It takes much more than a good suggestion and the precise timing to construct a billion-dollar firm. Expertise, focus, operational effectiveness and a wholesome dose of luck are all parts of a profitable tech startup. Most of the most profitable (or, no less than, highest-valued) tech unicorns in the present day didn’t get there alone.
Mergers and acquisitions (M&A) could be a main development vector for quickly scaling, extremely valued expertise firms. It’s a subject that we’ve coated on and off because the very first submit on Crunchbase Information in March 2017. Almost two years later, we needed to revisit that first submit as a result of issues transfer rapidly, and there’s a new crop of firms within the unicorn highlight today. Which of them are essentially the most lively within the M&A market today?
Essentially the most acquisitive U.S. unicorns in the present day
Earlier than displaying the U.S. unicorns with essentially the most acquisitions to this point, we first need to reply the query, “What’s a unicorn?” The time period is usually utilized to venture-backed expertise firms which have earned a valuation of $1 billion or extra. Crunchbase tracks these firms in its Unicorns hub. The unique definition of the time period, first utilized in a VC setting by Aileen Lee of Cowboy Ventures again in late 2011, specifies that unicorns have been based in or after 2003, following the primary tech bubble. That’s the working definition we’ll be utilizing right here.
Within the chart beneath, we show the variety of recognized acquisitions made by U.S.-based unicorns that haven’t gone public or gotten acquired (but). Consider that is based mostly on a snapshot of Crunchbase information, so the numbers and rating could have modified by the point you learn this. To keep up legibility and an inexpensive dimension, we lower off the chart at firms that made seven or extra acquisitions.
As one would anticipate, these rankings are considerably totally different from the one we did two years in the past. A number of firms counted again in early March 2017 have since graduated to public markets or have been acquired.
Dropbox, which had acquired 23 firms on the time of our final evaluation, went public weeks later and has since acquired two extra firms (HelloSign for $230 million in late January 2019 and Verst for an undisclosed sum in November 2017) since doing so. SurveyMonkey, which went public in September 2018, made six recognized acquisitions earlier than making its exit through IPO.
Which firms are nonetheless within the prime ranks? Journey lodging market large Airbnb jumped from quantity 4 to say Dropbox’s emptiness as essentially the most acquisitive non-public U.S. unicorn available in the market. Airbnb made six extra acquisitions since March 2017, most not too long ago Danish occasion area and assembly venue market Gaest.com. The still-pending deal was introduced in January 2019.
WordPress developer and internet hosting firm Automattic continues to be ranked quantity two. Automattic href=”https://www.crunchbase.com/acquisition/automattic-acquires-atavist–912abccd”>acquired another firm — digital publication platform Atavist — since we final profiled unicorn M&A. Open-source software program containerization firm Docker, photo-sharing and search website Pinterest, enterprise social media administration firm Sprinklr and venture-backed media firm Vox Media stay, as nicely.
There are some notable newcomers in these rankings. We’ll concentrate on essentially the most notable three: The We Firm, Coinbase and Lyft. (Honorable point out goes to Stripe and Unity Applied sciences, that are additionally new to this listing.)
The We Firm (the holding entity for WeWork) has made 10 acquisitions over the previous two years. Earlier this month, The We Firm purchased Euclid, an organization that analyzes bodily area utilization and tracks guests utilizing Wi-Fi fingerprinting. Different buyouts embody Meetup (a narrative damaged by Crunchbase Information in November 2017) reportedly for $200 million. Additionally in late 2017, The We Firm acquired coding and design coaching program Flatiron Faculty, giving the corporate a everlasting tenant in a few of its industrial areas.
In its bid to solidify its place because the dominant client cryptocurrency participant, Coinbase has been on fairly the M&A tear these days. The corporate not too long ago introduced its plans to amass Neutrino, a blockchain analytics and intelligence platform firm based mostly in Italy. As we coated, Coinbase possible made the deal to enhance its compliance efforts. In January, Coinbase acquired information evaluation firm Blockspring, additionally for an undisclosed sum. The crypto firm’s different most notable deal to this point was its April 2018 buyout of the bitcoin mining turned cryptocurrency micro-transaction platform Earn.com, which Coinbase acquired for $120 million.
And eventually, there’s Lyft, the extra solely U.S.-focused ride-hailing and transportation service firm. Lyft has made 10 recognized acquisitions because it was based in 2012. Its newest M&A deal was city bike service Encourage, which Lyft acquired in June 2018. Lyft’s principal rival, Uber, has acquired six firms on the time of writing. Uber purchased a motorcycle firm of its personal, JUMP Bikes, at a worth of $200 million, a few months previous to Lyft’s Encourage buy. Right here too, the Lyft-Uber rivalry manifests in structural sameness. Fierce competitors drove Uber and Lyft to lift cash in lock-step with each other, and drove M&A method as nicely.
What to remove
With long-term enterprise success, it’s typically a chicken-and-egg query. Is an organization profitable due to the startups it purchased alongside the way in which? Or did it purchase firms as a result of it was profitable and had a gap to broaden? Oftentimes, it’s somewhat of each.
The unicorn firms that dominate the non-public funding panorama in the present day (if not within the variety of offers, then in greenback quantity for positive) proceed to lift cash within the identify of development. Development can come the old style means, by establishing a market place and increasing it. Or, within the identify of fast scaling and ostensibly maximizing investor returns, M&A supplies a lateral route into new markets or a technique to additional entrench the established order. We’ll see how that technique pays off when these firms finally discover the exit door .