📶 startups buying startups?

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Good morning 👋

M&A is down, but that doesn’t mean people aren’t buying. In fact, startups are buying more startups, and they are on pace to play a bigger portion of the overall M&A activity than they have in years.

We’ve said it before, and we’ll say it again: venture funds need to expand their liquidity strategy.

Banking on a small percentage of your portfolio companies to IPO will not cut it for most funds. Expect more small wins (M&A, trading secondaries, etc.) from many big-name funds going forward.

We’ll see how this changes the rest of the venture portfolio approach …

P.S. Our premium newsletter (Confluence.VC Pro) is where we share our best databases, deal flow, templates, and other findings.

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TL;DR:

• 📰 News

• 🔗 Links

• ™️ Startups

• 🐥 Tweet

• 💰 Funds

• 📶 Recs

• 🗳 Poll

HEADLINES
Software Startups are eating the world startups ✅

• Startup Buying Power — VC-Backed Companies Are Hunting For More Startups (Crunchbase)

• The year of the small institution (Pitchbook)

• Arch Debuts AI Tool for Family Offices Swimming in Private Investments (Institutional Investor)

• DryMerge promises to connect apps that normally don’t talk to each other — and when it works, it’s great (TechCrunch)

• AI coding assistant Supermaven raises cash from OpenAI and Perplexity co-founders (TechCrunch)

• Agentic AI: A deep dive into the future of automation (Venturebeat)

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LINKS

🎙️ Podcast with Howard Marks: Morgan Housel sits down with the co-founder of Oaktree Capital Management to discuss the impact of debt and how debt impacts an investor’s longevity

📚 Required Reading for Marketplace Startups: Andrew Chen lists 20 of the best essays

💡 How To Get Startup Ideas: Paul Graham’s 2012 essay—to try not to think of startup ideas but instead look for problems, preferably problems you have yourself—is timeless writing

🚜 Non-Obvious Signs of Early Startup Traction—And How to Spot Them: First Round gathered the most surprising anecdotes from seasoned founders about when things clicked into place

⚾️ How to Pitch to Investors: The startup pitch framework + data room template + what only 1% entrepreneurs do + favorite deck slides

STARTUPS (Together with Harmonic)
Lightspeed companies founded in 2024 🔎

We use Harmonic to get thousands of data points on companies like these. 

Here’s how you can do the same.

TWEET

FUNDS

Explore all new funds (along with contact info) 👉 here.

RECS

POLL

Thanks for reading this far and giving us a little bit of your attention this week.

Feel free to unsubscribe whenever this stops becoming valuable to you.

- Clay

RESULTS

Here are the results from our poll question in yesterday’s piece:

Would you invest in China right now?

🟩🟩🟩🟩🟩🟩 Not a chance (14)

🟨🟨🟨🟨⬜️⬜️ Not right now but maybe in the future (8)

🟨🟨🟨🟨⬜️⬜️ Yes (8)

30 Votes