KUALA LUMPUR (Sept 6): The four most valuable American companies, namely Apple, Amazon, Google and Microsoft, are not doing a lot of buying into start-ups despite their respective deep coffers.
In a recent report, Crunchbase — which tracks trends, investments and news of global companies from start-ups to the Fortune 1000 — said that so far this year, the “Big Four” have made just five acquisitions of private, venture-backed companies, per Crunchbase data.
It said that of those, none were known unicorns and only one had a disclosed purchase price.
That indicates the rest were smaller deals by tech giant standards, it said.
Crunchbase said the largest startup purchase came in January, when Google bought New York-based security automation and response provider Siemplify for US$500 million (RM2.25 billion). Founded in 2015, Siemplify previously raised US$58 million in venture funding.
In addition to that deal:
- Amazon bought GlowRoad, an India-based reseller that had previously raised over US$30 million, and Veeqo, a UK-based provider of e-commerce fulfilment tools that had pulled in over US$9 million.
- Microsoft purchased Minit, a Slovakia-based provider of process mining tools that had previously raised around US$10 million.
- Apple acquired Credit Kudos, a UK-based provider of tools for measuring creditworthiness that previously raised around US$9 million.
Crunchbase said that considering that the Big Four have over US$300 billion in cash among them, and a collective market cap of over US$6 trillion, their 2022 startup merger and acquisition (M&A) activity looks conspicuously small.
That said, it added that they are not the only ones holding back on buying sprees.
According to Crunchbase data, M&A activity involving venture capital (VC)-backed start-ups has fallen since last year.
In 2021, there were more than 3,000 M&A deals globally involving a VC-backed company getting bought.
Halfway through the third quarter of this year, just under 1,600 start-ups have found a mate in the market.
The declines are more dramatic in the US. Last year, just fewer than 1,700 VC-backed start-ups were bought, per Crunchbase. This year has only seen 745 such deals.
The slowdown in dealmaking comes as both public and private tech company valuations have been trending lower.
So, while start-up price tags might look like a bargain compared to a year ago, prospective buyers are also down, said the report.