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Why Startups Are Selling Early
Series A startups are being acquired, the startup that sold to Spotify, and more...
SearchVentures
September 25, 2024
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Series A Leads Acquisitions
In the first half of 2024, Series A startups have seen the highest number of acquisitions, totaling 89 and surpassing all other funding stages.
What's driving the early-stage exits?
This Week’s Trends
Increase in Series A exits
The AI voice startup acquired by Spotify
€100 million for drones and more
Read Time 4 minutes
The Startup Trend
Early startup acquisitions
Series A startups are the most frequently acquired across all funding stages, based on half-year measurements since 2021, with 89 acquisitions occurring in H1 2024. This highlights a key phase in startup growth where acquisitions peak.
> Pre-seed round acquisitions, often linked to ‘acquihires’ or feature/employee grabs, also maintain a strong presence in M&A activity.
> Despite the media spotlight, late-stage acquisitions represent only a small portion of the overall market, with far more action occurring in earlier rounds.
💡Rising startup M&A activities via private equity (highlighted previously) indicate continued growth across all funding stages in 2024.
Startup feature
Sonantic's $120 million Spotify Deal
Sonantic, a London-based AI voice startup, was acquired by Spotify for $120 million just four years after its launch. With only $3 million in funding, the team—led by Zeena Qureshi and John Flynn—developed AI voices so realistic they were used to recreate Val Kilmer’s voice in Top Gun: Maverick.
Starting Lean and Scaling Fast
Despite only $3 million in funding, Sonantic scaled quickly by securing partnerships with top-tier game developers and entertainment studios, allowing their AI voice technology to be tested and refined in real-world projects.
“We built something that didn’t just speak, but could cry, shout, or even flirt.”
One of their breakthrough moments came when they worked on recreating Val Kilmer’s voice for Top Gun: Maverick, using their AI to restore Kilmer’s voice after his battle with throat cancer. Rather than chasing AI hype, Sonantic focused on solving a real-world problem, quickly applying their technology to practical use cases.
Here is a video demo of the realism behind Sonantic’s AI Voices
How They Got Acquired by Spotify
By 2022, Sonantic’s continuous product development had attracted Spotify. By staying lean and focusing on the practical applications of their technology, the founders Zeena Qureshi and John Flynn positioned themselves in the ideal place for an acquisition.
“The real value of our work was the technology behind it; we were waiting until we could either collaborate or directly sell to a big player in the space.”
The streaming giant was looking to enhance its platform with more engaging, voice-driven interactions. Sonantic’s emotionally expressive AI voices fit perfectly with Spotify’s goal of offering personalized, voice-based recommendations and content delivery — integrating the technology into their ecosystem of music streaming.
“We’re excited about the potential to bring Sonantic’s AI voice technology onto the Spotify platform.”
From $3 million in funding to four years later signing the papers on a $120 million acquisition, it was a significant payout for the founders. Sonantic had successfully captured the AI trend and beaten their competitors by providing an immediate practical application of their idea and technology.
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Headline News
This Week In Startups ✍️
Founders
> Quantum Systems, a Munich-based drone manufacturer closed €100 million Series B for small dual-use Unmanned Aerial Systems.
> Desia, an AI-driven platform for investment professionals founded by the person behind Italy’s first unicorn, raises $3.3 million .
> Notpla, a UK-based startup, making plastic-free packaging has raised £20 million as it looks to expand in the US..
Investors & VCs
> Acurio Ventures, rebranded from All Iron Ventures, closes its third fund of €150 million for follow-on investments.
> Capmont Technology, a Munich-based VC, raises €100 million fund to back early-stage B2B startups in Europe and the US.
> Headline, a US- and Berlin-based VC, raises $865 million growth fund and is eyeing defence and pharma startups.
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Cheers,
Odin Lund & Hari Mohandas
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