SWALLOWING THE STARTUPS

The conventional goal for startup founders is to take their company public, with a top consolation prize being a lucrative sale to a larger company.

A prime example is the $20 billion deal announced in September under which software design startup Figma Inc. would be acquired by Adobe Inc. The transaction, which is awaiting regulatory approval, values Figma at more than twice its final private valuation, securing a hefty payout for early investors. Figma founder Dylan Field is set to make $2 billion.

Overall, however, startups weren’t really cashing out big last year. Completed venture-backed acquisitions in the first three quarters of 2022 totaled $81.7 billion, according to PitchBook Data Inc., down 40.7%, from $137.8 billion in the same period the year before. No significant venture-backed tech startups went public.

By contrast, investors are predicting a flurry of acquisitions in 2023. Ryan Nolan, managing director at Goldman Sachs Group Inc., says this year will see “the return of the private company sale,  which was largely nonexistent in 2022.”