The biggest US tech companies aren’t buying startups

The four most valuable US companies have enough capital to find any startup they want.

But despite their deep coffers, Apple, Amazon, Google and Microsoft aren’t doing much buying.

So far this year, the “Big Four” have made just five acquisitions of private, venture-backed companies, according to Crunchbase data. None of these were known unicorns and only one had a stated purchase price. That means the rest were smaller deals by the tech giant’s standards.

The biggest startup acquisition was in January, when Google bought New York-based security automation and response provider Siemplify for $500 million. In the year Founded in 2015, Siemplify has previously raised $58 million in venture funding.

In addition to this agreement:

• Amazon bought GlowRoad, an India-based retailer that had previously raised more than $30 million, and Veco, a UK-based e-commerce fulfillment tools company that had raised more than $9 million.
• Microsoft has acquired Minnet, a Slovakia-based provider of process mining equipment that previously raised about $10 million.
• Apple Credit has acquired Kudos, a UK-based app that measures creditworthiness, which previously raised about $9 million.

Considering the Big Four have more than $300 billion in cash between them and a market cap of more than $6 trillion, their 2022 startup M&A activity looks like small potatoes. That said, they aren’t the only ones holding off on buying ridges.

According to Crunchbase data, M&A activity involving VC-backed startups has fallen since last year. In the year By 2021, there were more than 3,000 M&A deals involving the purchase of a VC-backed company globally. By the middle of the third quarter of this year, just under 1,600 startups had found a partner in the market.

The declines are even more dramatic in the U.S. Last year, Crunchbase counted more than 1,700 VC-backed startups. This year saw only 745 such offers.

The trading decline comes as valuations for both public and private tech companies continue to decline. So, while starting price tags look like a bargain compared to a year ago, prospective buyers are down.

Among the big four, shares of Amazon and Google have shed more than a quarter of their values ​​from their November highs. Apple and Microsoft also dropped from the top, but less so. (It should also be noted that we recently included Meta/Facebook on our list of the most expensive tech companies, but not anymore. Its shares have lost more than half their value in the past year: $440 billion.

Until this year, the most valuable technology names have cost too much to buy other publicly traded companies.

For example, Microsoft announced in January that it had agreed to buy video game giant Activision Blizzard for $68 million.

Amazon spent $5.6 billion buying two companies: robot vacuum maker iRobot and primary care clinic provider One Medical. Google, meanwhile, spent $5.4 billion to buy publicly traded cybersecurity provider Mandiat in March. Search giant Raxium, a Silicon Valley startup that uses technology for augmented reality displays, raised $1 billion this year. Raxium has no known venture funding, according to Crunchbase data.

For now, it’s unclear what will happen to the Big Four to become more active startup buyers. While lower price tags may provide some incentive, cost has not historically been a major driver for giant tech startups. They have long shown a willingness to pay handsomely for properties they really want.

For startup founders, then, it’s best to take the exit strategy known as “selling to Google” off the table for now. While that may indeed happen, it seems an increasingly unlikely outcome.

Example: Dom Guzman.