The Year Ahead 2023

Tight Money Will Pressure Startups to Sell in 2023

Startups holding out for an IPO or Figma-scale acquisition are likely to be disappointed.

Photographer: Elizabeth Renstrom for Bloomberg Businessweek

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By Katie Roof

January 10, 2023 at 6:00 AM EST

This article is for subscribers only.

This article is part of the January 16, 2023 issue of businessweek.

The conventional goal for startup founders is to take their company public, with a top consolation prize being a lucrative sale to a larger company. A prime example is the $20 billion deal announced in September under which software design startup Figma Inc. would be acquired by Adobe Inc. The transaction, which is awaiting regulatory approval, values Figma at more than twice its final private valuation, securing a hefty payout for early investors. Figma founder Dylan Field is set to make $2 billion.

Overall, however, startups weren’t really cashing out big last year. Completed venture-backed acquisitions in the first three quarters of 2022 totaled $81.7 billion, according to PitchBook Data Inc., down 40.7%, from $137.8 billion in the same period the year before. No significant venture-backed tech startups went public.