While I do see this as great news (for all the reasons others have outlined), I wonder how this will impact VC in the future; If the current goal is for companies to get VC money, burn that cash for years and years and years, and then have a huge IPO or acquisition (that makes it all worth it), it would seem regulatory issues would start to scare away investment.
I think the main effect will be to push VC funded companies more towards sustainable growth, with less emphasis on growth at all costs. This strikes me as a good thing overall. That probably won't harm the fundraising prospects for solid businesses much if at all.
Highly speculative or hyped companies will probably have a somewhat more difficult time attracting VC investors, but so many of those turn out to be frauds or vaporware that I'm not too concerned. Companies like the ones that benefitted from the SPAC boom a couple years ago. Most of those ended up being highly overvalued companies that lost money for the post-VC investors.
Eh, this is probably true. It was fun in the days when it was all about getting acquired by Google or Facebook, but I guess this spurred a lot of unsustainable businesses. If you were making revenue you were seen as dumb. "Lol, why would you charge money? Doesn't you know how to build a business?"
A couple agencies having certainly been flexing like that
The chilling effect may be more around the design tools market specifically
The case of Adobe is a bit different than anti-monopoly movements against other $T because the lack of 'serious' $100B+ market cap competitors here. So while say an adtech can have multiple big buyers in the $100B+ club, it's unlikely to see Autodesk, Corel, Canva, etc to do a $20B purchase here. AFAICT only Microsoft would sensibly be able to put its hat in the ring at high levels, made even more sane b/c the GitHub purchase, but even that was at $7.5B. So if there is no such thing as a decacorn in design tools b/c Adobe can't do big M&A, then VCs are only looking at exits at $1B, and funding + valuations get less frothy vs other markets.
All that starts mattering around Series A or Series B stage, as they look at how much $ they can exit at, and how big of a follow-on round the company can get with the same constraints. If a VC has a fund of > $50M, a pitch that cannot exit at above $B may break their portfolio design.
If they just wanted to cash out, they could still IPO or be acquired by almost literally any other company in the country. Adobe might be the only one who cause regulatory issues.
I'd rather have "regulatory issues" in a case like this even if it does slow down VC money
I’d hope this somehow influences regulators too. 15+ months of uncertainty and it’s the tiny UK market that tanks things. The lack of regulatory certainty will push for more lobbying and influence peddling which I think is net worse for the global industry.
It's not really the UK regulator's fault though, if anything they were the best as they gave their response first (a provisional no). The EU was still investigating and the US DOJ was also preparing similar investigations. The CMA also provided Adobe with a list of changes they could make in order for the application to be approved, so it's not even like they were unwilling to entertain it.
As we saw with the Blizzard acquisition the UK CMA will bend to international pressure if it's the only one holding out.
> the Blizzard acquisition the UK CMA will bend to international pressure if it's the only one holding out.
I read that MS agreed to remedial changes for the purchase to be approved by CMA, but those changes were the same ones that CMA originally asked for at the start that MS refused. So CMA got what it wanted but it's still seen as a MS as eventual winner and CMA loser.
> it would seem regulatory issues would start to scare away investment
In certain narrow cases maybe, where you really want the monopoly-holder to buy the startup. But overall this is better for VCs because competition breeds both investment and acquisition opportunities. In most cases 3 big competitors seeking to acquire your startup is better than 1 big monopoly seeking to acquire your startup.
I think the door is still open for Microsoft, Google, Apple or Salesforce to make a play. Figma was rumored to have approached Microsoft during their talks with Adobe but Microsoft declined to put in an offer as they were working through the Activision Blizzard acquisition at the time. Either one could probably get a "deal" at a $10-$15b valuation.
100% agree. I thought similarly with Plaid and Visa. It feels like it will stifle competition because it's now harder to get funding. Back when Facebook and Google were making so many acquisitions, it seemed like money was just flowing. Bad for competition. Good for incumbents.
