Startup M&A: Winners & Losers during Covid-19

Winners & Losers during Covid-19

In times of crisis, corporate giant’s needs can shift drastically and cause them to set sights on new and potentially game-changing mergers and acquisitions. For startups looking for an exit during Covid-19, this has resulted in some clear winners and clear losers.

During the pandemic, many tech companies have shifted a ton of focus into remote functionality and connectivity in order to facilitate remote workers. This has created a huge need for remote operability, e-commerce innovations, scalability, and even data security. People across the world have had no other choice but to resort to remote options in order to remain productive and connected with co-workers and loved ones. The need for enhanced infrastructure, security, and scalability are paramount for companies who want to be able to offer enhanced services during times of crisis and who also want to prepare for another (perhaps more serious) event in the future. 

2020 has already been a year of very important acquisitions that are demonstrating what types of startups have necessary and hyper-relevant services that are being targeted by the big players. Some of the most prominent acquisitions of the year so far include:

Teleconferencing App BlueJeans Acquired by Verizon

After the unprecedented spike in video calls and teleconferencing platforms, the popular BlueJeans platform caught the attention of media giant Verizon. According to Tami Erwin, CEO of Verizon Business, “Collaboration and communications have become top of the agenda for businesses of all sizes and in all sectors in recent months. We are excited to combine the power of BlueJeans’ video platform with Verizon Business’ connectivity networks, platforms, and solutions to meet our customers’ needs.” This acquisition is yet another example of how this worldwide crisis is shifting the focus of even the largest tech conglomerates in the world. 

Verizon acquires Bluejeans in early 2020

Keybase Acquired by Video Conference Giant Zoom

Keybase is a tech company that specializes in something called end-to-end encryption, which basically means that they ensure content and data cannot be observed by anyone outside of the participating parties in a chat or video call. The data security company was targeted by Zoom founder Eric Yuan after they announced a 90-day overhaul of their security and privacy infrastructure. This overhaul was triggered by the immense flow of traffic to their platform s a result of the quarantine orders. Students, workers, and families alike all had concerns over the privacy and security credentials of Zoom and led to them acquiring a startup that focuses on advanced encryption methods.

Eric Yuan, CEO Zoom

DocuSign acquires Seal Software

The e-signature specialists at DocuSign announced the acquisition of Seal Software as a result of their desire to add advanced machine learning functionality into their stack. Seal specifically designed machine learning and analytics software for digital contracts, which aligned perfectly with DocuSign’s mission to provide smarter and easier to access digital contracts and signatures. The massive push towards remote functionality has placed pressure on DocuSign and forced them into the spotlight, which is a major motivator for improving the functionality of their software. 

What’s Next?

Overall, the worldwide crisis we have all experienced has created a new focus on certain types of software and technologies that promote remote functionality and allow for disconnected productivity when people are not able to gather together. This is rapidly becoming the new normal, and as we have seen from the acquisitions happening over the last couple of months, companies are pouring resources trying to ensure remote functionality, throughput, and value for a changing world. 

The startup landscape is heading in a direction that is favoring increased remote productivity, data security, and simply any service that helps people stay busy, connected, and productive from the comfort of their living room. In these times of crisis, startups face a unique opportunity of necessity. Startups that can create advancements in independence, security, interconnectivity, and scalability will be the ones that end up becoming big winners – and will ultimately land themselves in the crosshairs of the Corp-Dev departments of the Big Company world. 

Daren Trousdell is an early stage investor, advisor and founder focused in the Fintech and Digital Media space.

Leave a reply:

Your email address will not be published.