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Even for Hot Start-ups, Billion Dollar Paydays are Rare

Tech start-ups may be attracting more money than ever, but that doesn’t mean a billion dollar payday is easy to come by.

Of all start-ups that were sold or went public in 2013, only about 1 percent garnered a billion dollars or more, according to CB Insight’s Global Tech Exit Report. That amounts to only 19 of the 1,824 private tech companies that went public or were acquired last year.

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Most went for less than $200 million, and a little less than half were under $50 million.

Megadeals the size of Facebook‘s purchase of WhatsApp for up to $19 billion are rare. In fact, that deal is equivalent in size to 250 tech exits that occurred in 2013, according to the report.

In other words, the social networking giant could have purchased 78 percent of all companies that disclosed M&A exit valuations last year for the same price it paid for the mobile messaging app.

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Still, 2013 was pretty big for tech deals worldwide, with 1,761 companies getting acquired and 64 going public.

Most activity occurred in the last two quarters, with 46 percent more private tech mergers and acquisitions and 63 percent more IPOs than in the first half of the year. In the fourth quarter alone, there was 534 M&A deals and 23 IPOs.

Who was buying all these companies? Yahoo—which purchased companies like Tumblr, Rockmelt and Bread—was the top tech acquirer in 2013, followed by AppleIBM and Facebook.

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Venture-backed tech companies accounted for 432 acquisitions and 39 IPOs. Internet and mobile-based software companies accounted for most of the venture backed tech exits, making up three of every four venture-backed tech exits in 2013.

The VC firm SV Angel led investors with the most M&A or IPO exits in 2013, followed by Accel Partners and Lightspeed.

About the author: Cadie Thompson

Cadie Thompson is a technology editor at CNBC.  She is always plugged in and yet also wireless.

  • http://www.mistaweb.com/ Horst G Ludwig

    there is also a shift to Asia and to other markets Alley Watch obviously doesn´t observe nor control. Contrary to the purchase of WhatsUpp, which by the way isn´t a Start Up at all, big business has left the US and might not come back. World has become sick of US corps and US foreign politics and if a domestic industry manages to call for attention because of success there are hostile attacks from both, the tax system and the bitter mood of US mayority not successfull at all.
    Tell you readers about it because there are 526.000 new start ups every month in the US and desperation ain´t a good teacher. 80 to 90% wont do it anyway or did you ever hear about 6 million start up companies (USA per year) having solved the US economy tunnel journey? And check 10 years past because the fraudulent finance system effected the US economy since 2005 already.
    You young and non experienced folks reading shall build company groups and learn to control international expansion and growth strategies.

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