It's low risk from the acquirer's point of view. Somebody else paid for that research, you just get to buy it once it's proven itself sufficiently to your liking.
The tv series Silicon Valley has a good episode where they discuss the importance of a start-up not having any revenue. Being pre revenue apparently means unlimited potential, with any level of revenue being bad, as you always have to grow it.
I don't exactly disagree. But the word "obvious" doesn't work very well during a bubble. Sure, yes, the current revenue doesn't justify the purchase price. But that doesn't mean that anything justifies the purchase price.
We can't work backward rationally from "this deal makes sense" and get to "here's why". Corporate acquisitions often don't work that way, even when there's no bubble. The price is often just not justified at all. By anything.
In many cases they're just capitalizing testosterone.
It could mean different things I guess, but here’s my take:
If you do very risky R&D in a big corpo then the risk creeps into other things: other projects might look at the R&D and say, “we will just use that when it’s done”. It’s a lazy kind of move for tech leaders to make, because it makes you look like a team player, and if the R&D goes belly up then you have someone else to blame. This ultimately leads to risky R&D in a big corpo not being compartmentalized as much as it should be. If it fails, it fails super hard with lots of fallout.
But risky R&D at a startup is compartmentalized. Nobody will say they use the output of the startup until there are signs of life, and even then healthy caution is applied.
