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When Unicorns Go Shopping, M&A Is A Domestic Affair

As soon as a startup accepts venture backing, its fate is sealed. It will get big or die trying. And so it begins: a capitalist game of Katamari Damacy1, except founders and funders are rolling up talent, backing, and revenue. The twin goals are to build a star business that outshines the competition and rakes in billions in the process.

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Along the way, it might make sense for a rapidly-growing startup to acquire other businesses as it builds toward massive scale. Recently, Crunchbase News has explored different facets of unicorns—privately-held high-growth technology businesses which achieve a $1 billion valuation—and their acquisition habits. Last month, we found that Airbnb, Automattic, and Pinterest are the most acquisitive U.S.-based unicorns in the market today.  We also found a trend that suggests more recently founded unicorns are acquiring smaller startups earlier on in their own venture’s lifecycle, as compared to older unicorns.

Our focus in these analyses has been on U.S.-based unicorns, mostly because there are so many of them. On Crunchbase’s unicorn list, over 190 are U.S. based, accounting for over 40 percent of the total.

We’ll look at whether unicorns are more likely to acquire companies domestically (e.g. from the same country) or internationally (e.g. companies headquartered in a different country). On a country-by-country basis, this may show which countries have more robust startup ecosystems, which can feed back into its most successful upstarts. We’ll start with the mergers and acquisitions (M&A) made by U.S. unicorns before taking a brief look at M&A patterns in unicorns from other countries.

U.S. Unicorn M&A Is Pretty U.S.-Centric

Somewhat unsurprisingly, most mergers and acquisitions happen domestically. Out of the over 300 total unique M&A transactions made by over 100 privately-held U.S. unicorns, the surpassing majority were for U.S. startups.

Crunchbase data indicates that just under four in five acquisitions made by U.S. unicorns involve a U.S.-headquartered startup on the sell side of the transaction. In descending order, the next most common countries for U.S. unicorn M&A deals are the U.K. and Canada (which are more or less tied), followed by Israel, and India, which as a group of four make up roughly 13 percent of deal origins. Just over nine percent of startups came from other countries.2

International Unicorn M&A Is Pretty Domestic, Too

Unicorns outside the U.S. aren’t slouching when it comes to M&A either.

In the chart below, we plot the split between foreign and domestic transactions among international unicorns. The column of numbers to the right of the graphic indicates the total number of M&A transactions analyzed, split by unicorn’s location.

The data indicates that unicorns outside the U.S. tend to follow the same general pattern: most of the companies they acquire are headquartered in the same country. However, while biased in favor of buying domestic, international unicorns are comparatively more likely to acquire abroad.

Even when your product or service can be accessed by anyone with an internet connection and a mobile device, business is pretty localized. This is particularly true of the startup business, which makes sense. The upswing of larger funding rounds at seed and early-stage notwithstanding, startups are resource-constrained, almost by definition. Far-flung business excursions aren’t a big line item in the budget when scaling in your home market is the task at hand. That is, until priorities change.

World Domination, One Deal At A Time

International expansion makes sense when the market at home becomes saturated, or in a highly competitive market where an advantage is conferred to the first mover.

The ride-hailing market has many examples of this dynamic. Paris-based BlaBlaCar accounts for ten of the twelve acquisitions in the chart above. (The other two were by music streaming service Deezer.) In BlaBlaCar’s acquisitions, it’s easy to see a global strategy at play. The French ride-hailing company bought up several similar service providers in Belgium, Germany, Hungary, Ukraine, and Mexico, all in the service of expanding its international footprint. In 2017, Crunchbase News covered a similar pattern, this time involving direct startup investments, by Chinese ride-hailing giant Didi Chuxing, which we revisited in May 2018.

Ride-hailing unicorns aren’t alone. In the travel booking and accommodations business Airbnb, the most acquisitive private U.S. unicorn, also cast the furthest geographical net. Besides all of its M&A deals with American companies, Airbnb also bought a raft of international companies, including: Accoleo and Gaest.com (Germany), Luckey Homes (France), Accomable (U.K.) and Trip4real (Spain).

Raleigh, NC-based video game company Epic Games has acquired four international companies in 2018 and 2019. These include U.K.-based Cloudgine, Finnish company Kamu, Serbian studio 3Lateral, and Vancouver, Canada-based Agog Labs. And as a final example, developer tool-maker GitLab is another U.S. company with all-international M&A. Gitlab acquired Norway-based Gitorious in 2015, U.K.-based Gitter in 2017, and Quebec City, Canada-based Gemnasium in 2018.

Perhaps unicorns from smaller countries buy outside their borders more frequently than those who are from larger locales. But it’s certainly true that American unicorns, and there are so many, shop locally. And that’s too bad for some global companies looking for exits to larger startups, as they’ll have to find a buyer in shallower, local markets.

Illustration: Li-Anne Dias


  1. Katamari Damacy is a video game series developed by Namco. Its central mechanic is rolling around a ball of small stuff (like thumbtacks, gum, and other office refuse), which in turn picks up progressively larger stuff (like buildings and mountains), with the main goal of reconstructing the cosmos, which was destroyed by the game’s protagonist’s father. It’s kind of involved.

  2. This is based on the headquarters location currently listed in Crunchbase. It’s likely that some of the acquired startups were founded internationally before relocating to the United States. We also excluded acquisitions where the acquiree’s headquarters location was not known. These factors may skew the data in favor of U.S. domestic M&A.

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