For Most Active Lead Investors, 2023 Has Delivered Few Exits

For the highest-spending startup backers, big exits tend to come in clusters. Investors rack up huge tallies in boom years, like 2021. In quiet years, like this one, few portfolio companies sell or go public at high valuations.

Just how quiet is exit activity in 2023? To get a sense, we looked at acquisitions and IPOs for companies backed by the most active and highest-spending lead investors of the past few years. We focused on five firms: Tiger Global Management, Andreessen Horowitz, SoftBank Vision Fund, Sequoia Capital 1 and Insight Partners.

The results were sobering. The five top lead investors saw just one traditional IPO of a company for which they led a private funding round. That was grocery delivery platform Instacart, which was backed by three of the aforementioned firms.

Acquisition activity was a bit busier, but still underwhelming. Using Crunchbase data, we put together a list of just six disclosed-price acquisitions this year of private companies backed by one or more of the busiest lead investors.

Biggest M&A exits came at a discount

Acquisition prices illustrate how far valuations have come down from the 2021 peak.

Loom, a provider of video collaboration tools, delivered the largest M&A deal for our most active lead investors, selling to Atlassian for $975 million in October. Previously, San Francisco-based Loom had raised over $200 million in venture funding, with Sequoia and Andreessen Horowitz among its lead backers.

While that looks like a large purchase by 2023 standards, Loom actually sold at a discount from its peak. A little over two years ago, the startup raised a $130 million Series C at a $1.5 billion valuation — so Atlassian’s price represents about a 35% decline. Just about a year after closing its Series C, Loom joined the long list of tech startups slashing their workforces — laying off 14% of its staff.

After Loom, the next-biggest deal was Check Point Software Technologies’ purchase of network security provider Perimeter 81 for $490 million. Founded in 2018, Tel Aviv-based Perimeter had previously raised $165 million, including a 2020 Series B led by Insight Partners.

That sale also came at a sharp discount to the startup’s peak valuation. In June 2022, Perimeter 81 raised a $100 million round at a $1 billion valuation.

For the third-largest deal, Corvus Insurance’s $435 million sale to Travelers Insurance, we see the same pattern at work. Boston-based Corvus raised a $100 million Series C led by Insight Partners in March 2021, at a $750 million valuation.

Tough comps

The 2023 exit tally looks particularly grim when compared to a year or two ago. Last year, a single deal — Adobe’s planned $20 billion purchase of design software provider Figma — carried a price more than seven times larger than this year’s top six acquisitions combined.

As for IPOs, the comps are also stark. In 2021 and 2022, public offerings of private companies backed by one or more of the busiest lead investors debuted at a collective valuation of more than $400 billion. So far this year, we’re running at about 2% of that total.

Nonetheless, for those in the startup investment game for the long haul, these aren’t necessarily alarming comparables — at least not yet. Cyclic downturns commonly follow record bull runs. And closed IPO windows eventually reopen.