We are in the midst of technology start-up boom era where innovative ideas persistently popping up, supported by a range of public initiatives and private funding. To remain as market leaders in the industry, large corporations often consider start-up acquisition as the easiest and quickest way on boosting their competitiveness.

Instead of investing on new talents, new equipment and significant amount of time on research and development to produce the same innovation, these large corporations keep a watch out on those promising tech start-ups which could potentially provide positive synergy.

However, the chances of a start-up goes failure is high, greater than 70 per cent. Even those with impressive technology ideas at the start might be eliminated by newer technology or competitor with lower cost. Singtel’s digital marketing arm, Amobee, which it acquired in 2012 and is still loss-making, is a good example.

Mr Akshay Mehra, co-founder of peer-to-peer lending platform Crowd-Genie, agrees on the difficulty on tech start up evaluation.

“The usual metrics in a large organisation are all about repeatability at scale – so a business unit should be able to project its business for the next 12 to 24 months, and then the managers are expected to meet or beat these numbers. Now in a start-up where business models are in flux, any future projections are at best valid for six months. So when a start-up misses its projections, the traditional company managers will always struggle to assess such teams. This leads to frustrations from both sides – the acquired start-up and the acquirer.”

Original article can be found here: http://www.straitstimes.com/techstartup