Startup M&A Trends Higher As PE Leads, But Remains Sluggish Compared To Earlier Years

Startup investors were looking to M&A in 2024 as the fast track to getting liquidity. But while Crunchbase data shows deal volume for venture-backed companies is likely up year over year, it remains sluggish compared to earlier years.

That’s despite the fact that the public markets have been historically slow and private company valuations have come down, which should make acquisitions more compelling for buyers.

Interestingly, some of the largest M&A deals this year have been led by private equity firms — rather than the public companies that typically top the acquisition leaderboards.

All in all, M&A for venture-backed companies so far this year has reached $67 billion across more than 1,300 deals, Crunchbase data shows. (It’s worth noting, however, that only around 16% of deals analyzed since 2019 have a price associated. The majority of deal prices are not disclosed.)

Those figures are not far from total M&A activity in 2023, when it was $72 billion across more than 1,700 deals.

Still, 2024 trails lower than exit values in prior years.

While M&A and public-market exits remain slow, secondary financings are growing in popularity, returning some capital to investors.

PE leads

Biotechnology was the sector that led for the largest number of acquisitions over a billion dollars in 2024. For software companies acquired for a billion dollars or more, private equity acquired the majority this year to date.

In prior years, public companies typically topped the leaderboards for the largest deals.

Significant deals this year include New York-based Apollo’s planned acquisition of London-based package delivery company Evri for close to $3.5 billion, and London-based Hg’s $3 billion acquisition of legal and compliance tech startup AuditBoard, based in Cerritos, California.

With all the venture funding in biotech, it is no surprise that one of the largest deals was Merck’s acquisition of New York-based eye disease therapy company Eyebiotech.

Active acquirers

The most active acquirer in venture-backed startups in 2024 to date has been Swedish private equity firm EQT, with seven disclosed deals for venture-backed companies in the real estate, data, security and logistics sectors, according to Crunchbase data.

Also active this year were public cloud services company Salesforce 1, semiconductor company Nvidia, security company Cloudflare, and Autodesk, a 3D design software developer for construction. For those acquirers, sectors have included cloud management, AI tooling, security and asset management and content development platforms.  In the healthcare sector Stryker was actively acquiring medical device, health monitoring and ligament construction companies.

One private company was also on the more-active acquirers list: Connecticut-based virtual environment company Infinite Reality, which has acquired companies in gaming, Web3 and entertainment.

Magnificent seven

Of the so-called magnificent seven of largest tech companies, Microsoft, Alphabet, Amazon, Apple and Meta were less active acquirers in 2023 and 2024, Crunchbase data shows.

Nvidia was more active, while Tesla is not an active acquirer, according to Crunchbase data.

Google’s $23 billion acquisition of Wiz would have been the largest deal this year, but the cybersecurity startup backed away from the offer in July, due in part to the regulatory environment.

And had artificial intelligence startups Inflection AI, Character.ai and Adept AI been acquired by Microsoft, Alphabet and Amazon, respectively, 2024 would be looking like a blockbuster year for startup M&A. Instead, the companies went the route of licensing deals as a way to pay out venture investors and in many cases, AI teams from the startups joined the public cloud companies.

Methodology

For this M&A analysis, we include companies that have raised seed, early- and late-stage venture capital. Data does not include publicly traded companies that were subsequently acquired.

Please note that all funding values are given in U.S. dollars unless otherwise noted. Crunchbase converts foreign currencies to U.S. dollars at the prevailing spot rate from the date funding rounds, acquisitions, IPOs and other financial events are reported. Even if those events were added to Crunchbase long after the event was announced, foreign currency transactions are converted at the historic spot price.

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Illustration: Dom Guzman