Startup Exits by Acquisition: A Cross Industry Analysis of Speed and Funding

Being acquired by a larger company represents the final step in a startup life cycle and is often the ultimate objective of both founders and equity investors. In fact, the occurrence of an acquisition allows shareholders to transfer their equity stake to the acquiring company and thus realize a return on their initial investment, hopefully resulting in a capital gain. From an investor’s point of view, two important elements to estimate are the time needed to take a company to an exit and the capital it will require to reach that result. These two factors are related to the sector in which the venture operates. Since acquisitions represent the most frequent case of exit, this paper focuses on their analysis. A sample from Crunchbase with more than 17,000 U.S.-based tech-startups founded after the year 2000 and acquired before 2021 was analysed. Starting from the original 744 categories used by Crunchbase for company classification, 64 sectors were identified through a clustering proces...