After WhatsApp, Nest and Oculus, the next biggest deal this year was VMware Inc.’s $1.54 billion purchase of AirWatch LLC, whose technology helps businesses protect and manage mobile devices. The four deals in the first three months of this year match the total number of billion-dollar acquisitions of venture-backed companies in 2012 and 2013 combined, according to data compiled by Bloomberg.
There’s been almost no acquisition-related money to be made in the public technology market. Lenovo Group Ltd. is spending about $5 billion buying the Motorola Mobility handset business from Google and the low-end server unit from International Business Machines Corp. The only other big purchase so far this year was RF Micro Devices Inc.’s agreement in February to acquire TriQuint Semiconductor Inc. for $1.59 billion.
On the Oculus deal, Matrix and Spark made about 20 times their money, while Sequoia Capital parlayed an investment of $58 million in text messaging company WhatsApp into about $3.5 billion. Nest, a maker of Web-connected thermostats, provided more than 15-fold returns to backers Kleiner Perkins Caufield & Byers and Shasta Ventures.
Diversity Risk
One potential risk in the current market is the lack of diversity among acquirers. Facebook and Google are spending on startups, though they have few rivals when it comes to seeking billion-dollar deals.
Yahoo! Inc. bought blogging company Tumblr Inc. last year for $1.1 billion and AirWatch was VMware’s second purchase in two years, after the $1.26 billion acquisition of software networking startup Nicira Inc. in 2012.
That doesn’t mean others aren’t looking. Oculus had plenty of interest in addition to Facebook, said Antonio Rodriguez, an Oculus board member and partner at Matrix in Boston.
“This is not a company that has lacked for suitors along the way,” Rodriguez said. “Facebook just did a much better job talking to the team.”