Tech Acquisition Sprees Create Exits for Venture Investors
Mark Lennon
Earlier this month CrunchBase data showed that venture funding is reaching new highs, so it's no surprise that Q3 2013 also had the most number of venture-backed acquisitions. With 131 deals, Q3 2013 was the best quarter since Q4 2010's 123 deals.
The acquisition sprees at Yahoo! and Google we have covered recently play no small part in the recent surge in deal volume. Yahoo! has already made a play for a dozen venture-backed companies in 2013 including its $1.1B acquisition of Tumblr. Cisco and Twitter have also been active this year making strategic acquisitions.
Software companies are a clear acquisition focus. Out of over 350 venture-backed deals, 13% were for software startups. Enterprise, Web and Mobile were also popular targets for companies looking to acquire engineering talent, technology and patents. The venture-backed software startups acquired in 2013 together had a disclosed deal size of $4.75B against just $538M of funding. Calculated as a very crude ROI, that is an 8.8x return for the small amount of successful venture companies that found a buyer this year. The average acquisition was a 5.7x return on invested funds overall. Since 2007, Web companies have had the highest ratio of exits, with 17% of venture-backed companies in the industry getting acquired or going public.
The increase in venture-backed exits could be the consolidation of a crowded market of well-funded startups, but the size of the acquisition deals and sky-high IPO valuations rival the dot-com boom. Venture investors are generating cash from their recent exits and don't seem to be holding back in finding new Series A investments, as we pointed out previously. The result could be a an end to the Series A crunch.
The CrunchBase dataset includes more venture-backed exit data for Q3 than any other source. This month CB Insights ran a comparison of their venture-backed exit data versus Dow Jones VentureSource and Thomson Reuters. Since CrunchBase wasn't in the analysis, we ran our own.
Remember, CrunchBase is the free database of technology companies, people, and investors that anyone can edit. The funding rounds, people profiles and company milestones are a collection of data provided by companies, investors and our readers. We constantly cross-reference this data with public filings and news reports to provide the most accurate public data set available.
You can download the CrunchBase September 2013 Data Export and check it out for yourself.
Originally published October 15, 2013
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