With the ever-shifting landscape of the acquisition market in the tech world of today, it seems at first like a bit of a fool’s errand to pick out any trends. This week’s purchase of Wildfire by Google, as well as buys by Salesforce, Oracle and Microsoft in recent months, point to a bullish environment. But, concerns abound over the Facebook IPO and whether that is having a pull-back effect on the rest of venture capital investing.
Investors say several patterns and trends are emerging though. First, the top dogs in the VC world are getting funded. Manu Kumar from K9 recently raised $40 million and Dave McClure recently raised $50 million for 500 Startups. “There’s money pumping in to the best guys,” said Derek Andersen, founder of the popular StartupGrind event series.
That initial money doesn’t always translate into big success stories though. Founders have to get scrappy to succeed. “A lot of the companies that got angel funding are not getting another round of funding. They’re going lean and they’re stretching out five, six, 700 thousand dollars as far as they can. Why? (Their product is) just not taking off. And when you raise at a valuation of even $3 or 4 million, if anyone’s going to put more money in, you have to show growth beyond that right? So you’ve got to have a business worth at least $10 million or $20 million, and that’s not easy to do overnight.”
Some investors say more successful exits are occurring compared to six months ago, but (going with the scrappy theme still) those exits are smaller in size now. “A friend of mine tried to sell his company, a somewhat well-known brand, around six months ago. He thought he might get acqui-hired and was unable to do so,” Andersen said. “I think if he had waited six more months, maybe tried to do it today, he would have gotten acquired.”
Will Facebook’s IPO, and its recent fall under $20 per share have an effect on acquisitions? “We’ll see over the next 2-3 months if there’s a decline but you know, Google just bought Wildfire,” said Andersen. “There’s lots of smaller acquisitions which are not huge dollar amounts but the founders found somewhere to go and basically got something for their investors out of it.”
There are always rewards for those founders who stay scrappy by building products that work. Who knows, they might end up like one of the companies on the infographic below, which shows some of the top tech acquisitions of the last several months. Which newly funded company may be the next Yammer, Buddy Media or Wildfire? Only time will tell.
Graphic via ResumeBear
John Boitnott is a writer and social media consultant who has worked at Village Voice Media and NBC. He is now Vice President of Business Development at Hasai Inc. [Disclosure: VentureBeat has a contract with Hasai to do social media work.]