Since 1999, StarVest has acknowledged the importance of M&A in growing a company and continues to emphasize that acquisitions made complementary to organic growth can be vital to a company’s continued success.  In FY 2015, AppDirect, a StarVest II portfolio company which attained unicorn status, made two strategic acquisitions: AppCarousel, a leading provider of app management platforms for connected autos and other smart devices, and RadialPoint, a provider of cloud services for SMBs. In conjunction with AppDirect’s stellar 2015 performance, these acquisitions have contributed substantially to the company’s year-over-year revenue growth and helped propel it further into market dominance. In a October 2015 McKinsey report titled “Grow fast or die slow: The double-edged sword of M&A,” three salient points are made relating acquisition to growth in software and online-services companies, enumerated below:

  1. Low-volume acquisition programs disrupt growth; high-volume programs accelerate growth
  2. Successful acquisition programs complement organic growth
  3. Successful acquisitions align with the company’s growth strategy (whether this improves the scale of the offering, fills a gap in the offering, or expands beyond the current offering)

As corroborated by the growth strategies of our portfolio companies over the years, StarVest adamantly believes a well-managed acquisition strategy can be significant driver for B2B/SaaS, technology-enabled companies.

If you’d like to read more on this topic, visit Grow fast or die slow: The double-edged sword of M&A