No late summer slump for investments in Data & Analytics – Data Invest market update Q3/2019

No late summer slump for investments in Data & Analytics

M&A and Investments in Data & Analytics – Market Update Q3 2019

The quarterly Market Update on M&A and investments in the Data & Analytics software market is brought to you by Data Invest, the company marketplace, and BARC, the leading independent market analyst for Data & Analytics and other enterprise software segments.

Data Invest Q3 Market Update M&A and Investments in Data & Analytics: Record-breaking third quarter in terms of investment sum, while the Hadoop market quickly consolidates and data science/AI companies add portfolio capabilities by acquisition.

Mergers & Acquistions

B2B software brand Idera has bought WhereScape. WhereScape develops and markets automation software for modern Data Warehouses deployed in in the cloud or on premise. Idera, a parent company for several database, development, and testing software companies announced to integrate WhereScape in their Database Tools unit. Other software providers in the same Idera unit are AquaFold featuring an IDE for visual database queries and Webyog featuring MySQL monitoring and management tools. With the acquisition of WhereScape, Idera improves its capabilities for empowering data professionals regarding DevOps use cases in complex data environments. WhereScape was a very visible player in the Data & Analytics ecosystem. It will be interesting to watch whether Idera with its much broader and application agnostic toolsets will maintain the presence or change the go-to-market approach.

Hewlett Packard Enterprise (HPE) has announced the acquisition of Hadoop provider MapR after the target had reported significant declines in orders and liquidity problems a few months earlier. In June MapR announced that a very poor first quarter of fiscal year 2019, due to a lack of customer orders and a growing trend toward primary and hybrid cloud solutions, had forced the company to lay off more than 120 employees. Soon after the complete close down of the company seemed immanent, but a savior appeared in August when HPE acquired the company. Such a fire sale ends a sad story for the investors that put in total USD 280 million in the company over the years and most probably lost most of it. HPE strengthens its Intelligent Data Platform business with MapR’s IP and customers. To form this platform business HPE acquired AI and Big Data company BlueData earlier and now offers technologies for containerized applications and data pipelines in hybrid data center and cloud deployments.

The sellout of Big Data Analytics solutions described in a previous article continues:

Cloudera has acquired Big Data Analytics vendor Arcadia Data. The ArcEngine is able to automatically analyze and visualize unstructured and semi-structured data from cloud environments. The technology utilizes Machine Learning capabilities to predict and pre-compute frequent queries, analyses and reports. With that ArcEngine offers automated and detailed insights in data lakes, e.g. for use cases such as Cyber Security or IoT. Cloudera on the other hand needs Analytics technology like Arcadia Data’s in their endeavor to become an end-to-end provider for storing and analyzing Big Data. Originally starting as a Hadoop distributor, the company nowadays interprets itself as a provider of Enterprise Data Cloud solutions. With the addition of ArcEngine, Cloudera’s business users will be achieve faster self-service reporting and more intelligent insights in their data deployed in Cloudera data management systems.

The acquisition is a good example for an overall M&A trend in the Big Data (Analytics) segment: As technologies such as Hadoop and Cloud data platforms mature, providers of data management solutions add Analytics capabilities to their portfolio. Customers potentially benefit from a more complete offering of holistic and integrated Big Data Analytics solutions. Two more examples for this trend in 2019 are Looker, provider of discovery-driven BI and Analytics software, and Google Cloud, as well as AllSight, provider of Customer Data Analytics, and Informatica.

Artificial Intelligence and Machine Learning transactions follow the rationale of market consolidation, platform forming, as well as technology penetration into different segments:

Several of the once small, highly innovative and disruptive advanced analytics and AI technology providers have grown so much over the past few years, that we observe the first tendencies towards true AI platforms and also a market consolidation.

Just two weeks ago, Alteryx announced its acquisition of Feature Labs, a UK-based AI and Machine Learning startup. Feature Labs supports data scientists in feature engineering, which tries to extract new variables for machine learning algorithms from domain knowledge and raw data. With the company’s technology, the creation of machine learning algorithms can be automated to a certain degree. Feature Labs is a fitting addition to Alteryx’ data preparation and data science platform that had already been enhanced with Machine Learning technology through the acquisition of Yhat in 2017.

Alteryx also carried out another acquisition in 2019 with the purchase of ClearStory Data. The target boasts an analytics platform for complex and unstructured data. The Alteryx management identified synergy and innovation potential and announced to integrate the ClearStory Data IP into its data preparation workflows.

The AutoML unicorn, DataRobot, has acquired ParallelM, provider of “MLOps” technology. The ParallelM solution offers deployment, management and monitoring for ML algorithms across productive systems in organizations. Through this, companies applying AI and ML solutions are able to improve operationalization of ML algorithms. The acquisition is a clear case of capability enhancement for DataRobot with the new product “DataRobot MLOps” based on ParallelM’s technology. Jeremy Archin, CEO of DataRobot reasoned the added functionality with a growing demand from AI-driven enterprises for ML operations and governance. The company has raised USD 432 million total reaching a pre-money valuation of over USD 1 billion and performed four acquisitions in two years.

Besides deals within the AI and ML market, we also continue to witness the penetration of Advanced Analytics technologies into other software segments or even completely different industries. A good example for cross-segment penetration is Anaplan’s acquisition of Mintigo: Anaplan offers an enterprise planning & budgeting platform that can be adapted to several business lines – one of these is marketing. In August, the company purchased Mintigo, a provider of Predictive Marketing and Sales Analytics solutions. Through the acquisition, Anaplan is able to boast predictive capabilities as a completely new planning feature.

An example for cross-industry transactions is the purchase of Celect by Nike. The worldwide biggest sportswear retailer enhances its own insight-based sales capabilities by the acquisition of Celect, which offers a Cloud-based PaaS for Predictive Analytics especially in retail. With the technology, companies can predict customer demand and plan their product portfolio accordingly.

Investments

The third quarter of 2019 was extremely busy when it comes to Data & Analytics investments. Especially the sizes of the funding rounds were massive: In comparison to an accumulated investment sum of USD 1.6 billion for the first two quarters, Q3 alone featured USD 1.2 billion in over 30 investments.

The biggest funding rounds so far this year have been scored by Fractal Analytics and Databricks, both in the first quarter. Furthermore we witnessed big ticket sizes for ThoughtSpot, DataRobot, and Indecomm Digital Services – each pocketing at least USD 200 million. ThoughtSpot features a natural language search based Analytics solution, whereas Indecomm  provides Software Engineering services in the areas of Big Data, Machine Learning & Analytics, as well as UI/UX and several more.

Another interesting insight is the development of investment sums as well as the shift of hot segments when comparing the first nine months of 2019 with the same period in 2018: Investment sums in 2019 show a clear drop in Q2 which is also the only quarter where funding rounds were stronger one year before. In contrast, third quarter investment sums had a massive decline in 2018 whereas Q3 marks the strongest quarter in 2019.

This shows a change in companies that get investments: Data Management and Data Integration face a sharp decline in investor interest, whereas application oriented segments such as Big Data Analytics as well as Advanced Analytics are gaining importance. Together, these two segments account for 76% of investment sums in the year 2019. Companies in Advanced Analytics make up for 45% of capital invested in 2019, nearly doubling their share in comparison to 2018. The overall development underlines the growing importance of topics like Artificial Intelligence, Machine Learning, and Big Data Analytics for financial investors as also companies are willing to invest in analytics use cases.

If you liked our M&A and Investment Market Update for Q3 2019 remember to subscribe and get periodic updates of the market.

Follow & contact the authors of this market update for more information:

Maximilian Gluchowski, CEO of Data Invest

Dr. Carsten Bange, CEO of BARC

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