Even as more enterprise capitalists seek liquidity to indicate their limited partners real returns, the variety of M&A deals involving startups declined slightly quarter-over-quarter in the third quarter.
According to Crunchbase, there have been 479 M&A deals for VC-backed startups worldwide in the third quarter data. This is a very small decline in comparison with the 500 deals concluded in the second quarter, but it breaks a two-quarter streak of growing M&A transactions for start-ups.
However, this number represents a slight increase in comparison with the third quarter of last yr, which saw 430 startup deals globally.
It is also price noting that the third quarter data is ahead of last yr’s pace of mergers and acquisitions related to start-ups, when the transaction process slowed down significantly.
On the other hand, the Q3 data represents a decline of 17% in comparison with the same quarter in 2022, when the M&A market was still very strong.
Great deals
The third-quarter data actually shows some noteworthy large deals, each by tech and non-tech buyers.
These include the bank card giant MasterCard agreeing to buy a threat intelligence company The future is saved for $2.65 billion and Sales power 1 purchase of a data management tool developer Own company for roughly $1.9 billion.
While overall M&A data for the third quarter doesn’t point to a marked rebound in dealmaking, it might at least partially alleviate concerns among some VCs about the slow pace of M&A in an environment that many consider overly regulated – one of their foremost concerns, some VCs say industry when it involves elections.
The impact of AI
As with anything related to technology, it is also necessary to contemplate the impact of artificial intelligence on the M&A market.
Crunchbase data shows that AI startup dealmaking data largely reflects the overall variety of mergers and acquisitions, at least over the last few quarters.
According to Crunchbase, 70 deals involving AI startups were announced last quarter data. This is again only slightly down from 75 transactions in the second quarter, but up 46% in comparison with the same quarter last yr.
The percentage of transactions involving AI also increased slightly yr over yr. A yr ago, just 11% of worldwide M&A deals were AI-related, but over the last two quarters, that number has jumped to fifteen% – not surprising as all technology is laser-focused on AI and its potential applications.
Some of the more notable deals last quarter involving AI startups included: AMD purchase of an artificial intelligence laboratory based in Finland Silo.AI for $665 million and Systems used acquisition of a New York-based industrial AI insurance platform Planck for $300 million.
Looking to the future
While it’s difficult to predict the market, it seems unlikely that the fourth quarter will see a big rebound for M&A startups.
First, the US election may have cooled the dealmaking process a bit until people know the end result – and that end result is more likely to have little impact on Q4 regulations, and may have no impact at all.
Second, the fourth quarter is typically slower because year-end holidays can impact the market.
Nevertheless, VC-backed startups should have a higher M&A yr than last – even if it is not nearly as good as VCs expected.