M&A Activity Involving VC-Backed Startups Picked Up In 2024

For the past couple years, exits and liquidity have been top of mind for venture capitalists desperately trying to get money flowing back to their limited partners.

While last year wasn’t the cascade of M&A activity many had wished for (and certainly the IPO pipeline never unfroze), it did provide some hope. Deal activity actually increased 7% from 2023, with Q4 being the strongest quarter for M&A involving VC-backed startups in seven quarters, Crunchbase data shows.

The fourth quarter saw 537 M&A deals involving VC-backed startups, a 46% increase from Q4 2023 and a 9% jump from Q3 last year, per Crunchbase data.

In 2024, a total of 1,975 M&A deals were consummated, an increase from the 1,842 announced in 2023. While the 2024 number is down from the height of the VC market in 2021-22, it is actually almost identical with the 1,974 deals in 2020.

Big money

The final quarter of 2024 actually also produced some of the biggest deals of the year — even if they likely flew under most people’s radars.

In December, insurance giant Gallagher agreed to buy insurance firm Assured Partners for $13.5 billion, while investment giant BlackRock bought HPS Investment Partners — an investment firm that focuses on non-investment grade credit — for $12 billion.

BlackRock was not alone. Other financial buyers such as Apollo and Hg also completed big deals last year, while strategic buyers such as Merck and Elevance Health also showed an openness to deal-making.

US market pops

The domestic M&A market for VC-backed startups saw a bigger bump than the global market.

After bottoming out in Q4 2023, when only 185 deals were consummated, the last quarter of last year jumped to 289 deals, per Crunchbase data — a 56% pop. The fourth quarter also saw a smaller — but still substantial — jump of 12% from Q3.

Overall, 2024 saw 1,032 M&A deals announced for VC-backed startups — a 30% uptick from 2023 which saw only 856 deals as the M&A market dried up.

An AI push

Of course, with the numbers up, one would logically conclude artificial intelligence — tech’s most recent darling — was the main driver.

That’s at least partially true. While M&A activity actually tailed off slightly through the past few quarters, it ended the year with a total of 268 VC-backed AI-related startups getting bought, per Crunchbase data. That number represents a 39% jump from the 193 deals in 2023, but is down slightly from the 282 deals announced in 2022.

The biggest deals last year in the AI space were credit card giant Mastercard agreeing to buy threat intelligence company Recorded Future for $2.65 billion in September, and CCC Intelligent Solutions buying EvolutionIQ — an AI company that offers claims guidance solutions for insurance companies — for $730 million late last year.

2025?

Predicting the M&A market can be a fool’s errand. Many thought 2024 would see a robust return to deal-making.

However, many are optimistic that changes in the federal government will jump start an M&A market. Those changes could include at the Federal Trade Commission and U.S. Department of Justice, as the new administration may look to eliminate regulatory hurdles.

Many also see more corporate and private equity interest in the market now, as those in deal-making are taking a more “risk-on” attitude.

However, there still could be bumps. President-elect Donald Trump’s nomination of Gail Slater — a frequent critic of large technology companies — to lead the Justice Department’s antitrust efforts has caused some consternation in Silicon Valley.

There’s also the fact that many startups are still coming to terms with the valuation cuts seen after the over-heated market in 2021 and 2022. If startups do not come off those higher numbers, the M&A market could remain slow.

It’s important to remember that even last year’s uptick doesn’t mean buyers are buying at high valuations — many deals involving startups were likely only completed after the target company accepted a number well off their expectations of just two years ago.

Nevertheless, many VCs will see the small jump in M&A last year as a huge positive, as DPI — distributed to paid-in capital, or the capital paid to funds’ LPs after exits by those funds’ portfolio companies — remains the top issue in the venture world.