After years of using the Matterhorn database in this column to report on M&A, the journalist has become the story: Matterhorn Transactions will be acquired by DealPulse, Inc. The deal seeks to combine Matterhorn’s extensive deal analytics offerings with the infusion of additional artificial intelligence technology that DealPulse and its parent, Maker5 Venture Studio, provide.
Matterhorn was founded by a team including Mark Gerson, John Cooper, and Logan Beirne (this author) in 2011 when Goldman Sachs approached them with their desire for an analytics platform to quantify competitive market deal terms. When Matterhorn enlisted attorneys from Kirkland & Ellis and Debevoise & Plimpton to build the system, they quickly realized the value of this information for attorneys as well – and Matterhorn’s product was quickly adopted by law firms across the U.S., U.K., and Canada.
According to the deal’s press release, “This union will bring together the technology and attorneys to enable clients to know precisely the frequency, form, and language of transaction terms with their own proprietary deal databases,” said Sanjay Kamlani, CEO of Maker5, “Under Logan’s brilliant leadership, Matterhorn has worked with leading firms to build a multinational business processing both public documents as well as attorneys’ client documents securely behind each firm’s firewall.” This author questions the use of “brilliant,” but will take praise where he can get it.
The deal arrives during trying times for angel and venture-backed companies. The old adage that 90% of startups fail within the first 3 years is actually too kind: the correct statistic is 91.6%. 543 startups have shut down through Q3 2023, compared to 467 during the full year of 2022.
Startups cite running out of cash as the top reason for shutting down, according to CBInsights. As interest rates rose at an unprecedented rate over the course of 2022-2023, the liquidity that had flooded the economy during the pandemic quickly dried up, leadings companies strapped. Venture Capital dropped by 50% in 2023 just as startups faced more expensive loans, rising labor costs, and economic headwinds that cut into revenues. This perfect storm led many to businesses to fold.
Despite the odds, the chance of success drives the American innovation machine, which continues to outshine the other nations’. The U.S. produces more startups than other countries – by far.
Analysts cite multiple reasons for this phenomenon. First is American culture, which promotes “forgiveness of failure, tolerance of risk and an appetite for apparently off-the-wall ideas,” according to John Kao, former Harvard Business School professor and the founder and CEO of EdgeMakers. This culture helps create that drive to venture out and pioneer new areas, all while tolerating those ventures that fail. Second, analysts point to government policies that fund basic research, encourage public-private partnerships, as well as tremendous investments in national security technologies. Finally, American innovation is drive by the waves of immigration that throughout the nation’s history have brought together various peoples and ideas. “The U.S. certainly still attracts the energetic, the ambitious and the dissatisfied, which continues the cycle of innovation.”
Entrepreneurs tend to be optimistic individuals, and their predictions for 2024 are just that: they expect startup growth to rebound over the course of the year as venture capital funding returns and the icy IPO market thaws. Venture capitalists are likewise optimistic. The predict that artificial intelligence will drive greater efficiencies and valuations. DealPulse is counting on it.