One of my old buddies from business school is a venture capitalist.
When I started Crowdability about ten years ago, I asked him what the biggest myth was about early-stage startup investing.
He didn’t hesitate. “Most investors assume the goal is an IPO,” he said. “But I can tell you first-hand; most of the money gets made when companies get bought out — when they get acquired.”
At the time, this surprised me. After all, IPOs get all the headlines. And early investors can make fortunes from them, seemingly overnight.
But as my friend explained, and as you’ll learn more about today, IPOs are the exception, not the rule. Startup investors make most of their money from acquisitions.
And it looks like 2026 could be a banner year…
The Two Ways Startup Investors Get Paid
In case you didn’t know, startup investors earn their profits in two main ways:
- The startup they invested in goes public in an Initial Public Offering (IPO).
- The startup gets acquired.
IPOs can lead to massive profits, but they happen infrequently.
The most common way for startup investors to earn their profits is through an acquisition — in other words, when a startup is taken over by another company in an M&A transaction.
This makes sense intuitively. Large companies are constantly seeking growth. And often, it’s faster and less risky to buy something, rather than to build something from scratch.
For startup investors, those buyouts can be hugely profitable — even when the startup they invest in never rings the bell on the stock exchange.
2025: A Record Year for Deal Making
Despite various macroeconomic hiccups in 2025, including tariff uncertainty and geopolitical tensions, M&A activity surged.
As you can read about in PitchBook by clicking the image below, there were more than 50,000 deals completed globally, worth a combined $4.9 trillion, just shy of the $5 trillion mark.
Furthermore, 2025 marked the second consecutive year of growth in both deal count and value — the first time that’s happened in over a decade.
Heading into 2026, the global M&A market appears poised to continue its momentum…
There’s ample capital on the sidelines, borrowing costs have started to ease, and growth opportunities in areas like AI, infrastructure, and energy continue to attract strategic buyers.
Why This Matters for Startup Investors
To understand why this matters, let me share two numbers: 200 and 10,000.
In 2025, there were about 200 U.S. IPOs. But there were roughly 10,000 takeovers.
Think about that. For every company that went public, dozens were acquired.
That’s why experienced venture investors don’t rely on IPOs alone. They know that acquisitions are the most common type of “exit” — and often the fastest path to liquidity.
2026 Is Already Off to a Fast Start
We’re only at the beginning of 2026, and dealmaking is already grabbing headlines — including SpaceX’s $250 billion acquisition of xAI, the biggest M&A deal of all time.
Deals are getting done. Capital is flowing. Confidence is returning.
And if interest rates come down further, borrowing costs will ease, providing an even bigger catalyst for more acquisitions.
That’s why many analysts believe 2026 could be a banner year for M&A.
The Opportunity in Front of Us
Bottom line: you don’t need to wait for an IPO to earn your returns.
As you learned today, statistically speaking, the primary path to startup profits is M&A.
But to profit, you need to get into position now.
Ready to jump in?
Here are some startup deals you can browse through today »
Happy Investing,
Best Regards,
Matthew Milner
Founder
Crowdability.com
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