For B2B and enterprises IT startups, the median number of years between the first round of venture funding and a meaningful exit greater than $350M is now about 11 years. That’s 4.5 years longer than in 2014.
I ran a quick Pitchbook search for
- Venture-backed Information Technology companies,
- Excluding the B2C segment,
- With IPOs and acquisitions of any kind (mergers, reverse mergers, buyouts, etc.), and
- At a reported exit value >$350M (excluding blanks).
That search came back with 392 companies (as of 09/17/2018). I then filtered out NULL values in the ‘First Round’ date; and removed some outliers for clarity (Nokia, founded 1865; AMC and Stratasys, with 30 years and 23 years from their first round to exit). That left me with 179 exits with more than $350M deal value.
The dark and light blue box-and-whisker chart shows the median number of years from the first round of funding to exit with lower quartile and upper quartile ranges, and 1.5x IQR whiskers.
2011 was an interesting year. It seems like enterprises became active again after the recession in 2008. They might have picked up the targets that they perhaps had already in mind three years earlier:
- Popcap, VMAX Telecom, AdMeld, and Ralink Technology got acquired less than four years after their first funding round.
- Clearwell Systems got acquired by Symantec for $390M six years after their first funding.
- Efficient Frontier (8 years, $400M to Adobe), Skype (9 years, $9,000M to Microsoft), Endeca (10 years, $1,075M to Oracle), BlueArc (11 years, $600M to Hitachi Data Systems), Force10 Networks (12 years, $800M to Dell), Atheros (13 years, $3,100M to Qualcomm), and ITA Software (15 years, $700M to Google).