So Pitchbook has some new data out on how much M&A of VC-backed start-ups … is by other VC-backed start-ups.
And it’s a record: 33.7% of all VC-backed start-ups that are acquired are by VC-backed buyers. Up from 20% in 2018.
Now this isn’t necessarily bad:
- First, it’s not new. 20% of deals even in 2018 were start-ups buying start-ups.
- And the dollar value has gone up, it’s doubled since 2018, although down from a 2023 peak.
- And start-ups have gotten bigger. So they can pay more.. Stripe, Databricks, etc. have done $1B+ acquisitions before their IPO.
- Sometimes, it gives you a chance to double down. Get bought for stock early by Coinbase or Snowflake, sometimes the value can grow dramatically after the acquisition. Sometimes.
But a lot of these deals may be sort of “better than nothing” deals. Better than shutting down. Better than running out of money. And they often are better than that.
Either way, a lot of this is start-ups looking for an exit … finding it at another start-up.
So if nothing else, build those relationships too. Not just with the big public Cloud companies.
