The silent M&A wave: when a sale beats the next funding round

Paul describes an M&A wave that is easy to miss: founders who sell before their next funding round. Not because they are out of cash, but because the valuations of 2021 and 2022 are not coming back.

In one minute

• Valuations have reset. The BVP Cloud Index fell from around 28 times revenue in late 2021 to 6.3 times by June 2026.
• Miro was sold to Bending Spoons at an enterprise value of $1.355 billion, close to 90% below its 2022 valuation of $17.5 billion.
• In a down round, liquidation preferences can leave founders with nothing: in the article's example, investors take the entire price of a EUR 45 million sale.
• Down rounds are common again. Cooley counted them in 19.9% of its Q3 2025 financings, and 95% of deals carried a 1x preference.
• Founders who look at a sale while they still have runway can create competition between buyers. Those who wait until the money runs out cannot.

The liquidation preference trap

Investors usually get their money back before founders see anything. Paul's example: a company raised EUR 10 million at Seed and EUR 25 million in a Series A, and now needs EUR 20 million in a down-round Series B. With 1x preferences and the new round first in line, EUR 55 million sits ahead of the founders. A sale for EUR 45 million can go entirely to the Series B and Series A investors.

Bending Spoons and the buyers of fallen stars

Bending Spoons is the clearest European example of this market. It bought Airtable, Vimeo and Eventbrite for a fraction of what they were once valued at. According to its IPO prospectus, it looked at more than 2,500 acquisition opportunities in 2025, analysed about 200 in depth and completed six.

What it means for founders

Paul's conclusion: selling is not an admission of failure, and raising another round is not proof of conviction. Both are capital-allocation decisions. The founders who get the best outcome are the ones who weigh their options early, quietly and before the decision is forced on them.

This is a summary. The full article first appeared in The Recursive. Read it there (opens in a new tab)