The 2018-2023YTD Corporate-Startup M&A Landscape Brief examines the trend of corporates acquiring startups to access innovative technologies, products, and talent.
In today's fast-paced business landscape, the acquisition of startups by corporate giants has become a prominent strategy for growth, innovation, and market expansion. This trend has been notably observed with technology behemoths like Facebook, Google, and Amazon leading the way. These corporations recognize the value that startups bring to the table, including cutting-edge technologies, disruptive business models, and a fresh pool of entrepreneurial talent. The strategic acquisition of startups by corporates serves multiple purposes. It enables corporations to access innovative technologies and intellectual property, fast-track their entry into new markets or industries, and stay ahead of emerging trends and disruptions.
On the other hand, they allow small companies to leverage the scale and resources of larger corporations. By integrating a product into a larger company's platform, it can reach a wider user base and maximize its impact. Furthermore, the acquiring firm's resources and expertise can enhance the product in ways that may not have been feasible for the startup to achieve independently. Ultimately, such collaborations can lead to improved offerings and enhanced value for consumers.
In the MEAPT region itself, the acquisition of startups is not unheard of, from Souq’s landmark acquisition by Amazon to Uber buying Careem in a staggering $3Bn deal. When it comes to emerging markets, regions like MENA and Africa offer untapped and rapidly growing markets. Acquiring startups in these regions allows corporates to gain a foothold and expand their presence in these promising markets. It can be a lot easier to acquire a startup that already has an established presence in the region rather than building a setup from scratch. The retail giant Alibaba Group established its presence in Turkey by acquiring the Decacorn Trendyol.
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In other cases, corporate acquisitions of smaller companies often serve as a strategic move to eliminate competition and consolidate market power. By acquiring a smaller competitor, corporations can eliminate the threat posed by their innovative products, services, or technologies. This enables the acquiring company to strengthen its market position, expand its customer base, and gain access to valuable intellectual property or proprietary technologies. Through such acquisitions, corporations can eliminate competition, increase market share, and potentially establish monopolistic advantages, solidifying their dominance in the industry. In 2017, Amazon acquired Whole Foods Market, a leading grocery retailer, for $13.7Bn. This acquisition allowed Amazon to enter the brick-and-mortar retail space and compete directly with traditional grocery chains. By acquiring Whole Foods, Amazon eliminated competition and gained a physical retail presence, expanding its reach and establishing a strong position in the grocery industry.
Furthermore, acquisitions often come with the added benefit of acquiring talented teams and entrepreneurial mindsets, termed “acquihires”. A lot of companies acquire startups for their talents. A few years back Careem did an “acquihire” deal with India’s Commut to get access to the talent. No matter the motivation, the acquisition is a symbiotic relationship where the corporation gains access to innovative technologies, products, or talent, and the smaller company receives resources, expertise, and market reach that can accelerate its growth and development.
What’s In The Brief?
This research brief provides takes a look at corporates divulging into the world of venture capital and tech startups through strategic acquisitions.
Who is it for?
Whether you’re a private investor, a VC, an investment company, a CVC, or working in corporate, this report gives an overview of the ecosystem and caters to a diverse audience including any curious minds who want to use the yearly, quarterly and monthly charts in this report to track investment activity.
You can also see in which country and industry the investment activity focused in terms of deals and capital deployed, allowing you to leverage insights and make wise choices.
The report can also be used by consultants looking to identify technology innovation trends and who will find it valuable to look at the evolution of M&A activity and concentration of acquirers/acquired startups.
Last but not least, government entities searching for investment opportunities will also find valuable information to make informed decisions.
Where is this information from?
The report was 100% created using data from MAGNiTT. MAGNiTT is the leading VC verified data platform and offers a comprehensive directory of technology innovation trends. Our unique SaaS solution includes investment directories listing startup venture funding across the Middle East, Africa, Pakistan, and Turkey, and now Singapore. By using MAGNiTT, you will also get access to market sizing tools to visualize investment growth and trends across various industries, geographies, and stages, as well as comparison tools for benchmarking geographies, industries, and investor performance. Furthermore, MAGNiTT offers exit comparisons by examining mergers and acquisitions.
Learn more about MAGNiTT's Data Methodology.