The startup exit market used to be bad. The startup market has had better days.
After a turbulent and ultimately aggressive 2020 in venture capital terms, startups rolled into 2021, more than hot. Last year saw record-breaking totals of venture capital pumped into upstart tech companies around the world, with some of them raising two or even three times in a single 12-month period if they were particularly in demand.
It wasn't just traditional venture firms that were busy last year, corporate venture players were too.
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As The Exchange explored last August, the value of deals involving CVCs was rising both in dollar and deal terms; corporates were not immune to the bull-rush into startup equity that captured the minds and wallets of investors. We dug into the pace at which corporate venture capital funds were being put together earlier this year.
The financial and strategic goals were the same as before the boom, according to CVCs. With the possibility of financial returns in decline, falling startup prices, a moribund IPO market, and antitrust issues may limit the acquisitiveness of some major tech companies.
CVCs may turn to strategic objectives if they don't have a lot of exits that are encouraging from a financial perspective. Corporates fishing portfolio companies from the private markets could mean a more active M&A market.
Let's think about which active CVCs are likely to get busy with their checkbooks this year.
There are many reasons for a startup to look for a partner.
Public valuations have been taking a hit. For macroeconomic reasons. There are doubts about whether double-digit multiples can hold and whether the exits were mispriced.
Tech companies are pausing their IPO plans because of the stock market troubles. In many regions, public exits have almost stopped.
What hasn't stopped is the creation of a mythical creature.
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