How many startups are thinking about acquisitions / mergers? ‘None, they’re heads down surely.’ I wouldn’t be so sure. I think there’s a really interesting super early-stage M&A play in this market. I’m not talking about £10m cash deals, that’s out of the question of course, but strategic small purchases or share for share deals should be on the rise. The 2021 market led to an explosion of point solutions getting funded. ‘What’s a point solution?’ Those that solve a small component of a company’s pain point but not the whole value chain. Most didn’t get traction because they weren’t high enough on a prospective buyer’s radar but they likely did spend all that investor cash on some solid technology. Bolt 3-4 point solutions together and all of a sudden you might have a valuable platform. Over recent years, everyone was heads down and trying to build everything. I think there’s some great deals in the market now where it might make more sense to buy. There are still quite a few zombie companies out there so there’ll likely be more of these opportunities to come. ________________________________________ Founders, have you been thinking about this? If not, will you now? Investors, what are your views? #vc #venturecapital #investors #investing #founders #M&A #finance
David B Horne would have much to say positively about this
Damn right that is our game plan!
I am fully with you on this one, Kiran. My experience on this topic is mostly from the SaaS space, where I have helped some companies and investors look into doing exactly this in the past couple of years. There is great potential for putting good things together to create exponential value.
Whoever said none hasn't been talking to founders. As money gets harder and hard to get many founders are realizing they built a really neat feature and not a company. They're looking for someone to buy their "feature."
Ive worked with many companies that were seed/A round that entered into acquisition talks. Sometimes its a really good option, yet difficult when ego is involved. (ie; "My company is going to be the next unicorn)
I fully agree that merging might be a great way. But one should be careful when merging. Merging 3-4 companies may look easy on the paper, but 3-4 different company cultures and systems may prove a nightmare. Nevertheless, i do think you are on to something in your post.
I certainly am!
Will discuss this with you tomorrow. Some of us very bullish on this thesis.
Not enough, plenty more could be thinking about it.
Founder at Money Guided
10moVery interesting question. I know of at least 10 UK based d2c fintechs that raised in 2021/22 (or before) that have now either gone under or have been warehoused. Some with unclaimed R&D, all with booked losses, most with “something” in the way of genuine technology. Areas such as: discount/voucher apps, budgeting / financial management, insuretech, investing apps, debt solutions / credit lines etc… An existing fintech with a broad front-end solution (ie capability to be cross product) could skip millions of build cost and create a very interesting “super app”. The “issue” for an acquirer is (baring porting over users of the existing company or managing a suite of more complicated regulatory permissions) is that the founders / seed investors typically wants pure cash and not stock in another early stage fintech. Moreover they’re all (understandably) quite attached to their idea so don’t necessarily face reality as to what the “leftovers” are really worth… as such without reasonable backing from institutional investors (who have been more conservative in the last 18 months to say the least)… deals are really hard to do! Certainly opportunity there though.