It isn’t just the financing section of FTC’s newsletter that’s grown in 2021, startup-to-startup M&A is up to record highs this year. According to a recent Crunchbase report, intra-startup M&A (VC-backed companies acquiring VC-backed companies) reached a record high of 286 deals YTD, which is more than the previous full year record of 203 deals set in 2016. This trend comes on the back of record VC funding and IPO volumes in 2021.
In addition to startups being flush with cash, one school of thought believes these deals are encouraged because selling founders have developed a liking for stakes in high-growth startups. Equity in high-growth technology firms is often more attractive to today’s sellers than the all-cash corporate offers of yesteryear. Acquisitions are also moving more quickly -- some of these deals close in only 30 days vs the previously typical ~60-90 day timeline.
Strategically, these buyouts are enabling startups to quickly expand their reach into new regions. Last year, Stripe acquired Paystack for over $200m to supercharge their African expansion ambitions. Klarna bought Sofort to double its merchant numbers. Other subtle factors drive startup M&A as well. Though not new, the ‘acqui-hire’ is now not always seen negatively, but rather as an acquirer willing to pay a premium to keep a full engineering or product team intact.
Time will tell whether this Gen Z inspired shopfest will last … but we wouldn’t be surprised to see the word inorganic on pitch decks in the months to come.
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Inorganic Growth: Not Just For The Corporate Crowd
2021 set a record for H1 IPOs - YTD, c. $80b has been raised via IPOs which surpasses the c. $78b raised throughout 2020. Experts suggest that 2021 is set to break records for IPO volumes by year's end. Read more
Quick thoughts on the acqui-hire - Experts from Latham & Watkins share their perspectives on the acqui-hire. Notably, this tactic is used increasingly to ensure that an entire team stays intact at the purchasing firm and can save effort vs individual recruiting efforts. Read more
Startup-to-startup M&A hitting record highs - A record number of VC-backed startups have acquired other VC-backed startups in 2021. 268 of these deals have happened already YTD, which suppresses the full year record of 203 deals set in 2016. Read more
Biggest private crypto deal ever is closed - Antigua-based crypto derivatives exchange FTX closes a record $900m fundraise at an $18b valuation. Read more
Grab taps Adyen to extend BNPL offering across Southeast Asia - Grab has deepened its partnership with Adyen by enabling more merchants – starting in Singapore and Malaysia – to offer PayLater payment options to consumers, and address increasing consumer demand for deferred payment methods. Read more
Low-income lending rules set for broad overhaul - Top U.S. banking regulators said they would work jointly to modernize rules governing how banks lend hundreds of billions of dollars annually in lower-income communities. Read more
Nasdaq, SVB, Citi, Goldman Sachs, and Morgan Stanley launch new platform for trading private company stock - Nasdaq Private Market will be contributed to a standalone, independent company, which will receive strategic investments from SVB, Citi, Goldman Sachs, and Morgan Stanley. Read more
The winners and losers from India’s Mastercard ban - The move will have wide-ranging implications across India’s financial and fintech system, affecting everyone from established lenders to payments startups. Read more
UK mortgage applicants report negative reactions to their BNPL usage from legacy banks - UK-based mortgage applicants are reporting negative reactions to their BNPL usage when applying for home loans. Mortgage experts suggest that much of the issues are because lenders simply don't understand the main drivers for BNPL usage. Read more
Venmo removes public news feed over privacy concerns - After years of defaulting public posts and joke transaction descriptions, Venmo has removed its global social feed. This comes after increasing privacy concerns and security leaks amongst notable users such as President Biden. Venmo has 70m users. Read more
Visa acquires Currencycloud, which makes APIs for remittances and currency transfers, in a $963m deal - Visa acquired Currencycloud for $963m. To date, Currencycloud had raised c. $188m and was a leading provider of API-enabled cross currency payments. Read more
Vodafone’s booming M-Pesa shines a light on valuable Africa fintech start-ups - Vodafone has reported surging growth at its African mobile money platform M-Pesa. The UK company said that the number of transactions conducted over the mobile payments system shot up 44% in the 3 months to June to 4.5bn, with €63bn of funds transferred over it during that time. Read more
Wise publicly shares their strategic roadmap - While corporate strategy is usually hidden behind closed doors, UK fintech Wise has made its strategic roadmap available to the public. The company made this plan available to encourage more people to join their company and foster a culture of transparency, one of Wise's core values. Read more
Capchase - New York City based recurring revenue financing startup raised $280m in funding led by i80 Group. Read more
Dwolla - Iowa based maker of an API for payments raised $21m in funding led by Foundry Group. Read more
Ethos - San Francisco based insuretech platform raised $100m in Series D funding led by SoftBank. Read more
GudangAda - Indonesia based B2B marketplace raised $100m in Series B funding led by Asia Partners and Falcon Edge. Read more
Lev - New York based commercial real estate financing platform raised $30m in Series A funding led by Greenspring. Read more
Paro - Illinois based provider of on-demand financial expertise raised $25m in Series C funding led by Madrona Venture Group. Read more
Properly - Canada based tech-enabled real estate brokerage raised $35m in Series B funding led by Bain Capital Ventures. Read more
Soldo - UK based pay and spend automation platform raised $180m in Series C funding led by Temasek. Read more
Spendesk - France based corporate spend management service raised $118m in funding led by General Atlantic. Read more
Sundae - San Francisco based real estate marketplace raised $80m in Series C funding led by Fifth Wall and General Global Capital. Read more
Titan - New York based investment management platform raised $58m in Series B funding led by Andreessen Horowitz. Read more
Yapily - UK based open banking API raised $51m in Series B funding led by Sapphire Ventures. Read more
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