Ok, now we are going to see more startups acquire other startups

Back in June, I predicted that we would see an uptick in startups acquiring other startups this year. At the time, the venture market was souring and starting to show a divide between startups with years of cash on hand — companies that were also, often, overvalued — and those that were low on capital and would likely struggle to raise new funds.

Well, while I was technically not wrong — it is still 2022 for two more weeks — my prediction didn’t really pan out as I thought it would.

According to data from Crunchbase, as of December 13, 1,291 startups have been acquired by other venture-backed companies this year. This compares to 1,292 in 2021. So while this year is on track to see more transactions than last, it won’t be by a meaningful amount.

But a recent acquisition showed both why we haven’t seen much movement yet and why we expect to see significantly more activity heading into next year.