Startup Investments Worth Hundreds of Billions Are Now a Thing of the Past... "M&A Trends Have Changed"

43 Startup M&A Deals from April to July... 60% Increase
Synergy Effects Among Startups... Acquisition of Valuable Companies
"IPO and Scale-up Strategies... Preference for Stock Swap Method"

Visitors are exploring the 3D hologram solution Hypervision at the Digital Transformation Expo held at KINTEX in Goyang, Gyeonggi Province.
Photo by Hyunmin Kim, Goyang kimhyun81@

[Asia Economy Reporter Kim Bo-kyung] # Finda, a loan comparison platform service operator, acquired the commercial district analysis startup OpenUp last month. About 10 OpenUp employees also joined Finda. OpenUp, which has operated a regional startup cost calculator service, holds 84 million sales data points and generates 700,000 data points monthly. Finda plans to provide information and services to help small business owners by utilizing artificial intelligence (AI) technology based on OpenUp's big data. A Finda representative stated, "We expect synergy from the collaboration of the two companies."

Recently, mergers and acquisitions (M&A) among startups have become more active, and the M&A market trends are changing. Some startups with either technology or capital strength attempt business expansion through M&A, while companies facing financial shortages increasingly acquire 'valuable companies.'

According to the startup database platform ‘Innovation Forest’ on the 27th, there were a total of 43 startup-related M&A deals from April to July this year, nearly a 60% increase compared to the same period last year. Until last year, the investment market was flush with money, and startups could selectively receive investments to increase their corporate value. However, recently, with interest rate hikes and concerns about economic downturns, investment sentiment has cooled, leading to increased activity in the M&A market.

A notable point is M&A between startups. Ahn Hee-cheol, a startup attorney at the law firm Delight, said, "Over 100 M&A deals took place in the first half of this year, and more than 40 startups were acquired by other startups." He added, "In cases where startups acquire other startups, it is not simply to absorb technology or personnel but a choice for longer-term IPO (initial public offering) and M&A strategies." He also explained, "While the previous strategy was to grow companies through large-scale investments and then exit, recently, more companies are pursuing M&A through stock exchange methods."

An industry insider said, "Startups are showing a trend of scaling up by partnering with startups that have already successfully implemented services rather than starting from zero when entering new markets."

Global Startup Festival 'COMEUP 2021' / Photo by Honam Moon munonam@

Not only in the case of Finda and OpenUp, but also the food, clothing, and shelter company Uisikju Company, which operates the non-face-to-face laundry service ‘Laundrigo,’ acquired Penguin House, which operates unmanned laundromats, preparing to enter the unmanned smart laundry market in earnest. Viva Republica, which operates Toss, announced its entry into the budget phone business by acquiring the budget phone company ‘Merchand Korea’ last month.

Overseas, business expansion through M&A is also ongoing. A representative from the proptech company R Square said, "In the U.S., a big M&A market is already unfolding," adding, "More startups are hoping to be acquired by companies needing new technologies amid financial shortages." Global real estate consulting firm JLL acquired the building operation platform ‘Building Engines’ for $300 million and the commercial real estate platform VTS acquired the office management platform ‘Lane Technologies’ for $200 million. Sharad Rastogi, President of JLL Technologies, stated, "Startups will seek cooperation (acquisition) with strategic partners that help accelerate product roadmaps and efficiently expand markets."

Recently, domestic large corporations have also been acquiring startups to find new growth engines. GS Retail announced last month that it would acquire the pet specialty mall ‘Pet Friends’ jointly with IMM Private Equity, and recently, Nexon acquired ‘Meetings,’ a video interview platform operator headquartered in Silicon Valley, USA.