The most puzzling thing about Blitzhire acquisitions isn’t that they’re expensive.
It’s that they’re deliberately inefficient.
Billions flow through structures that make zero financial sense—unless you’re one of a handful of AI giants racing at breakneck speed.
Here’s the playbook Villi Iltchev unpacked on TheOnePoint Podcast:
▪️ Instead of acquiring the company, buyers pay billions for a non-exclusive license to its IP (exclusive would trigger regulators).
▪️ Then they layer on billion-dollar retention packages for founders and researchers—sometimes valuing a single engineer at $100M.
▪️ Finally, they leave nine-figure sums on the balance sheet so the “shell” company still looks alive to antitrust eyes.
Grossly inefficient? Absolutely. Hundreds of millions get burned in taxes and leakage.
But for the Googles of the world, time matters more than money. They don’t want regulators dragging a deal out for a year while rivals stack AI talent.
Blitzhire is the new acquihire—but only for the top 3–5 labs with trillions at stake. For everyone else, the M&A market remains sluggish, IPOs aren’t “closed” but repriced, and SaaS exits are harder than ever.
It’s corporate Darwinism in slow motion: survival velocity for the giants, stagnation for the rest.
Topics that we covered
(00:00) Episode intro and guest introduction – Villi Iltchev of Category Ventures
(00:48) What is Category Ventures? Fund size, focus, and thesis
(01:54) Why Villi started Category – solving the “subscale VC” problem
(04:46) Category’s ability to lead rounds and bring certainty for founders
(05:49) Emotional side of running a new VC firm in a frothy AI market
(08:28) What is a Blitzhire acquisition? Origins and mechanics explained
(13:48) Structuring Blitzhire deals – IP licenses, retention packages, and keeping shells alive
(16:19) Why Blitzhires are grossly inefficient but deliver speed
(17:10) Will more Blitzhire deals happen? Comparing AI to the mobile war
(20:13) Acquihires then vs Blitzhires now – from $1M per engineer to $100M per researcher
(21:59) The state of IPOs and why pricing, not access, is the issue
(25:30) M&A dynamics: why big buyers prefer large targets, not smaller SaaS firms
(27:15) What’s next for Category Ventures – building brand and reputation over time
Social links
- Villi Iltchev: https://www.linkedin.com/in/villi04/
- Category Ventures: https://www.categoryvc.com/
- Rohit Yadav: https://www.linkedin.com/in/rohityadav23/