Washington – The recent increase in antitrust enforcement activity by the FTC and the DOJ was followed by a sudden sharp decline in startup acquisitions by large companies, and an enormous drop in overall acquisitions of smaller startups, according to a new report released by CCIA.
During an increasingly aggressive antitrust enforcement paradigm from mid-2021 through 2024, smaller startups have had fewer opportunities to be bought out. As smaller startups generally lack the option to exit via an IPO, reduced access to exit via acquisition led to more businesses shutting down, fewer startups selling for more than they raised, and lower overall returns for investors. These are all bad outcomes for startup founders and venture capital (VC) investors. Since the U.S. is a global leader in Artificial Intelligence (AI), which plays a big role in about one third of recent VC investments, overly strict antitrust enforcement could harm future economic growth, weaken the U.S. in global competition, and harm U.S. national security.
The following quote may be attributed to Trevor Wagener, CCIA’s Chief Economist and Director of the Research Center:
“Aggressive antitrust enforcement from mid-2021 through 2024 over-deterred startup acquisitions by large companies, particularly harming smaller startups. Overly aggressive antitrust enforcement effectively removed acquirers who previously accounted for 16% of bid value from competition for acquisitions, and other potential acquirers failed to step up to replace those lost funds.”
