Crunchbase: Upturn in Startups Buying other Startups
- Kendrick Wakeman, CFA
- Aug 1
- 1 min read
Crunchbase is running an article this morning reporting on the upturn in startups buying other startups. It's not quite back to the heady days of 2021, but a solid increase of 18% and a continuation of the trend. It makes sense to us for a few reasons:
The race to scale is more important than ever right now, particularly in WealthTech.
The funding market is still tight (but getting better) so there are values to be had.
Modern startups are all on clean, easy-to-integrate tech platforms.
VCs are looking to accelerate their exits as their funds get long in the tooth by buying their way closer to victory.
Being smart and opportunistic with an acquisition can give a startup a significant boost towards scale, potential cross-selling opportunities, and key talent. We also point out that there is an opportunity for revenue arbitrage if you are able to acquire revenues at a lower multiple than what investors might pay. We just caution founders against getting distracted and taking their eyes off the ball during the process.
