SA国际传媒

For a startup, buying another startup may make strategic sense. But it isn鈥檛 easy to do.

The list of decisions is long. How much to pay? Is it about acquiring assets, bringing in talent, or both? How should one compensate key people and keep the team motivated? Should you retire the acquiree鈥檚 brand or keep it?

The complexities around completing an M&A deal go a long way to explaining why some venture investors consider it their job to help shepherd portfolio companies through the process. It also points to why some firms have much more acquisitive startup companies in their portfolios.

鈥淭here鈥檚 a bit of a Goldilocks play that has to happen,鈥� said , a longtime software executive who joined last year as managing director. She works with portfolio companies as an operating partner, with a particular focus on navigating decision-making around M&A.

It鈥檚 not a light workload. Per SA国际传媒 data, Insight portfolio companies are a pretty acquisitive bunch. Since 2020, they have acquired聽1 at least 110 companies in software sectors from cybersecurity to logistics to grammar correction.

Notably, the firm is among more than a dozen active lead investors whose portfolio companies do a lot of M&A. Below, we put together a chart of 14 firms among those with the most acquisitive portfolio companies:

As illustrated above, has a particularly acquisition-hungry portfolio. This is partly a function of the fact that it is lead investor in a ginormous number of growth-stage companies. Several are prominent serial acquirers.

Corporate card platform , for instance, has made at least six known acquisitions to date, including its most recent last year: a $90 million purchase of financial planning tools provider . , the virtual and hybrid event platform provider, also made six acquisitions while raking in over a billion dollars in venture funding in 2020 and 2021.

鈥檚 portfolio also contains a lot of active dealmakers. This includes the delivery services , , and , which have collectively made at least 17 known acquisitions.

Among Insight鈥檚 portfolio companies, meanwhile, , a provider of software tools for online publishers, stands out as an active recent buyer. It鈥檚 made three acquisitions since last year, including the $100 million January purchase of personalized messaging startup .

Of course, carrying out M&A deals isn鈥檛 the end goal for growth startups and their backers. The objective is to provide value, often by filling a niche the acquirer couldn鈥檛 or chose not to develop in-house.

Given that acquired startups generally get subsumed into the acquiring company, it鈥檚 often difficult to vet over the long term whether a purchase was a success.

Failures are easier to pinpoint 鈥� although commonly more due to missteps made by the acquiring company. The most obvious case in point for this is , which between 2020 and 2022, per SA国际传媒 data. Now they鈥檙e all part of one big bankruptcy.

The sharp retraction in tech and growth company valuations also means a lot of prices paid in 2020 and 2021 now look much too high.

Beyond getting the price wrong, per Bouck, the big reason acquisitions commonly fail is 鈥渆ither because the acquiring company moved too fast or too slow in integrating.鈥�

It鈥檚 a bit like getting a recipe right 鈥� which requires not just the proper ingredients, but also the correct process and timing. Perhaps it鈥檚 no coincidence that Bouck also authors a .

Illustration: Dom Guzman

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