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Analyzing the $8.8 Billion Invested Across 400+ Marketing Technology Companies ANNUAL INVESTSCAPE REPORT 2017 © 2018 All Rights Reserved. MarTech Advisor.

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Page 1: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Analyzing the $8.8 BillionInvested Across 400+ MarketingTechnology Companies

ANNUAL INVESTSCAPE REPORT 2017

© 2018 All Rights Reserved. MarTech Advisor.

Page 2: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

TABLE OF CONTENTS

1.1 Annual Investscape 2017

Annual Investscape 2017 Page 1 to 6

PART

The Big Picture

2.1 Graphs & Charts

2.2 Commentary

2.3 Investor Round Table

Page 7 to 15

PART

Annual Recap 2017 Page 16 to 17

3.1 Quarterly Investscape Reports: Q1, Q2, Q3, and Q4

PART

About MarTech Advisor Page 18

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor.

PART

Page 3: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Annual Investscape 2017Part 1

© 2018 All Rights Reserved. MarTech Advisor.

Page 4: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

VC investmentsin MarTech

went down by 37% - from

$14.5Bn in 2016to $8.8Bn

in 2017

Q-on-Q investmentsQ1 - $1.5BnQ2 - $2.4BnQ3 - $2.4BnQ4 - $2.3Bn

Total share of investments in USA

based MarTech companies was 80.8% whereas, 19.2% was

invested in ROW MarTech

companies

700+ Investors invested in more

than 400 MarTech companies across

40 categories in 2017

Mobile Marke�ng,

Ecommerce and Sales Enablement

are the top funded categories

of 2017

QUICK 5: REVIEW

2017

The highest number

of investments by any one VC in

MarTech (Salesforce Ventures)

15

Share of Companies

Funded that are not

from USA

New unicorns blazed into

the MarTech space

19.2% 19

1.1 Annual Investscape 2017

Year In Numbers – 2017

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 1

Page 5: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Year-on Year Growth in Funding 2014 to 2017(Figures in Billions)

Q1 Q2 Q3 Q4

2014

2015

2016

2017

0.99 2.04 1.20 1.68

2.16 2.07 2.42 1.30

2.24 5.10 2.83 3.87

1.59 2.42 2.45 2.33

5.92

7.96

14.05

8.81

Top MarTech Categories Funded in 2017(Figures in Millions)

$

$

$

$

$

$

$

$

$

$

$

$

$

$

$

Mobile Marke�ng

E-Commerce

Sales Enablement

Loyalty/Referral/Gamifica�on

Social Media Marke�ng

Events & Webinars

Web & Mobile Analy�cs

BI, CI & Data Science

Marke�ng Automa�on/Campaign & Lead Mgmt

Display & Na�ve Adver�sing

Asset & Resource Management

Communi�es & Reviews

Customer Experience/VoC

Mobile App Dev & Marke�ng

Web Content/Experience Management

986.1

600.5

531.6

453.3

433.1

418.4

407.9

384.8

374.7

368.1

364.0

303.9

296.7

293.1

236.8

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 2

Page 6: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

$

$

$

$

$

$

$

$

$

$

$

AppLovin

Unity Technologies

Slack

Magento

Reddit

Squarespace

Qualtrics

MediaMath

Pinterest

Zeta Global

Fuze

Domo

Mobvista

Zoom

InVision

841

400

250

250

200

180

175

150

140

104

100

$ 200

$

$

$

100

100

100

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 3

Top MarTech Companies Funded in 2017(Figures in Millions)

Page 7: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Most Ac�ve Investors of 2017

Numbers represent the frequency of funding by a VC in the yearThe logos used are purely for representa�on purpose

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 4

15 11

8 7 7

6 6 6 6

6 5 5 3

3 3 3 3

3 3

5

3

3 3

Page 8: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Geographical Split by Origin of the Funded Companies(Percentage based representa�on)

United States ROW

81%

19%

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 5

Company Funded in Quarter2017

Category HQ Loca�on

Anaplan

Ap�us

Docker

Domo

Eventbrite

InsideSales.com

InVision

Kik

MarkLogic

MediaMath

Pinterest

Qualtrics

Quora

Reddit

Slack

Sprinklr

Squarespace

Unity Technologies

Zoom

Q4

Q3

Q2, Q3, Q4

Q2

Q3

Q1

Q4

Q3

Q2

Q2

Q2

Q2

Q2

Q3

Q3

Q1

Q4

Q2

Q1

Cloud/IaaS/PaaS

CRM

Web Development

Dashboards And Visualiza�on

Events & Webinars

Sales Enablement

Asset & Resource Management

Personaliza�on & Chat

DMP/ CDP

Social Media Marke�ng

Events & Webinars

Customer Experience

Social Media Marke�ng

Social Media Marke�ng

Asset & Resource Management

Social Media Marke�ng

Web Content/Experience Management

Mobile App Dev & Marke�ng

Events & Webinars

United States

United States

United States

United States

United States

United States

Switzerland

Canada

United States

United States

United States

United States

United States

United States

United States

United States

United States

United States

United States

Unicorns Funded in 2017

Page 9: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

MTA Rank(based on funding amount)

Company Name

1

2

3

4

5

6

7

8

9

10

AppLovin

Unity Technologies

Slack

Magento

Reddit

Squarespace

Qualtrics

MediaMath

Pinterest

Zeta Global

Funding in 2017(In $ Millions)

841

400

250

250

200

200

180

175

150

140

No. of Funding Rounds un�l 2017

3

6

10

2

3

3

3

7

13

5

Top 10 Companies of 2017

Moved Up Moved Down New Entry Stayed Same

MTA Rank(based on funding amount)

Category Name

1

2

3

4

5

6

7

8

9

10

Mobile Marke�ng

E-Commerce

Sales Enablement

Loyalty/Referral/Gamifica�on

Social Media Marke�ng

Events & Webinars

Web & Mobile Analy�cs

BI, CI & Data Science

Marke�ng Automa�on

Display & Na�ve Adver�sing

Funding in 2017(In $ Millions)

986.1

600.54

531.61

453.293

433.086

418.42

407.87

384.8

374.704163

368.14

Movement from 2016

Top 10 Categories of 2017

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 6

Page 10: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

© 2018 All Rights Reserved. MarTech Advisor.

The Big PicturePart 2

Page 11: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Top Categories Funded 2014-2017(Figures in Millions)

0.0 500.0 1000.0 1500.0

Web & Mobile Analy�cs

Marke�ng Environment

Display & Na�ve Adver�sing

Web & Mobile Analy�cs

Display & Na�ve Adver�sing

Data Management Pla�orms/Customer Data Pla�orms

Web & Mobile Analy�cs

Iden�ty

CRM

E-Commerce

Mobile Marke�ng

Sales Enablement

2000.0 2500.0

2014

2015

2016

2017

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 7

2.1 Graphs & Charts

$686

$869

$323

$1165

$641

$421

$2272

$2500

$1320

$601

$986

$532

Top Companies Funded 2014-2017(Figures in Millions)

Sabre Corpora�on

SnapChat

SurveyMonkey

Pinterest

SnapChat

Domo

Infor

SnapChat

Apple

AppLovin

Unity Technologies

Slack

2014 2015 2016 2017

$645

$485

$250

$553 $537

$235

$2500

$1975

$1000

$841

$400

$250

Page 12: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Geographical Split 2014-2017

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 8

0 5 10 15

2014

2015

2016

2017

Sequoia Capital

Accel Partners

500 Startups

Sequoia Capital

Salesforce Ventures

Ba�ery Ventures

Salesforce Ventures

New Enterprise Associates

Ba�ery Ventures

Salesforce Ventures

Accel Partners

Y Combinator

United States ROW

2014 2015 2016 2017

94% 91% 95% 82%

6% 9% 5% 18%

13

11

10

14

11

8

12

11

11

15

11

8

Top Investors 2014-2017Numbers represent the frequency of funding by a VC in the quarter

Page 13: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Compara�ve Table From 2014 To 2017

Total Funds Invested

Total No. Of Companies Funded

Total No Of Categories Funded

$14.05 Bn

365

41

$8.81 Bn

405

40

$5.92 Bn

350

42

$7.96 Bn

220

42

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 9

2014 2015 2016 2017

Top 3 Categories Funded • BI, CI & Data Science• Social Media Network• Social Media Marke�ng

• Social Media Network• Web & Mobile Analy�cs• Display & Na�ve Adver�sing

• Pla�orm / Suite• Social Media Network• Mobile App Dev & Marke�ng

• Mobile Marke�ng• E-Commerce• Sales Enablement

Top 3 Companies Funded(figures In Million)

• Sabre Corpora�on ($645.5 Mn)• SnapChat ($485Mn)• SurveyMonkey ($250 Mn)

• Pinterest ($553 Mn)• SnapChat ($538 Mn)• Domo ($235 Mn)

• Infor ($2.5 Bn)• SnapChat ($1.9 Bn)• Apple ($1.0 Bn)

• AppLovin ($841 Mn)• Unity Technologies ($400 Mn)• Slack ($250 Mn)

Top 3 Investors(no. Of Times Funded)

• Sequoia Capital (14)• Accel Partners (13)• Ba�ery Ventures (10)

• Sequoia Capital (14)• Accel Partners (13)• Ba�ery Ventures (10)

• Salesforce Ventures (12)• Ba�ery Ventures (11)• New Enterprise Associates (11)

• Salesforce Ventures (15)• Accel Partners (11)• Y Combinator (8)

Top 3 Countries Funded • United States• United Kingdom• Canada

• United States• Canada• United Kingdom

• United States• United Kingdom• France

• United States• Denmark• United Kingdom

US/ ROW Split 90:10 80:20 70:30 80:20

Page 14: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

The ‘seamless customer experience’ is emerging as

the holy grail of marke�ng. And this cannot be

achieved without marke�ng technology. Because the

customer lives equally online and offline, the purpose

of marke�ng technology is increasingly to bring

together all the moving parts, all the touchpoints, all

the data and intelligence – and deliver that seamless

brand experience.

This throws up a couple of considera�ons for the

CMO.

— All the investments in martech point solu�ons

become problema�c if they cannot meaningfully

talk to one another. So, there is a huge need for

solu�ons capable of delivering new models of

integra�on. From retroac�vely integra�ng point

solu�ons to central data hubs; from APIs to

hybrid models – integra�on is the new game in

town. And a logical outcome of that is going to be

‘stack ra�onaliza�on’.

— Customers are moving to mobile, period. From

mobile-also, to mobile-first, to mobile-only

seems the inevitable reality of how customers

will want to engage with brands. CMOs need to

be prepared for this future and need to ensure

their many investments can help deliver on that

future.

— The offline customer experience is an integral

part of the ‘seamless’ experience, so the

technology needs to lend itself beyond digital

applica�ons and direct interac�ons with

customers – right down to in-store experiences,

partner and service experiences, payment and

billing experiences among others.

When we viewed VC investments in Martech in 2017

against this context, we made a few observa�ons. But

before that, here are some of the highlights from the

2017 report:

— Mobile Marke�ng, though at number 1 spot in

terms of most funded category – just shy of a

billion dollars – went there because of a single

large investment in AppLovin ($841Mn)- not

surprisingly a mobile apps company.

— Other top funded martech companies

were, Unity Technologies ($400Mn; gaming

technology), Slack ($250Mn; collabora�on and

project management), Magento ($250Mn;

ecommerce enabler), Reddit (Community) and

Squarespace (Website and UX) with $200Mn of

funding each.

— Docker (containers) and Datarobot (machine

learning and predic�ve modeling) got funded

twice in 2017 with a total haul of $137Mn and

$121Mn respec�vely.

— The most common type of funding in 2017 was

Venture Capital funding

— Salesforce Ventures appeared as the top investor

for the second consecu�ve year. They have

invested 15 �mes in mul�ple martech categories

in 2017. They are also the top investor of Q4

2017, with 4 investments for companies in

different categories.

— Other top investors of 2017 who have invested

more than 7 or more �mes are Accel Partners

(11), Y Combinator (8), New Enterprise

Associates and Silicon Valley Bank (7 �mes each).

— Martech companies from USA contributed

80.8% of the total funding in 2017, whereas,

martech companies from ROW received 19.2% of

funding

— In Q4 martech companies received $2.3Bn of

funding. But it was United Kingdom that received

the highest funding, a�er United States, in Q4-

2017.

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 10

2.2 Commentary

Page 15: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 11

MarTech Industry Trends

As we started to pull this report together, we were

struck by the 37% dip in total investments in martech

from 2016 (which was a really good year at $14

billion). But if you look at the pa�ern over the last 7

years, martech investments have been up-and-down.

This is not unusual for a dynamic and evolving market,

where the trends change as fast as customer

understanding and adop�on, and nearly as fast as the

disrup�ons and innova�ons the space sees. The

observa�ons we found noteworthy, in the VC funding

context were:

1. The changing focus of investments: the first

several years from 2010 onwards saw majority of

the funding in ‘social networks’ or internet

companies that had unrestricted access to

‘poten�al customers’ - from Facebook to

Snapchat and Pintrest. One of the major shi�s in

the later years seems to be the funding for more

‘specialist’ martech areas that are also point

solu�ons (such as email marke�ng, social media

analy�cs or interac�ve marke�ng technology) –

somewhat valida�ng the explosion of point

solu�ons in the martech space from 100+ to over

5000. Come 2018, could we see another shi�? A

shi� towards companies that provide integrated

solu�ons (go beyond stand-alone point

solu�ons), support integra�on as a core part of

what they do or are into one of the more obvious

technologies of the near future such as

mobile, data, AI/ machine learning and

predic�ve/prescrip�ve analy�cs?

2. Innova�on in funding - A healthy funding

ecosystem makes a healthy industry With all the

talk of the martech VC funding apocalypse: the

ques�on is - what might be the outcomes of such

an event? Roughly half the companies on Sco�

Brinker’s landscape have had some form of VC

funding, even though many of them will probably

never make their investors much money. That

also means more than half did not have VC funding -

yet, the a�ri�on rate has been insignificant from

last year to this. Sure, some amount of funding will

dry up, and some will shi� to the more a�rac�ve

martech categories (mobile, madtech, analy�cs

and machine learning/AI). But that doesn’t mean

that martech itself will face an uncertain future.

Instead, we will probably see innova�on in

funding models, more disrup�on coming from

small, independent players (the ‘long-tail’ of

the industry and more integra�on - driven

solu�ons that can s�tch together the various

solu�ons seamlessly. In a conversa�on with

Martech Advisor, Sco� Brinker said, The

classic VC model is built around consolidated

winners. There will s�ll be new opportuni�es for

those kinds of martech companies in the future

— I'm quite certain that major disrup�ons in

marke�ng and sales are not done with for this

century. But the vast majority of martech

startups are not going to fit that model. They

need alternate financing models, and luckily,

there are quite a few of those: angels, incubators,

crowdfunding, bootstrapping, micro-VCs, ICOs,

etc.”

Anand Thaker, CEO and Founder, Intelliphi, who

heralds from the financial investment arena

himself, shares this perspec�ve on the 37%

decline in overall martech funds from last year:

The "Long Tail" of Marke�ng Technology

Source: h�p://chiefmartec.com

a few $1 billion+ giants

dozens to hundreds of$100 million+ leaders

thousands of < $100 million niche innovators, ver�cal specialists, and new challengers

This looks like the classic distribu�on of choices in an open digital pla�orm.

reve

nu

e/m

arke

t sh

are

marke�ng technology products

Page 16: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 12

“High-growth funding general ly can be

viewed from perspec�ves of opportunity cost,

availability, appe�te and investment experience

in the marketplace.

One possibility is that other opportuni�es have

been compe�ng for mindshare and wallet-share

of investors. We are seeing more investment into

innova�on and tech enablement in the physical

spaces. Healthcare, energy, agriculture, finance,

security just to name a few.

Another trend is VCs are taking on fewer, but

larger size deals. Deal flow has been intense.

Investors are wai�ng for maturing later stages

companies and larger valua�ons. Also, VCs are

wai�ng to evaluate addi�onal rounds of current

por�olio companies and support more resilient

growth for them. Like marketers, the choices for

investors are abound.

On the flipside, entrepreneurs are considering

bootstrapping and/or wai�ng to evaluate taking

on VC funding. Founders are seeking investors

who can bring support beyond the money to the

table and may turn to alternate sources of

funding.

We could be experiencing the calm eye of the

storm in MarTech investment.”

3. Unicorns and the race to $5 billion: We

witnessed 19 unicorns emerge in 2017 – up from

7 in 2016. So will 2018 see the rise of the

$5billion dollar martech company? Says Sco�,

“Salesforce, Adobe, IBM — these are all

companies with billions of dollars in revenue in

the broad field of marke�ng and sales

technology. If we're just talking about valua�on,

not revenue, [HubSpot} is a public marke�ng and

sales technology company currently valued at

over $3 billion. I'd also contend that Google and

Facebook should be interpreted as new kinds of

marke�ng companies. A�er all, that's how they

make almost of all their money: by enabling

marke�ng to individuals in ways that were never

before possible. They're something very

different than merely media distribu�on pipes,

the way we thought of classic adver�sing

channels such as TV. There's incredible data and

so�ware intelligence being applied here. But

why not more $5 billion pure martech solu�ons

companies? Three reasons to consider: (1) the

environment in which marke�ng and sales is

opera�ng is s�ll changing, which favors

disruptors and innovators; (2) marketers are in

the business of seeking to differen�ate their

firms, which means they're always looking for

differen�ated capabili�es; and (3) the low

barriers to entry in so�ware these days make it

feasible for thousands of entrepreneurs to

pursue their ideas for addressing the first two.

4. The implica�ons of consolida�on: as the

famous MarTech Landscape graphic shows, the

space is ge�ng more crowded than ever with

over 4800 companies flooding the market with

5000+ solu�ons. But does this necessarily imply

it’s also ge�ng more fragmented and more point

solu�on based than ever – or are there new

models of consolida�on that could emerge?

Doug Pepper - Managing Director, Shasta

Ventures says: For the start-up market, we

predict that a strong economy and the lower

overall corporate tax rate will likely mean more

(and more successful) IPOs and robust stock

valua�ons. In addi�on, the trending favorable

public market stock prices combined with tech

companies’ already large reserves of cash point

toward a strong M&A market in 2018.

Page 17: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 13

Sco� brings a different perspec�ve with this

c o m m e n t “ t h e m a r t e c h l a n d s c a p e i s

simultaneously consolida�ng and fragmen�ng.

Look at it through a revenue distribu�on curve.

It's a long tail with a few mul�-billion dollar giants

at the head, several hundred companies above

$20 million but below $1 billion that are leaders

in their respec�ve categories or ver�cals, and

then thousands of sub-$20 million startups,

special ists, and hybrid service-so�ware

providers. It's analogous to the film industry.

Huge consolida�on around major studios and

their big blockbusters. But simultaneously a

crea�ve explosion of new video ar�sts as

independents, leveraging YouTube, Ne�lix, and

Amazon as enablers to reach their niche

audience with specialized content. In both

instances, consolidated "pla�orms" help more

long-tail specialists thrive.

5. The integra�on wave: going back to the ques�on of

seamless customer experiences, there seems an

urgent need for stack ra�onaliza�on; meaningful

integra�on across the ac�ve stack; and smoother

data storage, transforma�on and flow across stack

components. From ‘everything you need’ pla�orms

(which was never a realis�c proposi�on), we are

moving towards a new kind of full-spectrum pla�orm

- we like to call them ‘enabling pla�orms’ - that

embrace and encourage integra�on across mul�ple

players. This model - somewhat reminiscent of the

Apps Marketplace model - is the way forward for a

sustainable future. Integra�on with other systems –

billing systems, customer support and success,

maintenance, in-store – is also increasingly crucial for

the seamless customer experience. For VC’s, this

means interest in solu�ons that encourage and

embrace integra�on with the ecosystem of solu�ons,

including APIs technology; data integra�on solu�ons

such as CDPs; as well as mul�ple smaller players that

have the ability to go mainstream if plugged into one

of the larger enabling pla�orms.

Source: h�p://chiefmartec.com

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We asked some of the investors featured in the

Annual Investscape 2017 to weigh in with their

comments on what they look for in poten�al

investees, and what they were interested in for 2018.

Here are some edited excepts:

ON POTENTIAL INVESTEES

Ma� Garra�, Vice President, Salesforce Ventures

(Invested in Anaplan, Splice Machine, DigitalGenius,

FollowAnaly�cs, MapAnything, Chute, 7Summits,

AutoPilot, CrowdFlower Inc., FullStory, Gainsight,

Highspot, Pendo, Workato, Ap�us)

"Salesforce Ventures is first and foremost, a strategic

investor focused on building the world’s #1 enterprise

cloud ecosystem to extend the power of the

Salesforce pla�orm and help us deliver the next

genera�on of technology for our joint customers.

What compels us to invest in a company is a talented

management team, innova�ve products that extend

our offerings and a large market opportunity.

Companies also need a strong company vision that

will resonate with Salesforce customers."

Tim Kopp, General Partner, Hyde Park Venture

Partners

(Invested in Popular Pays, Terminus, RepIQ,

LookBookHQ Inc., Sigstr)

“To be successful in martech, it's important to stand

out from the crowd. When I invest in martech

companies, I think about the same factors that I did

when I sat in the buyer seat as CMO of ExactTarget.

Companies need to demonstrate these three things: a

clear value proposi�on that drives meaningful ROI,

�me to business value, and a brand that speaks in the

marketplace. Now as a VC, I look for industry-leading

growth, because trac�on solves so many problems. It

can be hard to separate yourself from the noise, and

that is why the value of brand cannot be overstated in

martech.”

Mark Gorenberg, Managing Director, Ze�a Venture

Partners

(Invested in FollowAnaly�cs, InsideSales.com,

Marke�ng Evolu�on)

“Ze�a Venture Partners started in 2013 as the first

firm focused on inves�ng in AI for enterprise. These

are companies that combine proprietary data with

machine learning algorithms and applica�on layer

so�ware. So�ware alone has become commodity.

The data provides the barrier to entry. We only invest

in companies that con�nuously improve results and

insights as more customers are added and more data

is collected. Martech is leading this new intelligence

era and we have now invested in eleven martech-

oriented companies since 2014 that use data to get

insights that lead to higher ROI, faster turnaround of

op�miza�ons, and more personalized results.”

Doug Pepper, Managing Director, Shasta Ventures

(Invested in Leanplum, Aviso, Akoonu, Highspot,

People.ai)

“When we consider a new so�ware investment at

Shasta Ventures, we start with the founding team. We

look for a team that possesses the ins�nct, drive, grit

and obsession to build a category-leading product

and bring it to market. We look for passionate teams

that are building products in a strategic category like

MarTech. And, we look for start-ups that can grow at

scale. In today’s market, it’s no longer enough to have

the poten�al to reach $100 million in revenues. We

need to believe that a company can grow 40-50%,

year over year, while passing the $100 million mark

and that it is in a large category that can support $200-

300 million in revenue. Further, we need to see 300%

growth when a startup is small to believe that high

growth is s�ll possible at scale. While this may sound

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 14

2.3 Investor Roundtable

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like a tall order, we’ve been fortunate at Shasta to meet with passionate teams each week who show the poten�al to reach these milestones

ON THE MARTECH CATEGORIES OF INTEREST FOR 2018

Ma� Garra�, Salesforce Ventures

"Salesforce has been democra�zing technology since our founding in 1999, and now we're doing the same with Einstein, the first comprehensive AI for CRM. As we con�nue to accelerate Einstein and AI at Salesforce, we will be looking for complementary Martech technologies that u�lize data science and AI to make marketers’ lives easier by providing orchestra�on across mul�ple apps or create personalized, omnichannel marke�ng journeys."

Tim Kopp, Hyde Park Venture Partners

“Account-based marke�ng is driving one of most revolu�on changes to how marke�ng is done today. It is fundamentally changing how products are bought and sold by focusing more on quality rather than quan�ty and driving 1:1 engagements at scale. I have invested in Terminus, Sigstr, LookBookHQ who all are making ABM a big part of their strategies."

Mark Gorenberg, Ze�a Venture Partners

In 2018, marke�ng solu�ons will require machine learning algorithms and crowdsourced proprietary data that con�nuously trains them. To produce a compe��ve ROI and valuable company, obtaining data usage rights from customers will become as important as retaining so�ware IP rights. To enable intelligent marke�ng, some of the growth areas to watch this year include:

— D ata e n r i c h e rs fo r re a l - � m e b u s i n e s s op�miza�on.

— Predic�ve Analy�cs-enhancements for exis�ng marke�ng solu�ons.

— Mobile app-first driven marke�ng campaigns.

— Instore commerce driven by Computer Vision, NLP, and IOT.

— E-commerce search using NLP and machine- learning improved content.

Doug Pepper, Shasta Ventures

I believe 2018 will finally be the year of the Bot. Bot-powered applica�ons on messaging pla�orms like

Facebook will finally start to gain trac�on in 2018. Gartner predicts that by 2021 more than half of enterprises will spend more per annum on crea�ng Bots and Chatbots than tradi�onal mobile app development.

We all know that user a�en�on is shi�ing away from mobile apps and consumers are spending more and more of their �me in messaging apps like Facebook, Whatsapp and Slack. However, up un�l now, Bot applica�ons on messaging have failed on two fronts: either the consumer experience is poor or there isn’t enough traffic to those applica�ons to move the needle for the enterprise. Both of these problems will be solved in 2018. First, Facebook has commi�ed to driving distribu�on to Bot applica�ons where they’ve seen traffic already improving a�er the addi�on of new discovery features. And second, Bot developers are learning from 1.0 applica�ons and building much higher quality experiences for consumers.

Anand Thaker, MarTech Advisor Category Expert (AI and Big Data) and CEO of Intelliphi

In terms of MarTech investment, the exci�ng areas are:

1. Intelligence Enabled Solu�ons: including AI, NLG, Predic�ve, Bots, Agents, etc..

2.Customer Experience: while this has many orchestra�on tentacles, brand engagement, customer reten�on and community advocacy are cri�cal for both established and innova�ve companies alike.

3. Account Based Solu�ons: enabling be�er internal coordina�on and external orchestra�on on complex, longer sales pipelines.

4 .Customer Data Pla�orms: acquis i�on, management, culture, and privacy around customer data is a fundamental for any of the above to succeed.

5. Bonus opportunity area: privacy / GDPR: There is s�ll plenty we are unsure about how GDPR and similar regula�ons will impact the industry. We will see more marketers loop back with IT on how this can be applied both to prospect and customer data.

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 15

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Annual Recap 2017Part 3

© 2018 All Rights Reserved. MarTech Advisor.

Page 21: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 16

3.1 Quarterly Investscape Reports: Q1, Q2, Q3, and Q4(Click on the image to view each Quartery Investscape Infographic of 2017)

Investscape Q1 2017Analyzing the $1.5 Billion MarTech Funding

4 73% 200+The highest number of investments by any one

VC in MarTech(GreyCroft Partners)

Share of companies funded that are from

USA

200+ VCs invested in 95 MarTech companies

across 30 categories in JFM 2017

Quarter in numbers – Q1’17

INVESTSCAPE Q2 2017Analyzing the $2.4 Billion MarTech Funding

Quarter In Numbers – Q2’17

The highest number of investments by any one

VC in MarTech(Salesforce Ventures)

Share of companies funded that are

from USA

Number of VCs invested in 100 MarTech companies across 31 categories in

AMJ 2017

250+80%6

Q1 2017

Q2 2017

Page 22: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

Quarter In Numbers – Q3’17

The highest number of investments by any one

VC in MarTech(New Enterprise Associates)

Share of companies funded that are

from USA

Number of VCs invested in 100+ MarTech companies across 37 categories in

JAS 2017

250+74%4

INVESTSCAPE Q3 JAS 2017Analyzing the $2.4 Billion MarTech Funding

ANNUAL INVESTSCAPE 2017Analyzing the $8.8 Billion MarTech Funding

© 2018 All Rights Reserved. MarTech Advisor. Page - 17

Quarter In Numbers – Q4’17

The highest number of Investments by any

one VC in Martech (Salesforce Ventures)

Shares of Companies funded that are

from USA

Number of VCs Invested in 100+ Martech

companies across 35 categories in OND 2017

250+82%4

INVESTSCAPE Q4 OND 2017Analyzing the $2.3 Billion MarTech Funding

Quarter In Numbers – Q4’17

The highest number of Investments by any

one VC in Martech (Salesforce Ventures)

Shares of Companies funded that are

from USA

Number of VCs Invested in 100+ Martech

companies across 35 categories in OND 2017

250+82%4

INVESTSCAPE Q4 OND 2017Analyzing the $2.3 Billion MarTech Funding

Q3 2017

Q4 2017

Page 23: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

© 2018 All Rights Reserved. MarTech Advisor.

About MarTech AdvisorSec�on 4

Page 24: ANNUAL INVESTSCAPE REPORT Analyzing the $8.8 Billion · 2018-10-27 · Q2 - $2.4Bn Q3 - $2.4Bn Q4 - $2.3Bn Total share of investments in USA based MarTech companies was 80.8% whereas,

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© 2018 All Rights Reserved. MarTech Advisor. Page - 18