The Googlepon deal rumor du jour is Google (GOOG) will pay $5.3 billion for Groupon (Cf. $2.5 billion as of yesterday). Since we know anything can happen before “The Ink is Dry and the Cash is in the Bank,” I recommend every startup which raised capital collectively pray this price tag is media sensationalism.
Since the IPO market is not as available an exit strategy as in years past, investment pitch decks seem to be heavily skewed toward acquisitions by guerrillas such as Google and Facebook. And we all know what happens when a large number of things all rush to escape from one small exit.
In this case, if sugar daddy Google uses $6 billion to acquire white hot Groupon, that’s $6 billion less available for future acquisitions. For those who think in terms of diffusion, that means the exit just got smaller while the crowd rushing to the door remains the same size.
Right now the startup space is undergoing an awesome phase of capitalist creation. However, deals like Googlepon should remind entrepreneurs and investors alike that a rapturous phase of capitalist destruction will inevitably claim most of the companies which cannot survive without a shining white knight’s acquisition.