M&A Activity Involving VC-Backed Startups Picked Up In 2024

For the past couple years, exits and liquidity have been top of mind for venture capitalists desperately trying to get money flowing back to their limited partners.

While last year wasn鈥檛 the cascade of M&A activity many had wished for (and certainly the IPO pipeline never unfroze), it did provide some hope. Deal activity actually increased 7% from 2023, with Q4 being the strongest quarter for M&A involving VC-backed startups in seven quarters, SA国际传媒 data shows.

The fourth quarter saw 537 M&A deals involving VC-backed startups, a 46% increase from Q4 2023 and a 9% jump from Q3 last year, per SA国际传媒 .

In 2024, a total of 1,975 M&A deals were consummated, an increase from the 1,842 announced in 2023. While the 2024 number is down from the height of the VC market in 2021-22, it is actually almost identical with the 1,974 deals in 2020.

Big money

The final quarter of 2024 actually also produced some of the biggest deals of the year 鈥� even if they likely flew under most people鈥檚 radars.

In December, insurance giant agreed to buy insurance firm for $13.5 billion, while investment giant bought 鈥� an investment firm that focuses on non-investment grade credit 鈥� for $12 billion.

BlackRock was not alone. Other financial buyers such as and also completed big deals last year, while strategic buyers such as and also showed an openness to deal-making.

US market pops

The domestic M&A market for VC-backed startups saw a bigger bump than the global market.

After bottoming out in Q4 2023, when only 185 deals were consummated, the last quarter of last year jumped to 289 deals, per SA国际传媒鈥� a 56% pop. The fourth quarter also saw a smaller 鈥� but still substantial 鈥� jump of 12% from Q3.

Overall, 2024 saw 1,032 M&A deals announced for VC-backed startups 鈥� a 30% uptick from 2023 which saw only 856 deals as the M&A market dried up.

An AI push

Of course, with the numbers up, one would logically conclude artificial intelligence 鈥� tech鈥檚 most recent darling 鈥� was the main driver.

That鈥檚 at least partially true. While M&A activity actually tailed off slightly through the past few quarters, it ended the year with a total of 268 VC-backed AI-related startups getting bought, per SA国际传媒 . That number represents a 39% jump from the 193 deals in 2023, but is down slightly from the 282 deals announced in 2022.

The biggest deals last year in the AI space were credit card giant agreeing to buy threat intelligence company for $2.65 billion in September, and buying 鈥� an AI company that offers claims guidance solutions for insurance companies 鈥� for $730 million late last year.

2025?

Predicting the M&A market can be a fool鈥檚 errand. Many thought 2024 would see a robust return to deal-making.

However, many are optimistic that changes in the federal government will jump start an M&A market. Those changes could include at the and , as the new administration may look to eliminate regulatory hurdles.

Many also see more corporate and private equity interest in the market now, as those in deal-making are taking a more 鈥渞isk-on鈥� attitude.

However, there still could be bumps. President-elect 鈥檚 nomination of Gail Slater 鈥� a frequent critic of large technology companies 鈥� to lead the Justice Department鈥檚 antitrust efforts has caused some consternation in Silicon Valley.

There鈥檚 also the fact that many startups are still coming to terms with the valuation cuts seen after the over-heated market in 2021 and 2022. If startups do not come off those higher numbers, the M&A market could remain slow.

It鈥檚 important to remember that even last year鈥檚 uptick doesn鈥檛 mean buyers are buying at high valuations 鈥� many deals involving startups were likely only completed after the target company accepted a number well off their expectations of just two years ago.

Nevertheless, many VCs will see the small jump in M&A last year as a huge positive, as DPI 鈥� distributed to paid-in capital, or the capital paid to funds鈥� LPs after exits by those funds鈥� portfolio companies 鈥� remains the top issue in the venture world.

SA国际传媒