Adobe’s planned acquisition of design platform Figma for a whopping $20 billion has been called off, citing concerns from the European Union and the United Kingdom regarding regulatory compliance. This development adds to the growing concerns about how stricter competition rules imposed by governments around the world could negatively impact the exit opportunities for startups.
Venture capitalists and entrepreneurs alike were already anxious about the fate of startup exits after the failed $5.6 billion acquisition of Plaid by Visa in 2020, which faced significant pushback from regulators. And the recent appointment of Lina Khan, a well-known advocate for antitrust policies, as the chairperson of the Federal Trade Commission only intensified these concerns.
However, it’s important to note that Figma and Plaid are just a couple of examples of startups that have been affected by antitrust and competition laws in recent times. Despite the initial uproar following the news of Adobe’s decision to scrap the Figma deal, discussions have quickly turned to how this could potentially hurt startup liquidity, with some VCs even predicting that major acquisitions by large companies will no longer be a viable option.
But let’s take a closer look at the data surrounding startup mergers and acquisitions. The prevailing sentiment of doom and gloom seems to be driven more by fear-mongering rather than an accurate portrayal of what the startup exit market truly looks like. In reality, the vast majority of startup deals bear no resemblance to the highly publicized Figma and Plaid acquisitions.