• Nigerian/African Tech
  • Start Up
  • Internet
    • App
    • Mobile
    • Software
  • Gadgets
  • Money
  • Video
Tech News, Magazine & Review WordPress Theme 2017
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
TechBooky
Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
Home Enterprise

Are Some Startups Getting Too Big to Acquire?

Femi by Femi
August 29, 2014
Share on FacebookShare on Twitter

Silicon Valley is on fire.

Seems a week doesn’t go by without another company getting acquired for a billion dollars — or more. Facebook bought Instagram for a cool $1 billion. Yahoo purchased Tumblr for $1.1 billion. Google grabbed Nest for $3.2 billion. Apple acquired Beats for $3 billion. And Facebook threw down a whopping $19 billion for WhatsApp. That’s a lot of zeros and popping champagne corks.

Also On TechBooky

Microsoft In Major Shake-Off, Announces The Disengagement Of 10,000 Employees

Kenyan Fintech Startup, Kwara Raises $3 Million Seed Extension

Tunisia AI Startup, InstaDeep Acquired By Germany’s BioNTech For £582m

Agritech Startup, Releaf Completed Its Pre-Series A Funding With $3.3m

Ghana Based Logistics Startup Jetstream Secures $13m Pre-Series A

There are generally two ways to cash out: You can get bought … or you can go public.

But there’s a new trend bubbling up under the radar: Some companies could be getting too big to acquire. Dropbox, Uber, Pinterest, Airbnb and Box are among the latest “startups” to get valued by private investors in the billions. And while it’s led to rounds of high-fives among employees, these 5 billion-dollar-plus price tags actually put most potential acquirers out of the market.

Every startup founder dreams of cashing in one day. There are generally two ways to make that happen: You can get bought by a Google or a Facebook … or you can go public. If you’re in the get-rich-quick game, though, going public isn’t the most convenient thing to do. You’re not allowed to sell off all your shares immediately post-IPO and head to the Bahamas, for fear that your company could be all smoke and mirrors. So if you just want to grab your cash and speed through the fast lane … you need to get Zucked.

More hot startups are being “forced” down the IPO route.

But what if you grow so fast, and are worth so much, that it doesn’t make sense for even a deep-pocketed company like Google to buy you? After all, 5 or 10 billion is no chump change. Few companies want to pay more than 10 percent of their own value for an acquisition. And how many consumer tech companies are worth more than $100 billion — the size you’d need to be in order to buy a $10 billion startup and not violate the 10 percent “rule”? Not many of them. “You can count them on two hands,” says Michael Moe*, co-founder of GSV Asset Management. Basically, the roster is: Google, Apple, Facebook, Oracle, Amazon and Microsoft. Then there are the rich but not that rich: Twitter, Yahoo, LinkedIn and a ton of other tech titans.

So more hot startups are being “forced” down the IPO route. But to be clear, that route is not always a cinch. Indeed, the too-big-to-acquire types sometimes realize that going public as a young company with an unproven business model can lead to heartbreak instead of triumph. Look no further than the cautionary tales of Groupon and Zynga. Both grew quickly, and received high valuations: Groupon was once worth $13 billion; Zynga IPO’d at $7 billion. Groupon spurned a potential $6 billion acquisition by Google four years ago. Today, both have fallen far from their once-soaring values; they certainly aren’t touted as the big successes anymore.

But while there is risk here, surely more startups will reach for big billion-dollar valuations. And indeed, some will still get acquired despite being too big to acquire (TBTA) — perhaps the likes of Uber (valued around $17 billion), Airbnb ($10 billion) or Dropbox ($10 billion)? Those companies, some would argue, are so important — thanks to their high number of users — that there’s no such thing as being too big. Or in other cases, a company may buy them for defensive purposes (e.g., Facebook’s aquisition of Whats App).

But those will be exceptions rather than the norm. And circling back to Zynga and Groupon — and some fear even Twitter, one day — the reality is there is risk for young public companies with ginormous valuations. And so while the days ahead are likely to give us more spectacular new successes, gilded young entrepreneurs and even cultural icons (e.g., the new Apples and Googles), the current billion-dollar boom will also offer a number of cautionary tales and spectacular flameouts as would be Facebooks become disappointed Zyngas and Aribas. Both sides of Greek mythology are about to take off.

Source: CARLOS WATSON/Ozy

Related Posts:

  • Facebook Acquires Customer Services Startup Kustomer For Undisclosed Fee
    Facebook Acquires Customer Services Startup Kustomer For…
  • AOL And Yahoo Is Acquired By An Asset Managers, Apollo
    AOL And Yahoo Is Acquired By An Asset Managers, Apollo
  • Facebook Buys Giphy And Is Integrating It Big Time With Instagram, Other Apps Too
    Facebook Buys Giphy And Is Integrating It Big Time With…
  • Google To Invest $50 Million In Indian Social Commerce Startup, Meesho
    Google To Invest $50 Million In Indian Social Commerce…
  • New York And Many Other States In The United States Intend To Sue Facebook Next Week
    New York And Many Other States In The United States Intend…
  • Telegram Gets Noise Suppression, Group Video Chat, And Other Tweaks
    Telegram Gets Noise Suppression, Group Video Chat, And Other…
  • Google To Spend $15B To Remain Default Search Engine On iOS
    Google To Spend $15B To Remain Default Search Engine On iOS
  • Access Bank Income Via  E-Channels Rises By 37% To $73M
    Access Bank Income Via E-Channels Rises By 37% To $73M
Femi

Femi

Paul Balo is a wireless communications technologist with interests in VoIP and 5G technologies. He leads the writing team at TechBooky

BROWSE BY CATEGORIES

Receive top tech news directly in your inbox

Loading

Recent

Tesla Cybertruck Mass Production Won’t Start Until 2024

Tesla Cybertruck Mass Production Won’t Start Until 2024

January 27, 2023
Apple Reportedly Delays Development Of Its Own WiFi Chips

Apple Reportedly Delays Development Of Its Own WiFi Chips

January 27, 2023
Google Commits To Complying With EU Laws On Its Services

Google Commits To Complying With EU Laws On Its Services

January 27, 2023
Airtel Launches Its eSIM Technology In Nigeria

Airtel Launches Its eSIM Technology In Nigeria

January 27, 2023
In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

January 27, 2023
How And How Not Gaming Can Be Used In Solving Real Problems

How And How Not Gaming Can Be Used In Solving Real Problems

January 27, 2023
Tesla Sues Former Employee For Allegedly Stealing Trade Secrets

Tesla Made The Most Money In 2022, But Its Future Still Rocky

January 26, 2023
Shutterstock Introduces Its Generative AI Image Tool

Shutterstock Introduces Its Generative AI Image Tool

January 26, 2023
Meta Agrees To $725M Settlement Of Cambridge Analytica Lawsuit

Meta Set To Reinstate Trump’s Facebook And Instagram Accounts

January 26, 2023
Here’s How ChatGPT Can Help Improve Your SEO

Here’s How ChatGPT Can Help Improve Your SEO

January 25, 2023

Browse Archives

January 2023
MTWTFSS
 1
2345678
9101112131415
16171819202122
23242526272829
3031 
« Dec    

About Us

TechBooky

TechBooky is a social Tech blog with a special focus on the budding African Technology sector. TechBooky is currently based in Abuja, Nigeria.

Subscribe to TechBooky

Enter your email address to subscribe to TechBooky and receive notifications of new posts by email.

Join 24 other subscribers.

Receive top tech news directly in your inbox

Loading

Popular Tags

AI (252) amazon (95) android (281) app (610) Apple (473) artificial intelligence (265) business (338) china (113) cloud (135) cryptocurrency (158) ecommerce (109) enterprise (239) facebook (472) gadget (448) gaming (160) google (545) government (381) guest post (108) instagram (137) internet (352) ios (249) iphone (210) microsoft (261) mobile (281) new feature (287) nigeria (276) privacy (135) research (134) samsung (139) security (374) smartphone (235) social media (671) software (415) startup (268) streaming (140) telecom (157) tips (340) transport (104) twitter (216) united states (191) users (132) videos (115) website (159) whatsapp (129) youtube (106)

Quick Links

  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips

Popular Post

  • Trending
  • Comments
  • Latest
Download Free Editable Resume Templates – Word / Docx – 2022

Download Free Editable Resume Templates – Word / Docx – 2022

July 25, 2022
The Best Free PC Games

The Best Free PC Games

July 29, 2022
Recover Permanently Deleted Emails From iCloud Manually

Recover Permanently Deleted Emails From iCloud Manually

March 5, 2022
Resume and Cover letter Templates for free

Resume and Cover letter Templates for free

July 25, 2022
How is Technology Changing Our Definition of What It Means to Be a Human?

How is Technology Changing Our Definition of What It Means to Be a Human?

April 1, 2018
[Fixed] “Outlook Running Slow Windows 10” Issue

[Fixed] “Outlook Running Slow Windows 10” Issue

February 12, 2020
Tesla Cybertruck Mass Production Won’t Start Until 2024

Tesla Cybertruck Mass Production Won’t Start Until 2024

January 27, 2023
Apple Reportedly Delays Development Of Its Own WiFi Chips

Apple Reportedly Delays Development Of Its Own WiFi Chips

January 27, 2023
Google Commits To Complying With EU Laws On Its Services

Google Commits To Complying With EU Laws On Its Services

January 27, 2023
Airtel Launches Its eSIM Technology In Nigeria

Airtel Launches Its eSIM Technology In Nigeria

January 27, 2023
In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

January 27, 2023
How And How Not Gaming Can Be Used In Solving Real Problems

How And How Not Gaming Can Be Used In Solving Real Problems

January 27, 2023

Recent News

Tesla Cybertruck Mass Production Won’t Start Until 2024

Tesla Cybertruck Mass Production Won’t Start Until 2024

January 27, 2023
Apple Reportedly Delays Development Of Its Own WiFi Chips

Apple Reportedly Delays Development Of Its Own WiFi Chips

January 27, 2023
Google Commits To Complying With EU Laws On Its Services

Google Commits To Complying With EU Laws On Its Services

January 27, 2023
Airtel Launches Its eSIM Technology In Nigeria

Airtel Launches Its eSIM Technology In Nigeria

January 27, 2023
In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

In Spite Of The Sucess Of Genetically Modified Foods, Debates Abound

January 27, 2023
How And How Not Gaming Can Be Used In Solving Real Problems

How And How Not Gaming Can Be Used In Solving Real Problems

January 27, 2023
  • About TechBooky
  • Submit Article
  • Advertise Here
  • Contact us
  • Privacy Policy
  • Disclaimer
  • Login

© 2021 Design By Tech Booky Elite

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors
  • Home
  • Africa
  • Business
  • Video
  • Metaverse
  • AI
  • Gadgets
  • Earnings
  • Tips

© 2021 Design By Tech Booky Elite