A surge in IPOs and M&A isn't driven by pro-business policies, but by a reduction in policy uncertainty. With a clearer, albeit more interventionist, landscape, companies have the confidence to execute major strategic plans they had previously postponed.

The number of startups founded in China dropped from 51,000 in 2018 to just 1,200 in 2023, a 98% decrease. Roelof Botha attributes this collapse to unpredictable government regulations that stifle entrepreneurial risk-taking, serving as a warning for how policy could impact innovation elsewhere.

With hundreds of unicorns and only about 20 tech IPOs per year, the market has a 30-year backlog. Consolidations between mid-size unicorns, like the potential Fivetran and dbt deal, are a necessary strategy for VCs to create IPO-ready companies and generate much-needed liquidity from their portfolios.

A significant shift has occurred: private equity firms are no longer actively pursuing acquisitions of solid SaaS companies that fall short of IPO scale. This disappearance of a reliable exit path forces VCs and founders to find new strategies for liquidity and growth.

The most lucrative exit for a startup is often not an IPO, but an M&A deal within an oligopolistic industry. When 3-4 major players exist, they can be forced into an irrational bidding war driven by the fear of a competitor acquiring the asset, leading to outcomes that are even better than going public.

Meta's victory over the FTC's antitrust challenge is not just a legal footnote; it signals the end of a highly restrictive regulatory era. This will likely trigger a massive wave of M&A, as large tech companies are now emboldened to acquire stagnant, late-stage private "unicorns" that have been stuck without an exit path.

M&A activity is not constant; it ebbs and flows with the political climate. Administrations perceived as "anti-M&A" can significantly slow deals. Founders looking for a strategic acquisition should consider the current political cycle as a key factor in their exit timing.

The trend of companies staying private longer and raising huge late-stage rounds isn't just about VC exuberance. It's a direct consequence of a series of regulations (like Sarbanes-Oxley) that made going public extremely costly and onerous. As a result, the private capital markets evolved to fill the gap, fundamentally changing venture capital.

In a fast-moving field like cybersecurity, it's impossible to build everything in-house. By treating M&A as an extension of the R&D department, a large company can leverage the venture-backed ecosystem to acquire innovative teams and products that are already validated.