Simon Chadwick
Investment boom in analytics and market research explodes and matures
When last we reported on inward capital investment into the marketing research and analytics industry, we found that the levels of new capital flowing into the industry – at US $3.2 billion – were four times higher than just three years previously. Surely this boom was nearing its apex and we would see venture capital and private equity focus more on gaining returns from the enormous amounts of money that had poured into this space?
Well, no. And yes.
There is absolutely no sign of a let-up in the tsunami of investment capital washing into market research and analytics. The 2014 Cambiar Capital Funding Index reports that inward flows of capital into the marketing research, analytics and information industry increased by 82% in 2014 (on top of an 88% increase in 2013). CCFI estimates that the total amount invested came to US $5.85 billion – seven times the amount invested in 2011.
At the same time, however, there are very clear signs that the investment boom is “maturing” – that is, money is being invested on a “doubling down” basis, with investors making increasingly large bets on companies that seem to be succeeding in their respective markets. More money is being invested in the later stages of firms’ life cycles and comparatively less in the earlier stages. In certain cases, investors are reaping the rewards of their bets by taking their portfolio companies to IPO and other forms of equity participation.
Some of the transactions conforming to this behaviour in 2014 were staggeringly huge:
- IMS Health successfully completed its IPO, garnering US $1.3 billion. This is an excellent example of how a very few established market research companies are once again hot in the public markets (Nielsen amongst them).
- Cloudera, an enterprise big data firm, raised an impressive US $900 million in a Series C funding round that was backed by the likes of Google Ventures and Intel.
- iSentia, a media intelligence firm, raised US $235 million in an IPO.
- Mozido, a customer analytics provider, raised a whopping US $185 million in a Series B round, backed in part by MasterCard.
- Qualtrics, a market research data-collection platform, also had a startlingly high early round success, raising US $150 million from Accel Partners, Sequoia Capital and Insight Venture Partners.
These, and a couple of other very large raises, can arguably be called outliers in the overall scheme of things, but even without them, the overall amount raised was close to US $3.1 billion. More accurately, they represent the extreme edges of the overall picture, in which firms that have proved their success in the market are attracting very high valuations and considerable amounts of double down capital.
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