Artificial intelligence M&A Media & entertainment tech SaaS

The Most Valuable US Tech Companies Still Aren’t Buying Startups

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Selling your startup to one of the most valuable U.S. technology companies used to be both a popular and mildly realistic path to exit.

Not anymore. These days, the most deep-pocketed acquirers seldom snap up venture-backed companies. Their aversion to such deals has intensified in recent quarters, amid a broader slowdown in startup M&A.

So far this year, the “Big Five” most valuable U.S. tech companies — Apple, Microsoft, Google, Amazon and Nvidia — have made just five known startup acquisitions, per Crunchbase data (see list). Four of the acquirees were seed-stage companies, and none of the purchase prices were disclosed.

Currently, 2023 is on pace to have the smallest number of acquisitions by the Big Five in years. To illustrate, we charted out deal counts and disclosed purchase prices for the cohort below:

Less money going to startup M&A too

In addition to doing fewer deals, the tech giants also appear to be spending far less money. This isn’t a hard stat, as most transaction announcements don’t include the price. However, given that the five startups bought this year previously raised just $57 million in equity funding altogether, these probably weren’t big-ticket deals.

That paucity of big purchases makes the odds of selling your startup for billions to, say, Google or Microsoft, look weak. Zeroing in on the largest tech companies’ acquisitions of startups over the past three calendar years, there’s not a single known deal above $1 billion:

Acquisitions of established companies still happening

Of course, tech giants are willing to spend handsomely on established companies. Last year, Microsoft agreed to pay $68.7 billion for gaming heavyweight Activision Blizzard (the deal has not yet closed). A year earlier, the software giant agreed to shell out $19.7 billion for publicly traded conversational AI SaaS provider Nuance Communications.

Amazon picked up MGM Studios for $8.5 billion in a deal that closed last year, and spent $3.9 billion to buy primary care clinic operator One Medical.  And Google bought cybersecurity provider Mandiant last year for $5.4 billion.

Nvidia, for its part, attempted to spend big, with a 2020 agreement to buy chipmaker Arm for $40 billion in 2020. It terminated the deal last year, however, citing regulatory challenges.

Notably, so far this year the Big Five have not announced any multibillion-dollar acquisitions. All are flush with cash and have market caps in excess of $1 trillion, so they certainly have the means to buy what they want. As such, it’s likely the prospect of stepped-up antitrust scrutiny and regulatory challenges is a factor keeping deals down.

It wasn’t like this before

In prior years, the most valuable tech companies have been behind some of the largest and best-known startup exits. The list includes:

  • Microsoft’s $7.5 billion purchase of GitHub  in 2018.
  • Google’s $3.2 billion purchase of thermostat maker Nest Labs in 2014, and its $2.1 billion acquisition of fitness tracker Fitbit in 2019.
  • Amazon’s $1 billion purchase of smart doorbell maker Ring in 2018.

Today, it’s far more likely one of the tech heavyweights will invest in your company, rather than buy it.

While M&A may be down, Crunchbase data shows corporate venture investors have been taking a bigger role in startup funding. Like everyone else, they’ve been particularly keen on the AI space, by far the most prominent bright spot in a slowed-down investment environment.

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Illustration: Dom Guzman

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