PremiumSoftware-as-a-service (SaaS) platform Netcore Cloud, which picked a majority stake in Unbxd for $100 million (around ₹762 crore) in its largest deal ever, is looking to strike at least one more acquisition before it aims to launch its IPO early next year.
Software-as-a-service (SaaS) platform Netcore Cloud, which picked a majority stake in Unbxd for $100 million (around ₹762 crore) in its largest deal ever, is looking to strike at least one more acquisition before it aims to launch its initial public offering (IPO) early next year.
"That is the thought process -- one more acquisition before we get to the IPO point," Kalpit Jain, Group CEO, Netcore Cloud, told VCCircle in an interaction.
Netcore, which has scaled without any venture capital and private equity funding, plans to file its draft red herring prospectus (DRHP) with the Securities Exchange Board of India (Sebi) by August this year and look to list on the bourses by March 2023. The company, founded by Rajesh Jain, may also look at a pre-IPO round that could involve investments by "marquee investors", added Jain.
The latest investment in Unbxd marked Netcore's fourth buyout after Quinto.ai, Boxx.ai and Hansel.io., in the last three years. Previously, it had acquired companies such as Greynium Information Technologies and Ravience Digital.
"There is so much to build in the marketing technology space and we can't build all by ourselves. The idea is to continuously look for companies that we could potentially acquire before and after the IPO," said Jain.
He explained that Netcore looks for acquisition of two types. First, tuck in acquisitions like the acquisitions of Quinto.ai, Boxx.ai and Hansel.io that gives the company a great product but the targets might not have a full customer reach yet. Second, involves acquisitions for geographical and customer expansion like the investment in Unbxd.
"Unbxd gave a good head start for us in the North American market and Europe could be another area we are continuously on the look out for a good company," he added.
Netcore Cloud's potential acquisitions could be guided by the new areas it seeks to add either organically or inorganically.
One area is around analytics as a lot of B2C (business to consumer) companies want to know how their consumers are engaging with the brand, said Jain. The second area is around conversational AI which is heating up with WhatsApp allowing brands to create commerce in its app, he added. He also said that Netcore Cloud could look at areas around content management system in the future.
Currently, India accounts around 75% of Netcore's business both in terms of revenue and customer base but with the latest investment in Unbxd and its plans to expand in other developed countries the mix could change.
He explained that North America is a very important and strategic growth market for the company as the average revenue generated from that geography is two to three times higher compared to India and Southeast Asia.
"So, in the next 24 months we want our international business to contribute 40% to our revenue and then aim towards a 50:50 mix," he said, "That does not mean we will focus less on India," he added.
Jain said that Netcore Cloud's ARR (annual recurring revenue) is currently $85 million and with Unbxd it will get to $100 million. The company aims to reach $150 million ARR in the next 18 months, he added. He also claimed that the company has been profitable and its acquisitions have been funded through internal accruals.
In terms of sectoral focus, Jain noted that a lot of growth in the past two to three years has come from digital first companies from across sectors such as gaming, fintech, ecommerce and direct to consumer (D2C) brands. The next phase of growth could come from such companies as well, he added.
Talking about remaining bootstrapped, Jain explained that the flexibility and the freedom to think and operate is more without investors.
"Having said that, we have always had conversations with PE and VCs but some of our philosophies did not match. Besides, we had enough profits to reinvest from our company," he added.
Netcore Cloud was launched in 1998 by serial entrepreneur Rajesh Jain, founder of IndiaWorld Communications (owner of a series of portals called Khel.com, Khoj.com, Samachar.com and Bawarchi.com).
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