MarTech RoundUp 2016: Investment Activity at an All Time High

Players in MarTech are having an encouraging funding year so far.

“You may have heard by now how the VC landscape underperformed in Q4 of 2015, but don’t let those news reports fool you into thinking the sky is falling,” states a recent report on venturebeat.com. “With venture capital investments changing significantly in the last two years, the 2016 landscape is shaping up to be a completely different experience than ever before.”

Investments compared to last year

The MarTech segment set records in global venture capital funding in the second quarter of 2016 at more than $5.05 billion. That’s already 72 percent of the $7 billion MarTech firms netted over all of 2015.  A large portion of that funding, some $3.5 billion, was invested in May alone.

Investments compared with other tech sectors 

In comparison, VC-backed FinTech funding in Q2 reached only $2.5 billion, down 49 percent from Q1 funding for this year and down 52 percent from Q2 of 2015, according to data from KPMG and CB Insights. InsurTech and alt lending remain strong sub-sectors, reports Business Insider.

Dealroom points to $318.9 million in funding for AdTech in the last six month, with July producing $62.6 million of that.

Funding in the HealthTech segment this year to date is already further along than all of 2013. Venturescanner.com reports scanning 1,285 health technology companies across 48 countries to compile $26.5 billion in funding.

Most-funded subsectors 

The most heavily invested categories in Q2 were marketing experiences and marketing operations, at $980.04 million and $526.55 million respectively. Companies receiving funding tended to rank high in experiences and operations.

Companies receiving funding tended to rank high in experiences and operations.

On Martech Advisor, Pranav Vadehra predicts significant recent investments this year in the following MarTech sub-sectors:

  • Loyalty: “Marketers are looking at drawing millennials’ attention through innovation in gamification and customer advocacy, as seen in the $50 million funding of loyalty, referral and advocacy platform Fivestars by Lightspeed Venture Partners,” he says.
  • Video: Vahedra points to Snapchat’s focus on video content. “This strategy seems to be perfectly aligned with the changing VC focus on monetization of social platforms,” he notes.
  • Mobile: “The transition to a mobile-first marketing environment is perhaps the biggest factor driving investment in MarTech, with several of the top-funded startups specializing in solutions for mobile marketing.”

Major acquisitions and funding deals 

  • In June, Microsoft announced it was acquiring LinkedIn for $26.2 billion, marking the largest acquisition in Microsoft’s history (and one of the largest in the history of the digital age).
  • Snapchat raised a $1.3 billion late-stage round from investors including Coatue Management, Dragoneer Investment Group, Fidelity Investments, General Atlantic, Glade Brook Capital Partners, Institutional Venture Partners, Lone Pine Capital, Meritech Capital Partners, Sequoia Capital, Spark Capital and T. Rowe Price.
  • In April Groupon announced a $250 million investment from Atairos, a private firm focused on supporting growth-oriented businesses across a wide range of industries.
  • Customer experience and marketing cloud provider Marketo is being acquired by private equity firm Vista Equity Partners in a $1.79 billion deal expected to close in Q3.
  • In June Salesforce acquired Demandware, a provider of enterprise cloud commerce solutions, for about $2.8 billion.

Takeaways

In a recent industry webinar sponsored by Venture Beat, industry representatives stated the following opinions about MarTech funding this year:

  • Jon Cifuentes, insight analyst with Venture Beat: “We are getting back to 2000 levels of funding; we’re basically at a 15-year high. (Investment is) bigger and more frequent, valuations are bigger and this trend is going on all over the world. More funding and more big deals going on every day, especially for early-stage funding. Growth is outpacing consolidation right now.”
  • Lisa Calhoun, partner with Valor Ventures: “It’s going to be a bang-up year.”
  • Ravi Belani, managing partner with Alchemist Accelerator at Stanford University: “I agree, I think there’s a lot of money out there. Obviously public markets are contracting and private markets are following… I urge (companies) to raise more cash than you need now. “
  • Sloan Gaon, CEO of PulsePoint: “I think ’16 will be a great year for new funding. There’s a shift toward companies with more predictable revenue streams than in past … that’s what the public wants and what VCs are looking for. I think the ability for VCs and capital funds to raise funds may become tougher… raise them in 2016 while you can.”

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