So what’s even the point of investing in startups now?

Anti-trust regulators are making it harder for larger startups to get acquired.

4/2/24 5:23PM

An investor’s thought process before investing in a startup goes something like this:

“My stake in this company won’t be liquid, and the odds of losing my money on this investment are probably, like, 90%, BUT, if the company is successful, my investment will be worth millions.”

The last six words are, as you could probably guess, the primary attraction for investing in a startup. Assuming that the company is successful, you need one of two things to happen to realize your returns:

Your company goes public.
A bigger company, such as Google/Meta/Apple/Microsoft/Amazon, acquires your company for a nice premium, you make millions, and you can add your name to the annual Midas List of top venture investors.

For over a decade, option one made a lot of people rich.

There were 539 tech IPOs between 2010 and 2021, including 46 in 2020 and 121 in 2021. Roughly three out of four of those companies were venture capital-funded, and the average valuation of successful IPOs climbed in tandem, from $545 million in 2010, to $860 million in 2015, to $4.5 billion in 2020.

And then the IPO market froze. In 2022, investors lost their appetite for new listings, and there were only 15 total tech IPOs through 2022 and 2023.

That left option two: acquisition. A playbook that has worked pretty well for startup founders over the last decade is the following:

You raise a Series A, then B, then C, then maybe another letter or two. Your valuation climbs from the 10s of millions to 10 figures, and Google/Meta/Apple/Microsoft/Amazon says, “Hey, listen, we want to acquire you for a few billion. You interested?”

You think to yourself, “Interested? Yeah I’m interested,” and you sign a letter of intent to be acquired. You’re happy, your employees are happy, and your investors are really, really happy.

Over the last five years, government regulators have increasingly added another step to this process, especially with tech startups, saying, “Hey, listen, we saw that you were about to get acquired. We’re going to sue, in the name of fair competition, to stop this deal from going through.”

An expensive, multi-month (or year) legal battle ensues, and eventually a judge either rules in favor of the merger (in which you make a lot of money) or the regulators (in which you’re “rich” in stock options only).

This is happening more and more frequently, largely because of FTC Commissioner Lina Khan.

Since taking the helm of the FTC, Khan has been quite vocal about her intent to 1) expand the definition of antitrust law beyond simply keeping consumer prices down, warning of the dangers that tech businesses such as (you guessed it) big tech companies like Amazon and Meta pose, and 2) focus on litigating rather than settling (read: suing instead of accepting merger concessions).

A brief overview of the FTC’s higher profile actions during Khan’s tenure:

The FTC sued to block Illumina’s acquisition of Grail (2024)
The FTC sued to block Kroger from acquiring Albertsons (2024)
The FTC sued to block Meta from acquiring VR company Within (2022)
The FTC filed a complaint to block Microsoft from acquiring Activision Blizzard (2022)
The FTC sued to block Lockheed Martin from acquiring Aerojet Rocketdyne (2022)
The FTC sued to block Nvidia from acquiring Arm (2021)

Most notably, the FTC saved us from the dangers of big vacuum by pressuring Amazon to drop its iRobot (the creator of the Roomba) acquisition.

The FTC has also sued Meta and Amazon on the grounds that their current business models are inherently anticompetitive.

This antimerger sentiment has been contagious among regulators, with the United Kingdom’s Competition and Markets Authority and the US’s Department of Justice blocking their fair share of big tech deals too:

The UK’s CMA blocked Adobe’s Figma acquisition (2023)
The UK’s CMA forced Meta to divest recently-acquired images platform Giphy (2022)
The US DoJ sued to Block Visa’s acquisition of Plaid (2020)

Why does all of this matter?

Public market conditions still aren’t favorable for IPOs, so M&A has become the default exit opportunity for startups. Regulatory roadblocks (or even the possibility of regulatory roadblocks) from agencies that have been quite candid about their opposition to big tech, as well as hefty breakup fees (such as the $1 billion that Adobe had to pay Figma) are enough to dissuade big tech companies from pursuing acquisitions that could raise red flags.

Meera Clark, an investor at Redpoint Ventures, summed up the situation well:

“There is a gap in the market in terms of exit opportunities: you either need to get sold for under $1 billion to avoid regulator scrutiny, or you have to be capable of hitting a more-and-more difficult IPO.”

Until IPO conditions improve, startups are in a tricky position: you want to be valuable enough to be worth acquiring, but not too valuable, otherwise the government might shut down the deal, leaving your investors and employees with millions in equity and no way to sell it.

Max Knoblauch5/29/26

The Trump administration is reportedly planning a 50% made-in-America requirement for USMCA tariff relief

Qualifying for USMCA-related lower tariffs may soon require more US-made vehicle components, according to reporting by The Wall Street Journal.

The Trump administration is reportedly planning to introduce a 50% US content requirement for vehicles covered by the trade pact to receive lower tariffs. The content would be measured by cost, according to the WSJ.

There currently isn’t any US-specific requirement for those lower tariff rates, but in order to receive preferential tariffs, vehicles are must contain at least 75% regional content (components made in North America). Per Reuters reporting, the Trump admin is seeking to raise the regional requirement to 82%.

These reported plans are subject to change as the US negotiates USMCA terms with Mexico over the next few months.

Overall, Tesla will likely have the easiest time qualifying for any stricter requirements. The automaker’s vehicles contained the highest amount of US/Canadian content in 2025, according to American University research. Ford, GM, and Stellantis all scored lower.

Notably: the underlying government data that many domestic content measurements rely on intentionally combines US and Canadian components, so it’s difficult to know exactly how much of any given vehicle is specifically US-made.

Exclusive | Trump Administration Wants Autos Under USMCA to Be at Least 50% Made in America

These reported plans are subject to change as the US negotiates USMCA terms with Mexico over the next few months.

Tom Jones5/29/26

The $640,000 Luce makes the average Ferrari look like a bargain

Put aside the shape; put aside the smoothing out of Ferrari’s iconic sharp edges; put aside, even, the calls from former Chairman and President Luca Cordero di Montezemolo to “take the Prancing Horse off.” On the grounds of price alone, Luce detractors might have a point.

By now, many of us will have read the criticisms of Ferrari’s first fully electric vehicle, as the Luce — which was unveiled to the world earlier this week and promptly saw the company’s shares crash out in New York and Milan — gets subtly shaded by competitors online and not-so-subtly shaded by basically everyone else.

What makes all of this worse for Ferrari is that, even by the luxury car maker’s notoriously high standards, they’ve slapped a pretty hefty price tag on the Luce, and the company’s CEO, Benedetto Vigna, has already been forced to defend the €550,000 ($640,000) price point, saying yesterday that it’s “fair to pay for innovation,” per Reuters.

While Ferrari’s cars have been getting more expensive of late, as recently as 2022, Ferrari’s average revenue per car sold was around $340,000. At nearly twice that price, this new electric model is obviously proving a little much (visually, conceptually, and financially) for many loyal and long-standing fans of the Prancing Horse to stomach.