Since 2012, 146 seeded companies
have been picked up prior to raising a follow-on round of financing, according
to CB Insights.
Nearly 100 of these acquisitions
have been 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 as comprising 30% of all
seed/angel acquisitions so far in 2013 compared to 23% in 2012 as shown below.
The data is this article is
drawn from CB Insights, the market research firm that together with the Angel
Capital Association produces the HALO Report on angel activity. You should expect the latest HALO update
shortly.
If you missed our recent
article on the innovative way the angels at Launchpad are preparing for increased
acquisitions, you can find it here.
CB Insights remains a firm
believer in the dreaded “Series A Crunch,”
which is sometimes blamed on “moron angel investors.” You can find our opinion here. Nonetheless, we feel obliged to present the
CB Insights view below.
With the Series A Crunch underway, acquirers from Yahoo to Salesforce are snatching up Internet and mobile companies running out of cash, says CB Insights.
“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).
“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.
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