Aging startups still draw acquisitions despite funding drought

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Aging startups draw acquisitions

Highlights

Uber acquired ezCater for $2.3 billion cash, a 53% premium to ezCater's 2021 valuation, despite no new funding in five years.
Miro's sale to Bending Spoons at $1.36 billion and Airtable's $1.28 billion deal represent steep markdowns from $17.5 billion and $11 billion valuations, respectively.
Stagnant startup fundraising post-2021 has led to delayed exits and sharply reset acquisition prices, as seen in Everlane's $100 million and Headspace's $300 million sales.

Crunchbase analysis highlights delayed exits

As reported by Crunchbase News, an analysis of Crunchbase data shows several larger acquisitions this year involve venture-backed startups that had not disclosed new equity funding for more than four years.

One of the clearest examples is Uber’s $2.3 billion cash acquisition of ezCater earlier this month. The Boston-based catering and workplace meals platform last raised venture funding nearly five years before the deal, yet still generated more than $2.5 billion in gross bookings in the year before its sale, with annual growth in the high teens and average order sizes above $400.

Even so, the transaction does not suggest a broad return to peak-era pricing. Uber’s purchase price is 53% above ezCater’s $1.5 billion pre-money valuation from late 2021, but other recent deals show much steeper markdowns from prior highs.

Valuation resets reshape the startup exit market

Miro, the online collaboration software provider, agreed last month to sell to Bending Spoons in a deal valued at about $1.36 billion. That compares with a $17.5 billion post-money valuation from its early 2022 funding round.

Bending Spoons also bought Airtable in August for $1.28 billion, only a little above one-tenth of the $11 billion valuation the company reached in its December 2021 Series F. Other examples include Everlane, which sold to Shein this spring for $100 million, and Headspace, which sold to Sword Health in a deal reportedly valued around $300 million, well below its peak valuation of about $2.6 billion.

The trend reflects how startup valuations peaked in 2021 and early 2022, leaving many companies reluctant or unable to raise new capital at lower prices. Because many of those boom-era rounds were large, startups often had room to cut costs and extend their runway, allowing them to keep operating for years before reaching an acquisition outcome that, while disappointing relative to former peaks, is still better than a collapse.

In our earlier article, we covered the sell-off in U.S. technology stocks tied to artificial intelligence, as investors reassessed whether lofty AI valuations can be justified. We also noted how $110 oil and persistent inflation worries could keep financing conditions tight, adding pressure to highly valued growth companies and increasing expectations of further market volatility.

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