Last year, VC exits were dominated by the IPO market. But the year also registered a respectable share of activity for mergers and acquisitions.
While the total number of venture-backed M&A deals in the North America fell 11.8 percent to 868, the portion of VC-backed companies compared to the total M&A market continued to grow. Overall, acquisitions of venture-backed companies reached a record 8.7 percent in 2019 of all M&A activity across North America, up from 7.6 percent in 2018, according to the latest report from PitchBook.
In fact, M&A of venture-funded companies approached the level of PE-sponsored mergers and acquisitions, which accounted for 9.5 percent of all transactions, the report found. The last time VC-backed exits exceeded PE-sponsored exits was in 2009, at the height of the Great Recession.
Corporates driving recent activity
Some recent deals have in part been driven by strategic buyers’ interest in purchasing technologies from VC-backed companies rather than building them in-house, according to the report. Corporates have found that acquiring tech startups is more cost-effective, and this trend will likely continue amid VC-backed companies’ tendency to stay private for longer periods, the report predicts.
Examples of such transactions from last year include PayPal’s $4 billion acquisition of Honey. The deal is expected to help PayPal acquire customers earlier in the deal discovery process.
In another notable acquisition, Google paid $2.6 billion for Looker, a data analytics startup, to help the tech giant compete better with its Google Cloud offering.
Last year’s overall M&A activity was dominated by mega-deals, including Bristol-Myers Squibb’s purchase of Celgene for $74 billion and 21st Century Fox’s sale to Disney for more than $71 billion.
Large deal sizes, combined with extremely low-interest rates and robust public markets, helped to not only keep M&A deal-making at elevated levels but also led to an increase in valuations, the report says.
Select top US-based, VC-backed M&A, 2019
| Company | Date |
Acquiror | Select investors | Total VC funding ($M) | Purchase price ($M) |
| Honey | 11/20/2019 | PayPal | Mucker Capital, Anthos Capital | $32 | $4,000 |
| Auris Health | 02/13/2019 | Ethicon | Kleiner Perkins, Lux Capital, Coatue Management | $733 | $3,400 |
| Careem Networks FZ | 03/26/2019 | Uber Technologies | DCM Ventures, Coatue Management, Saudi Technology Ventures |
$771 | $3,100 |
| Looker Data Sciences | 06/06/2019 | First Round Capital, Kleiner Perkins, PivotNorth Capital, Redpoint Ventures, CapitalG |
$280.50 | $2,600 | |
| Habana Labs | 12/16/2019 | Intel Corp | Battery Ventures, Bessemer Venture Partners, Intel Capital, Walden International |
$75.00 | $2,000 |
| Cylance | 11/16/2018 | Blackberry | DFJ, Insight Venture Partners, Khosla Ventures |
$297 | $1,400 |
| Harry’s | 05/09/2019 | Edgewell Personal Care | SV Angel, Thrive Capital Partners, Tiger Global Management |
$372.50 | $1,370 |
| SignalFX | 08/21/2019 | Splunk | Andreessen Horowitz, CRV, General Catalyst |
$178.50 | $1,050 |
| Shape Security | 12/19/2019 | F5 Networks | Kleiner Perkins, Norwest Venture Partners, Venrock, C5 Capital |
$183 | $1,000 |
| Semma Therapeutics | 09/03/2019 | Vertex Pharmaceuticals | Arch Venture Partners, F-Prime Inc, MPM Capital |
$163 | $950 |
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