This focuses on case where the acquirer seeks to capture the value of the startup's business. But this is not always the case, sometimes the startup is dubious, but a cash-rich enterprise can purchase startups simply to eliminate potential avenues of competition. They may not be interested in adding a better product to their portfolio, only in quashing any nascent attempts at building the better product so they can keep selling their own mediocre one.
Also, "model innovation" strikes me as missing the point these days. The models are really good already. The majority of applications is capturing only a tiny bit of their value. Improving the models is not that important because model capability is not the bottleneck anymore, what matters is how the model is used. We just don't have enough tools to use them fully, and what we have is not even close to penetrating the market, while all the dominant tools are garbage. Of course application innovation is the place to be!