Not all exits are good. As The New York Times showed in its recent analysis of mobile security unicorn Good Technology, some startups end up selling for less money than they raise. We’ll call this a down exit.
We used CB Insights acquisitions data to identify startups that sold for less than they raised. Our analysis doesn’t include companies that died outright.
Going back to 2010, we identified 214 VC-backed companies that had exits which were for less than the company raised.
If we look at the cohort similar to Good Technology, i.e. those who’d raised at least $50M in disclosed equity funding, we found that there were at least 13 of these significant flame-outs each year since 2011.
There was an uptick last year and in 2015 (through 12/22/2015) with these types of large down exits coming in at double of the level seen in 2010. Some of the high-profile “down exits” include Color Labs and Rdio as well as others which got a bit less attention:
- Gazelle — The consumer electronics trade-in site raised $61.9M before being sold for $18M to Outerwall.
- LiveScribe — LiveScribe developed products, including stylus devices and software, that helped people write and draw by hand digitally. It raised $102M before being acquired by Anoto (another digital writing company) for $15M.
- Cortina Systems — A semiconductor company that was acquired by Inphi for $131M after raising more than $215M since 2001.
Want to identify companies that might be struggling for M&A or talent poaching purposes? Check out our venture capital database below.
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