Exit and liquidity are not recently in the minds of Venture Capital investors – it appears that evidently many of their portfolio companies also want to incorporate offers.
Last year there have been almost 400 offers in which startups bought other startups – 31% increase – on Crunchbase dataBecause the year ends particularly strong. In 2023, only 300 such contracts occurred.
While last year’s number is at the top of 2021 and 2022 with almost 1000 offers, in which the startups bought other startups, he was still in 2020, which had lower than 300 such contracts.
Loads?
Although it is easy to reject the startups supported by VC buyers of their brothers, because only small companies eating smaller companies in the dollar mini offers, last year large transactions were recorded.
- Gigant fintech in October Stripe announced that he would buy Stablecoin platform Bridge for $ 1.1 billion.
- In June, the Market Intelligence Platform Alfasense He agreed to purchase Active In a contract price $ 930 million.
- In August, a digital pharmacy supplier Truepill was purchased for $ 525 million by Letsgetchecked.
- Cloud safety startup Wizard Last year, he concluded two good offers, for the first time buying New York start-ups in the cloud and response launch Jewel safety for $ 350 million in March, and then purchase of repair activities and risk management startup Dazz for $ 450 million in November.
Perhaps it is not surprising that every one the above buyers collected large rounds before they made purchases – together with the visa collected a huge round price $ 1 billion with a valuation of $ 12 billion, and Alphasense blocks $ 650 million with a valuation of $ 4 billion.
Upswing M&A?
Venture Capitals in recent years have tried to return the money to their limited partners. This problem was assigned to challenges with dispersed capital to the paid, which refers to the capital returned LPS after exits by the portfolio companies using IPO or other funds.
Although 2024 was not a peak for the merger and acquisition market, the variety of transactions covering companies supported by the project increased in comparison with 2023. Not only more startups bought other startups, but also activities in the field of start-ups supported by VC also increased from the previous year.
This does not mean that sellers receive the desired prices. Many startups will still reconcile with the cuts of valuations that took place on the overheated market 2021 and 2022 and many contracts regarding startups were probably finalized only after the companies accepted the price much below their expectations from two years ago.
Louis Lehotpartner in the office Foley and Lardner“Private equity and enterprise practices, mergers and acquisitions in addition to transactional practices, and in general mergers and acquisitions began to return to historical norms, this was not the case in the technology sector because of the last government position.
He said that the general conclusion of contracts with startups supported by VC is probably caused by investors consolidating their wallets. This is attributable to the incontrovertible fact that more successful startups are bought by others that had few options attributable to the difficulties in obtaining the financing of the project and the general condition of the merger and acquisition market.
Lehot added that it is still difficult to read on the M&A market, even with the latest presidential administration and changes in Federal Trade Commission AND US Department of Justice.
“I think that in the second half of the year we should know where we are standing,” he said.