With IPO markets still slow and startup valuations down from their 2021 highs, acquisitions are becoming a preferred exit route. Q1 2025 marked a major rebound for startup M&A, driven by more deals from private equity firms, strategic buyers, and even startups acquiring other startups.

1. Startup M&A Deal Value Hits $71 Billion in Q1 2025

The first quarter of 2025 was the strongest for startup M&A since 2021, reaching $71 billion in global exit value. A total of 550 acquisitions involving venture-backed startups were recorded — a 26% increase compared to the same period last year, though slightly down from 563 deals in Q4 2024.

Notable transactions included Google’s proposed $32 billion acquisition of cybersecurity company Wiz — potentially the largest private company acquisition on record. Other billion-dollar deals involved companies like Ampere Computing (acquired by SoftBank), Modernizing Medicine (by Clearlake Capital), Moveworks (by ServiceNow), and Weights & Biases (by CoreWeave).

The AI sector was particularly active, with 81 M&A deals involving AI-focused startups in Q1 — a 33% increase from both Q1 and Q4 of 2024.

2. Private Equity Firms Expand Their Role in Startup M&A

Private equity activity in startup M&A remains strong. In 2024, PE firms disclosed over $56 billion in acquisitions of venture-backed companies — and that figure only includes deals where pricing was made public.

That momentum carried into Q1 2025, with 22 announced acquisitions of seed- or venture-funded startups by PE firms. Among the largest:

• Clearlake Capital acquired a majority stake in ModMed for $5.3 billion.
• Bain Capital purchased HealthEdge for $2.6 billion.
• CBRE bought flex workspace provider Industrious for $400 million.

These deals underscore PE firms’ growing appetite for scaling up through acquisition, especially in healthcare and enterprise software sectors.

3. Startups Are Buying Other Startups

An increasing number of venture-backed startups are becoming acquirers themselves. Over the past year, 423 U.S.-based seed or venture-funded companies were acquired by other private startups.

While many of these deals don’t disclose pricing, some notable ones stand out:

• Stripe acquired fintech peer Bridge for $1.1 billion — the largest startup-to-startup deal of the past year.
• AlphaSense bought Tegus for $930 million.
• LetsGetChecked acquired Truepill for $525 million.

These acquisitions reflect a growing trend where mature startups use M&A to expand offerings, acquire talent, or consolidate markets.

What’s Ahead for Startup M&A in 2025?

At the start of the year, many expected startup M&A activity to keep rising, driven by hopes of a more business-friendly environment under the new U.S. administration. However, shifting economic policies — especially unpredictable tariff changes — have introduced new uncertainty.

According to Ofer Schreiber, senior partner at YL Ventures, large strategic buyers are proceeding more cautiously due to market instability and changing valuations. “Macroeconomic conditions heavily influence M&A decisions, particularly for public companies,” he noted.