Most Tech Startups Don’t Raise Big Money Before Exits

In what’s bound to be come as a surprise to many startups, 76 percent of tech companies acquired in 2012 made their exits without raising institutional investment, according to a report from the venture capital database CB Insights.

MoneyDuring the year, 2,277 private tech companies were bought out for a total disclosed value of $46.8 billion. (The value of some deals wasn’t reported.) Eight of those were purchased for more than $1 billion, six in the U.S. But the big surprise was the number of companies that reached the acquisition point without outside funding beyond angel investments. Some 94 percent of acquisitions were made by strategic buyers.

“While there were no bootstrapped or only angel-funded billion-dollar exits, it is clear that there are a lot of tech companies being formed who are able to grow by reinvesting their own profits or via angel financing,” the report said.

Among the other findings:

  • Fifty percent of the exit deals were for less than $50 million.
  • Eighty percent were for less than $200 million.
  • California had more private tech companies acquired in 2012 than the next five states combined. New York was No. 2, followed by Texas, Massachusetts and Illinois.
  • At the median, companies raised $16.6 million and were acquired for $73.5 million.
  • Web and mobile commerce was the most active segment among the acquisitions, followed by ad-related businesses.
  • New York led in Internet acquisitions, while Texas and Illinois had the highest portion of deals in computer hardware. Overall, Texas had the most diversity of deals across tech sectors.

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