Acquisitions outnumber IPOs as a venture exit path

The record

Carta's cap-table platform, used by tens of thousands of venture-backed startups, tracks how many of those companies get acquired each year. Its 2022 report counts 647 mergers and acquisitions among Carta companies that year, up 23% from 2021, though quarterly volume fell from 179 deals in Q1 to 129 in Q4. Its 2023 report counts 574 such deals, down 11%, and finds that 37% of acquired companies had fewer than ten employees — the highest share in the five years Carta had then tracked — while just 9% had 100 or more, the lowest share over the same period.

What the sources establish

A separate Carta piece on the 2023 exit environment sets the M&A count against the other common exit path: it counted 295 M&A deals among Carta companies in the first half of 2023, against just 52 U.S. IPOs over the same six months, and states that "over the past decade, new venture capital investments into U.S. startups have been about 10 times more common than VC-backed exits." All three reports establish deal counts and, for the smallest targets, employee-count bands. None states an aggregate dollar value for the acquisitions it counts — a contrast with the same publisher's IPO figures, which do carry total proceeds. That asymmetry is consistent with how these deals are recorded: an acquisition of a small, privately held company generally carries no requirement to publish a sale price, so a count can be produced without a value ever becoming public.

Scope and revision

Carta's counts describe only companies on its own platform, not the venture market as a whole, and each report notes that the tracked population keeps growing, which can inflate year-over-year deal counts independent of any change in acquisition activity. A deal count also does not distinguish an acquihire from a strategic sale at a premium to invested capital, or a sale below it; the data show where buyers concentrate — overwhelmingly among the smallest employee-count bands — without saying whether those sales returned capital to investors. Treating a deal count as a proxy for exit health, absent the missing value data, risks overstating what the series can support.

The decision in front of you

Editorially: a founder or early employee weighing an acquisition offer against continuing to raise venture capital should recognize that, on this data, a sale is both the statistically likely outcome and the one least likely to be publicly priced — meaning comparable-deal benchmarks are harder to find for a private sale than for either a priced round or an IPO.

• Does the acquisition count include or exclude deals where no consideration changed hands, such as acquihires?
• Is the reported deal count changing because of more or fewer acquisitions, or because the tracked population is growing?
• If a sale price is not disclosed, what basis exists for comparing it to invested capital?

Carta's own numbers make the shape of the market clear — far more sales than public offerings, concentrated among the smallest companies — without making its arithmetic clear, since the dollars behind most of those sales are not part of the record.