Acquirers Purchase Boom-Era Startups Without Recent Funding
Several startups that haven't raised funds in years are being acquired, often at lower valuations than their peaks. This trend may indicate a new reality for companies that struggled to secure fresh capital.
Original reporting · news.crunchbase.com
Original: “Acquirers Are Snapping Up Boom-Era Startups That Haven’t Raised Funding In Years”
Read “Acquirers Are Snapping Up Boom-Era Startups That Haven’t Raised Funding In Years” at Crunchbase News →
How this was written. Awesome B2B Growth wrote this article with a language model from Crunchbase News’s reporting (model: @cf/meta/llama-3.3-70b-instruct-fp8-fast); it describes that reporting rather than adding to it. The original, linked above, is the full story.
Key points from Crunchbase News’s report
- Acquirers are purchasing startups that haven't raised funds in years, often at lower valuations than their peaks.
- These deals involve companies that were once high-flying unicorns, but have since seen their valuations decline.
- The market may be resetting expectations for startups that have struggled to secure fresh capital.
- Many of these startups have managed to survive and even grow without additional venture funding.
- Acquisition prices often reflect a significant discount from peak valuations.
Startups that go years without securing new funding rounds often face diminished prospects for a significant exit, according to Crunchbase News. However, recent data suggests this may not always be the case.
This year has seen a number of notable acquisitions of private companies that had not disclosed new investments in over four years. These deals involve startups that were once high-flying unicorns, but have since seen their valuations decline.
One notable example is Uber's recent purchase of ezCater, a platform for catering and workplace meals, for $2.3 billion in cash. This deal came nearly five years after ezCater's last reported venture funding round, highlighting the trend of acquirers snapping up older startups.
Other companies, such as Airtable, Headspace, and Miro, have also sold to acquirers in recent months, often at valuations far below their former peaks. This trend may indicate that the market is resetting expectations for startups that have struggled to secure fresh capital.
The decline in valuations can be attributed to the cyclical peak in 2021 and early 2022, when many companies raised large funding rounds. Since then, few of these companies have been able to attract new capital or close rounds at reduced valuations, leading to a decline in their valuations.
Despite this, many of these startups have managed to survive and even grow without additional venture funding. EzCater, for example, generated over $2.5 billion in gross bookings in the year prior to its acquisition, with an annual growth rate in the high teens.
The acquisition prices for these startups often reflect a significant discount from their peak valuations. Miro, for instance, was acquired for $1.36 billion, a huge step down from its $17.5 billion post-money valuation in early 2022.
Questions and answers
What is happening to startups that haven't raised funds in years?
These startups are being acquired by larger companies, often at lower valuations than their peaks.
Why are these startups being acquired at lower valuations?
The decline in valuations can be attributed to the cyclical peak in 2021 and early 2022, when many companies raised large funding rounds.
Are these acquisitions a positive outcome for startups?
While not ideal, these acquisitions are far from a catastrophic scenario for startups that have struggled to secure fresh capital.
