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The $100M+ Club: A New Universe of Buyers

Lee Hower
May 21, 2012 · 2  min.

Reading Time: 2 minutes

For the last 5-7 years the universe of potential acquirers web-based businesses has been fairly concentrated.  On the consumer facing side, the number of companies doing multiple acquisitions of $100M+ was extremely short… Google, eBay/PayPal, Amazon, and Microsoft are at the top of the list.  IAC and Yahoo! were fairly active a few years ago though neither is as active today and big media conglomerates like Disney are fairly sporadic as they embrace web-based media.

On the B2B SaaS side or enabling services (e.g. ad-tech, analytics, development platforms, etc) the list is slightly different.  Included are some of the large companies above like Google and Microsoft but also active on the B2B/enabling side have been acquirers like Salesforce.com (Radian6, Heroku notably) and Apple (Quattro Wireless, Siri).  Oracle and IBM have made some acquisitions of SaaS businesses though many of their deals are more old school enterprise software businesses that have matured.

So no matter how you look at it, the universe of buyers has been fairly small and the really active buyers come down to just 4-5 companies.  That’s all starting to change slowly as a cohort of newly-public, but very large companies joins the fray.  Facebook, LinkedIn, Zynga, and Groupon have all been doing smaller (e.g. <$100M) acquisitions for several years now, but they’ve mainly been acquihires.  Here in 2012 you’ve already seen the first $100M+ acquisitions for LinkedIn (Slideshare), Zynga (OMGPop, Draw Something), and Facebook (Instagram) and it’s probably only a matter of time before Groupon does one.  There’s also a meaningful cohort of newly public companies that now have valuations of $1B+ who could seriously contemplate an acquisition of $100M+ for stock or cash… Yelp, Zillow, Tripadvisor, Jive Software, Splunk, and others.

The expanding universe of potential buyers is a great thing for founders.  And it’s not just because there will be more transactions and more competition for exciting startups.  We’ll see how long they remain exciting, innovative places to work but at least for now I think most founders who contemplate an acquisition would be open to having their company and team be part of a Facebook, LinkedIn, or Zynga.  The same can’t always be said of some of the more established companies.


Lee Hower
Partner
Lee is a co-founder and Partner at NextView Ventures. He has spent his entire career as an entrepreneur and investor in early-stage software and internet startups.