer or negotiating a favourable valuation but also on identifying an acquirer for whom the target business offers significant strategic value.
TermSheet Capital said it is expanding its buy-side team to identify Indian companies that match acquisition requirements across North America, Europe and the Middle East.
Headquartered in Pune, TermSheet Capital specialises in technology-led mergers and acquisitions and cross-border transactions, advising businesses on buyer identification, valuation, deal structuring and transaction execution.