Eighteen months to two years has traditionally been the average lifespan of any startup destined to either give up or get acquired. Luma.io announced today that it’s been acquired by Facebook’s Instagram subsidiary. Luma.io was one of many apps pitched as an “Instagram for video,” providing video stabilization, filters, and hosting. Yesterday, I wrote about Embark’s acquisition by Apple. Both Luma.io and Embark were funded in YC W12.
Luma.io, originally named Midnox, states on its homepage the service will be completely shutdown on December 31, 2013. There’s also a link for users to download their videos. A couple months ago, Instagram added support for video. This acquisition will likely result in Instagram using Luma’s technology in addition to acqui-hiring the talent. Facebook has acquired at least seven companies funded by Y Combinator.
The bigger picture here, though, is the quantity of acquisitions and acqui-hires by Y Combinator startups. Reaching a profitable exit is obviously the goal of any company. However, as I’ve noted before, no YC-funded company has ever had an exit other than an acquisition. Each new round of startups becomes increasingly difficult to take seriously whenever a company like Luma.io or Posterous just shuts down and abandons its users and their data.
Demo Day for YC S13 was earlier this week. Founders of 45 new startups stood on stage, asking for more money and talking about their company’s long-term plan. How many of those same 45 companies are just going to delete all their users’ data and give up within the next two years?