Back in the good old days for Silicon Valley in 2021, unicorns, private companies worth over a billion, became more abundant and bigger than ever before. But with the IPO market largely shuttered, M&A was expected to take off in early 2023. But that hasn’t happened. With high inflation, tech companies cutting costs, and a crackdown by antitrust regulators, M&A activity across stages and sectors has nosedived—meaning yet another exit ramp is blocked off for many startups. According to PitchBook-NVCA Monitor, acquisitions of venture-backed startups saw their lowest quarterly level in a decade. 

And those worth the most are having serious trouble finding buyers. Currently, there are 704 active unicorns with an aggregate post-money valuation of about $2.4 trillion, according to PitchBook. “Unicorns are likely to face significant challenges when sourcing potential acquirers due to limited buyer interest, and the recent decline in M&A activity coincides with the current economic downturn—only $39.6 billion in U.S. acquisition value has occurred since the beginning of 2022, which makes it the least active year since 2015,” explained PitchBook venture capital analyst Vincent Harrison in today’s research note about M&A among unicorns. 

Companies are largely choosing to hold off on buying even potentially profitable startups due to high inflation and pressure to cut costs. What are they turning to instead? “So far, share buybacks have been favored over M&A, with buyback announcements hitting a record high of $1.2 trillion in 2022,” explained Harrison. 

Another reason ambitious tech companies are wary of purchasing a unicorn is the antitrust push from President Biden and the federal government to stop companies from amassing huge swaths of market share. Meta is currently being sued by the FTC for antitrust violations related to its acquisitions of WhatsApp and Instagram. “This crackdown is likely to continue, affecting cash-starved unicorns seeking acquisition by large corporations,” explained Harrison. “So much so that many would-be acquirers may choose not to pursue deals altogether, further limiting exit opportunities available to unicorns and reducing their bargaining power and valuation, he added.

The bottom line? Once high-flying unicorns could start hitting the market for cheap. “The combination of limited exit options and the need for private capital may drive some unicorns to accept discounted acquisition offers as a means to either survive and/or generate some sort of return for themselves and investors,” said Harrison. 

Companies may not be looking to buy startups right now, but many are looking to sell them. Take Bonobos, the menswear brand that made headlines when it was acquired by Walmart in 2017 for an eye-popping $310 million. Last week, Walmart sold the brand to management firm WHP Global and fashion retailer Express at a staggering $75 million loss. As the economy worsens, experts expect the trend of huge corporations offloading their formerly heralded acquisitions to continue. “I think we will see more money-losing divestitures by corporate acquirers that made deals that fail to [earn back their investment,” explained business professor at Babson Peter Cohan. 

Can Chat GPT game the market? According to researchers at the University of Florida, Alejandro Lopez-Lira and Yuehua Tang, the answer is yes. “Our results suggest that incorporating advanced language models into the investment decision-making process can yield more accurate predictions and enhance the performance of quantitative trading strategies,” they wrote in the study. I spoke to the researchers about what their findings mean for investors, asset managers, and regulators. You can see what A.I is (and isn’t) good at when it comes to investing here.

Until next time,

Lucy Brewster
Twitter: @lucyrbrewster
Email: Lucille.brewster@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- SPAN, a San Francisco-based home electrification technology provider, raised $96 million in Series B2 funding. Wellington Management led the round and was joined by Congruent Ventures, Capricorn Investment Group, Qualcomm Ventures, Fifth Wall, Munich Re Ventures, A/O PropTech, and Amazon’s Alexa Fund, among others. 

- Super.com, a San Francisco-based savings app company, raised $85 million in Series C funding. Inovia Capital led the round and was joined by Hyphen Capital, EDC, Plaza Ventures, and others.

- Enveda Biosciences, a Boulder, Colo.-based natural product drug discovery platform company, raised an additional $51 million in Series B funding. Kinnevik led the round and was joined by KKR cofounder and co-executive chairman Henry R. Kravis, FPV, True Ventures, Dimension, and Wireframe.

- Avalor, a Tel Aviv-based security info organization company, raised $25 million in Series A funding. TCV led the round and was joined by Salesforce Ventures. 

- ​​Sonet.io, a San Jose-based onboarding platform for remote workers, raised $6 million in seed funding co-led by The Hive and WestWave Capital.

- Stack Identity, a Menlo Park, Calif.-based identity and access management (IAM) governance automation platform, raised $4 million in seed funding co-led by WestWave Capital and Benhamou Global Ventures.

PRIVATE EQUITY

- Silver Lake Management agreed to acquire Software AG, a Darmstadt, Germany-based software and technology services and solutions provider. The deal values the company at about €2.2 billion ($2.4 billion).

- CTI, backed by Bluestone Investment Partners, acquired Rapid Imaging, a Middleton, Wis.-based defense software provider. Financial terms were not disclosed.

EXITS

- I Squared Capital agreed to acquire Enva, a London-based recycling and resource recovery solutions provider, from Exponent. Financial terms were not disclosed.

OTHER

- Harris Williams, a Richmond, Va.-based investment bank, and Sixpoint Partners, a New York-based investment bank, agreed to a merger. Financial terms were not disclosed.

PEOPLE

- Headline, a San Francisco-based venture capital firm, hired Sophia Samutin as a vice president. Formerly, she was with Oak HC/FT.

- Spectrum Equity, a Boston- and San Francisco-based growth equity firm, hired Dan Kimball as CMO. Formerly, he was with Yelp.