The aim of this thesis is to investigate the evolution of new technology-based firms (NTBFs) based on solid empirical material for the Swedish economy. The focus on this thesis is exploring the role of acquisition by incumbent firms in the evolution of NTBFs. The findings of this thesis show that selection is a core feature in the evolution of NTBFs. NTBFs experience a high exit rate during the first years after entry, though they exhibit a higher survival probability than other types of entrepreneurial firms in general. Moreover, acquisition is an alternative but important selection mechanism for start-ups, particularly for NTBFs. Through acquisition, acquirers select “quality” start-ups in terms of technological capabilities and efficiency, especially when acquirers are from multinational enterprises (MNEs). In addition, acquired NTBFs experience an extensive internal selection and experimentation by acquirers within 4 years after acquisition. If acquired NTBFs survive the internal selection and experimentation process, the growth of acquired NTBFs is likely to be promoted, but this pertains only to acquisition by Swedish MNEs.