With the IPO market still in a slump, startups are increasingly relying on M&A for exits.
And while usually this involves a sale to a strategic buyer, the next-likeliest suitor is probably a private equity firm.
Over the past five years, private equity firms have spent more than $56 billion in disclosed-price acquisitions of private, venture-backed companies, per Crunchbase data. Since less than a fifth of purchases come with a reported price, total deal value is undoubtedly much higher.
So far this year we aren’t seeing signs of a slowdown. PE firms have announced 22 acquisitions of seed- or venture-funded private companies. The lineup includes three deals with disclosed pricetags totaling $8.3 billion.
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For a sense of how that compares to previous periods, we charted the annual deal counts and values since 2020 below.
Large recent deals
For 2025, it helps that the deal total includes the biggest reported purchase price in more than five years. That would be healthcare software platform ModMed’s March sale of a majority stake to Clearlake Capital Group at a reported value of $5.3 billion.
Founded in 2010, ModMed isn’t exactly a startup. However, it had raised more than $385 million in funding over the years, including multiple venture rounds and an investment from PE firm Warburg Pincus. Of late, the Boca Raton, Florida-based company has been focused on applying AI to automate its offerings for medical practices.
The second-largest deal — HealthEdge’s April sale to Bain Capital for a reported $2.6 billion — is another example featuring a health software player that has aged out of the startup label. Founded in 2004, the Massachusetts-based provider of software for health plans raised about $98 million in venture funding before selling to Blackstone Group in 2020.
Startup exits
Private equity firms tend to buy companies with established businesses and sizable, growing revenue. As a result, startups they acquire tend to be on the later-stage, more mature end of the spectrum.
This is evidenced by some of the other large PE acquisitions of the past year. This includes auditing automation platform AuditBoard, founded in 2014 and acquired by Hg last spring for $3 billion, and Nasuni, a cloud storage provider founded in 2009 that sold to Vista Equity Partners in July for $1.2 billion.
On the other hand, if you’re a seed-stage company launched in the past couple years, private equity probably won’t be your near-term exit strategy. It’s far more likely to sell to a company in the same industry that’s interested in the technology and willing to overlook the lack of a predictable revenue stream.
PE valuations take a beating, but deals still get done
Looking forward, there are cases to be made both for and against the probability of a near-term pickup in PE acquisitions of venture-backed companies.
On the negative side, shares of the big, publicly traded PE firms have taken a beating in recent months. Blackstone Group, KKR, The Carlyle Group and Apollo, for instance, are all down roughly a third from the highs reached late last year and early this year. That indicates increased investor pessimism about their ability to make money through buying and scaling businesses.
On the positive side, however, there’s certainly a bountiful supply of later-stage companies available for acquiring. Per Crunchbase data, there are currently 789 private, venture-backed companies in the U.S. that met or exceeded the $1 billion threshold at their last reported valuation.
Of those, many raised their biggest rounds around the market peak roughly four years ago. Since then, valuations have come down for many outside ultra-hot sectors like generative AI. At this point, a large cross section are pretty mature companies at this point, which might make them well-suited for a private equity acquirer.
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Illustration: Dom Guzman
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