Fintech & e-commerce M&A Real estate & property tech Transportation & Logistics

Startups Merge In Spaces Where Funding Has Fallen

Illustration of a magnet attracting various products. [Dom Guzman]

It’s common in venture capital to see startups with similar businesses close big rounds around the same time.

This year, it’s generative AI. A couple years ago, there were many niches where funding flowed, including areas like D2C, homebuying, and consumer fintech.

But hot sectors often don’t stay that way, especially in areas where the biggest rounds occurred close to the market peak. Now, in spaces where investment has shriveled, we’re seeing heavily funded startups merging with former rivals and others in a bid to stay competitive or simply stay afloat.

Sectors for startup consolidation

To highlight, we used Crunchbase data to identify startups that raised large sums in the past few years and have since sold to another private company in the same or similar industry. We then narrowed the list to sectors where venture funding has plummeted.

With that in mind, here are some of the industries and companies that made our list.

E-commerce aggregators

In 2020 and 2021, investors poured billions into e-commerce aggregators. Heavily funded companies like Thrasio, Perch and Razor Group used the money to buy up smaller brands and ramp up their sales on Amazon and other retailers.

But funding to the space dried up when the market took a downward turn beginning in 2022, with many publicly scaling back and cutting staff. Then came a wave of consolidation.

Berlin-based aggregator SellerX was an early mover, snapping up Austin, Texas-based Elevate Brands a year ago in an all-stock deal at an undisclosed valuation.

Razor Group, another Berlin-based aggregator, has also been acquisitive. The company purchased four e-commerce brand roll-up startups to date, including a March acquisition of  Boston-based Perch, a SoftBank portfolio company that had raised over $900 million.

Razor previously acquired Luxembourg-based Factory14 in April 2022, Mexico City-based Valoreo in late 2022, and Berlin-based The Stryze Group in 2023.

Real estate buying and investment platforms

Real estate buying and investment platforms raised heavy funding when mortgage rates were lower and the pace of home sales was brisker than is the case today. In more recent quarters, venture investors have shifted away from the space, and we’ve seen some consolidation follow suit.

In May, Roofstock and Mynd, two heavily funded, Oakland, California-based online platforms for investors in single-family rental properties, announced plans to merge. Roofstock had previously raised over $360 million, and Mynd has pulled in over $200 million.

A month later, home buying and selling platform Flyhomes announced it had acquired the assets of ZeroDown, a Sam Altman-backed startup that offered renters a path to build equity in and eventually purchase a home of their choice.

Fintech and BNPL

A few years ago, fintech was the biggest sector in the world for startup funding. Globally, companies in the space raked in more investment than any other in 2021, boosted by investor enthusiasm for buy now, pay later platforms, neobanks and others.

Fast-forward a few years, and these spaces are no longer red-hot. While adoption is growing in the U.S. and other markets, we’re no longer seeing hefty venture funding. Meanwhile public BNPL companies, such as Affirm and Square, the latter of which owns the Afterpay platform, are up from their lows but still well below their one-time highs.

Against this backdrop, we’re seeing some consolidation among later-stage startups.

This spring, San Francisco-based Empower, a provider of app-enabled cash advances and credit cards, acquired Petal, a New York startup focused on extending credit to underserved groups, for an undisclosed sum. Petal, founded in 2016, had previously raised over $250 million in equity funding and $680 million in debt financing.

Last summer, San Francisco-based Upgrade, a provider of online banking and loans, acquired Uplift, a Silicon Valley-based BNPL provider that had previously raised over $140 million in equity funding and over $500 million in debt financing.


Logistics was one of those startup sectors that peaked a bit later than others. In the first three quarters of 2022, investors put over $7 billion into the space, per Crunchbase reporting at the time. The two most prominent fundraisers of the period were Convoy and Flexport.

Over the next year, however, funding fell considerably, and companies saw their fortunes change. Seattle-based trucking logistics startup Convoy, once a high-flying unicorn, announced it was shutting down operations, citing a “massive freight recession.” Flexport acquired Convoy’s assets in late 2023.

Not just a down market phenomenon

It should be noted that mergers between rival well-funded startups isn’t specifically a down-market phenomenon. When these sectors were seeing peak levels of investor interest, we also saw a fair amount of consolidation.

SellerX, for instance, also purchased a German rival, KW-Commerce, in 2021. Roofstock made three acquisitions in 2021 and 2022, including Great Jones, a rental real estate operation platform that had previously raised over $33 million.

But acquisitions in a down market, of course, have a different flavor. Some acquirees had shuttered or were on the verge of doing so. For others, a difficult fundraising market made the option of another venture round a nonstarter.

Going forward, the hope is that consolidation will put these companies in a stronger position to grow, with fewer competitors to worry about.

Related reading:

Illustration: Dom Guzman


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