Marissa Mayer’s Yahoo Has Been Great for Startups

Marissa Mayer’s two-year tenure as CEO of Yahoo hasn’t been especially fruitful in terms of revenue growth or the value of the company’s core business. But, boy, has it been a boon to the startup economy.

With the $640 million purchase of BrightRoll, an advertising technology firm that specializes in online video, the Sunnyvale, California-based Web giant has now spent more than $2.1 billion on acquisitions since Mayer’s arrival in July 2012. In fact, it has spent considerably more: That figure, calculated by S&P Capital IQ, reflects only eight of the 49 companies snapped up over the period. Prices for the other 41 weren’t disclosed publicly.

BrightRoll is one of the few additions that ought to justify its price tag in relatively short order. Most of the others—including Tumblr, the largest deal at nearly $1 billion—have yet to do so. Many were quickly shut down and explained—or written off—as “acqui-hires,” perpetrated as a way to bring engineering talent into the fold.

In the ordinary course of things, a CEO who’s not showing much in the way of top-line growth would have a hard time selling an unending series of pricy acquisitions to her board of directors. But Mayer’s had a free hand thanks to the appreciation of its stake in the Chinese e-commerce company Alibaba, now worth $44 billion. (For reference, Yahoo as a whole is worth $47 billion.) It has already pocketed $6 billion in cash, after taxes, from the sale of shares in Alibaba’s IPO.

That means Yahoo has plenty of cash lying around if Mayer wants to keep rolling up small and medium-sized startups, or even to make a play for a big one, like Pinterest. Some analysts believe the visual social network is the most logical acquisition target for Yahoo, or at least would have been before its valuation climbed to $5 billion in May.

But some major Yahoo shareholders are keen to put the brakes on Mayer’s shopping spree. The hedge fund Starboard Value LP is agitating for Yahoo to merge its core business with AOL, with which it’s strategically aligned, rather than continue to bolt on new parts willy-nilly. And Reuters reports that two of Yahoo’s biggest shareholders have grown so impatient, they’ve taken to lobbying AOL CEO Tim Armstrong to make the deal happen.

The appearance in the third quarter of modest revenue growth might give Mayer the breathing room she needs to convince investors to give her strategy more time, if she’s able to maintain the momentum. But if the pressure continues to mount, Mayer may find she has no choice but to start returning more of her funny money to shareholders. And that will mean a lot fewer comfortable exits for startups in need of a home.