Buying Speed: Acquisitions as a Route to Market

For EU and US start-ups that have moved beyond early promise, market expansion is often the next binding constraint. This chapter examines acquisitions from the perspective of the start-up doing the buying: what a scale-up can obtain faster through a transaction, why that strategy appears more often among rising superstars and digital firms, and how market geography changes the choice. The aim is not to celebrate acquisition as a shortcut, but to show when it can convert capital into customers, capabilities, and reach—and when the integration and competition costs may outweigh the speed.

The Acquirer Is Also a Start-up Strategy

Start-up acquisition is usually discussed as an exit. A young company develops a product, attracts attention, and is bought by an established firm. That perspective matters for founders and investors, but it leaves out a different question: how does a start-up itself grow once organic expansion is no longer fast enough? The OECD study turns the lens around and examines scale-ups as acquiring firms.

An acquisition is a form of inorganic growth. Instead of building every capability internally, the start-up obtains a controlling stake in another company and takes responsibility for combining what it has bought with what it already does. In the report’s data, an acquisition means obtaining more than a 50.01% stake. The economic mechanism is broader than ownership. The transaction may give the acquirer immediate access to customers, a geographic market, technical knowledge, specialised employees, complementary services, or operating capacity that would take years to develop internally.

The time advantage can be substantial when the missing asset is difficult to reproduce. Suppose a digital scale-up has a product that works in its home market but lacks a sales team, a local customer base, or a service capability in another country. Organic expansion would require recruiting, learning the market, building relationships, and establishing operations in sequence. An acquisition can bring several of those elements together. It does not remove the need to integrate them, but it can move the company’s starting point closer to the desired market position.

The same logic applies to technology. A firm may acquire an adjacent capability rather than duplicate years of research and development. An ICT company might buy another ICT firm to deepen a platform, but it might also acquire professional services or another non-core business to make the product easier to deploy, support, or sell. In the OECD data, ICT firms frequently acquire other ICT firms, but only about 40% of targets of ICT scale-ups are in ICT. The substantial share outside the acquirer’s core sector is consistent with a strategy of capability and organisational complementarity, not only technological consolidation.

That choice becomes more valuable when the market rewards speed. Digital markets can have strong network effects: customers, developers, data, or complementary services make an established platform more attractive. Sectors with high fixed costs can also reward firms that reach sufficient volume quickly. In either setting, an acquisition may help a start-up obtain the assets required to compete before a window closes. The acquisition is not valuable because it is a transaction; it is valuable if the assets shorten a route to a defensible market position.

The observed data fit that mechanism.