In our Series A Crunch report, we explained that the glut of seed deals since 2009 combined with consistent level of Series A activity is creating a natural selection process that will result in over 1000 startup orphans (yes – tech companies who are going to die). But not all of those trending towards orphan status will get there, as many are being acquired whether for talent or technology before they officially close up shop. Whether you call them acqui-hires or soft landings or asset purchases, since 2012, there have been 146 seeded companies that have been picked up prior to raising a follow-on round of financing (often presumably because they couldn’t).
Nearly 100 of these acquisitions have come of companies in the Internet sector. With a string of big company tech CEOs from Yahoo’s Marissa Mayer to Twitter’s Dick Costolo voicing their ambitions to be “mobile-first” companies, acquisitions of mobile-based seed/angel companies are accelerating quickly as well comprising 30% of all seed/angel acquisitions so far in 2013 compared to 23% in 2012 as shown below.
While our Seed Investing Report found that seeded companies took slightly more than 13 months to raise follow-on financing on average, the average time between a company’s seed or angel funding and their acquisition was closer to 18 months with a median of 15 months.
Cali and NY Top Seed/Angel M&A Activity
California leads M&A activity for seed and angel-backed companies, followed by New York and Massachusetts which aligns well with venture capital fundings stats. While a number of companies including Google (acquired France-based Sparrow in 2012) and Yahoo (acquired UK-based Summly in April) have pursued complementary technologies or talent internationally, close to 90% of the acquired seed/angel companies since 2012 were based in the U.S.
If you’re an investor who has some companies in the portfolio that might benefit from a soft-landing, a list of the top acqu-hirers of seed and angel-backed companies can be found on the ‘Research’ tab, after logging in to CB Insights. (Note: The full list of acquirers is only available to paid CB Insights subscribers with access to CB Insider)
This report was created with data from CB Insights’ emerging technology insights platform, which offers clarity into emerging tech and new business strategies through tools like:
- Earnings Transcripts Search Engine & Analytics to get an information edge on competitors’ and incumbents’ strategies
- Patent Analytics to see where innovation is happening next
- Company Mosaic Scores to evaluate startup health, based on our National Science Foundation-backed algorithm
- Business Relationships to quickly see a company’s competitors, partners, and more
- Market Sizing Tools to visualize market growth and spot the next big opportunity