Buying a startup can work out very well. Just ask Meta about its Instagram purchase in 2012 or let Google tell you about its $50 million acquisition in 2005 of a little company called Android.

But while success stories happen, it’s also true that many purchases work out badly. Acquirers might find they overpaid, face regulatory backlash, failed to scale the business, or have determined it isn’t a strategic fit.

Such acquisition-gone-awry narratives often proliferate when business cycles shift — as they did in the past two years. Deals crafted in boom times can look ill-conceived in an environment of falling valuations and tougher financing.

A newer case in point is Drizly, the booze-on-demand provider that Uber swallowed up in 2021 for $1.1 billion. News came out last week that the ride-hailing giant decided to close down the service, which has suffered breaches, and focus its food and beverage strategy on Uber Eats.

Who else faced a similar reckoning over a pricey startup acquisition made in the past few years? Using Crunchbase data, we scanned over the largest purchases of venture-backed companies in the past four years, looking for some that haven’t worked out as hoped.

Below, we list our top examples of not-great outcomes, along with a look at what transpired:

No. 1: Teladoc-Livongo

Livongo, known for its diabetes remote management platform, wasn’t exactly a startup when virtual care provider Teladoc Health purchased it in 2020 for a whopping $18.5 billion. Founded in 2008, Silicon Valley-based Livongo raised a couple hundred million in venture funding before going public in 2019. The company subsequently saw its valuation and revenue soar alongside telehealth adoption rates during the depths of the pandemic.

What might’ve looked like a win-win deal for both Livongo and Teladoc in mid-2020, however, rapidly developed into a lose-lose scenario. Teladoc, which had a market cap close to $50 billion in early 2021, is now valued at just over $3 billion by that metric.

No. 2: Shopify-Deliverr

In 2022, Shopify paid around $2.1 billion to acquire San Francisco-based Deliverr, a provider of shipping and fulfillment services for online merchants. The timing looked right, as the deal came on the heels of a pandemic-induced spike in e-commerce. It didn’t hurt that Shopify shares had hit an all-time high several months before the acquisition closed.

Over subsequent quarters, however, Shopify shares fell sharply. In May 2023, the Ottawa-based e-commerce software and services provider disclosed that it would lay off 20% of its workforce and sell its logistics business — which included Deliverr — to freight software platform Flexport. The deal reportedly fetched just a fraction of the price Shopify had paid for Deliverr just a year earlier.

No. 3: Meta-Giphy

In 2020, when Meta inked a $400 million deal to acquire Giphy, the New York startup known for its vast, searchable library of animated GIFs, the combination sounded like a strategic win. Social media users were avid fans of Giphy’s offerings, which provided a quick way to add color to their posts and responses.

Unfortunately for Meta, antitrust enforcers didn’t think so fondly of the tie-up. Meta decided several months later to sell Giphy, after facing backlash from British regulators concerned the deal would lessen competition in social media and the display advertising market.

In the end, the purchase turned into a loss, with Shutterstock announcing in May that it was acquiring Giphy from Meta for $53 million.

No. 4: JP Morgan-Frank

In September 2021, JPMorgan Chase paid $175 million to acquire Frank Financial Aid, a college financial planning platform that claimed to serve more than 5 million students at thousands of U.S. higher education institutions. It wasn’t a large sum for the financial giant, which touted the deal as part of a strategy to broaden its reach with students and young adults.

Little more than a year later, it became clear to JPMorgan that Frank hadn’t been entirely frank about its success. In a lawsuit, the banking giant charged that the startup and its founder, Charlie Javice, had lied about the company’s size and market penetration. Frank’s website is no longer operational, and Javice was indicted in April on multiple fraud charges.

No. 5: Uber-Drizly

Lots of strategic acquisitions don’t work out as hoped. But what’s unusual in the case of Uber’s purchase of alcohol delivery service Drizly is just how much money went into a deal that ultimately didn’t provide much apparent upside.

In the end, Uber may have gotten some IP, industry connections and insights, or other value. But for the $1.1 billion it paid, one would expect more. At least, you would think, a branded service that was valuable enough to keep around.

No. 6: 23andMe-Lemonaid Health

In October 2021, when genetic testing provider 23andMe announced plans to acquire on-demand health care platform Lemonaid Health, markets were in a much bubblier state. Just a few months earlier, 23andme had made a well-received debut on Nasdaq through a SPAC merger deal that valued the company around $3.5 billion.

But market conditions change, and, in retrospect, it’s clear 23andMe didn’t get a valuation boost from the $400 million deal, which consisted of $100 million in cash and $300 million in stock. Recently the company, which continues to own and operate Lemonaid, had a market cap around $317 million.

Why buy?

M&A activity involving venture-backed companies has been pretty slow in recent quarters. And seeing so many prominent examples of big deals that didn’t work out doesn’t help stoke optimism.

Stepped-up scrutiny from antitrust regulators has also played a role in stifling acquisitions by the most valuable technology companies. Even large deals well on their way to closing — such as Adobe’s planned purchase of Figma — may face late hurdles that prove unsurmountable.

Still, the deals that work out well can deliver extraordinary returns. If only there were more of them.

Illustration: Dom Guzman