IC N AI & Data Technologies 2021 Atlas - ICON Corporate Finance
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AI & Data
Technologies
CO RPORATE FI NANC E
IC N
ICON 2021 Atlas
Strategic Analysis for AI & DataTech Fundraising & M&A
Investment
AI & DataTech Banking
– 2021 Atlas for DeepTech Disruptors
2
Contents
AI & DataTech Overview
• ICON’s Expertise
•
•
•
Key Insights
DataTech Stack
Detailed Market Segmentation
AI & DataTech
Setting The Stage
• Snowflake’s Path
Overview
• IPO Influence
Fundraising Trends
• VC Feeding Frenzy
• Transaction Trends
• Fundraising Valuations
• Most Active Investors
M&A Activity
• Rebound & Resilience
• Broadening Of The Buyer Pool
• Premium Valuations
• Private Equity Activity
About ICON Corporate Finance
AI & DataTech – 2021 Atlas
3
ICON’s AI & DataTech Expertise
Identify Strategic Opportunities. Leverage Competitive Dynamics. Achieve Execution Advantage.
Data-driven advice for a data-driven industry – ICON’s AI & DataTech Platform is a curated, proprietary data platform utilized to achieve optimal results.
Company & Transaction Database Proactive & Proprietary Analysis
>4,300 M&A Transactions By VC, CVC & PE Trends
▪ Firm-specific Investment Analysis
>2,900 Acquirers ▪ Breakdown By Size & Valuation
>3,200 VC Financings From Acquirer Appetite Analyses
▪ Product Gap Analysis
>2,900 Investors ▪ Highlights Premium Acquirers
>1,700 Companies Hyperdetailed Categorization
▪ Identifies Competitive Dynamics
>160 Sectors ▪ Vendor Financial Sizing
AI & DataTech – 2021 Atlas ICON’s AI & DataTech Platform is continuously updated. Data contained in this report will adjust over time.
4
Predictions DataTech Stack
Demand Driving Investment
In its IPO prospectus, C3.ai cited research pointing to enterprise AI growing at a Data Apps
24% CAGR from 2020 to 2024. VCs will continue funding companies feeding this
demand, but investment will skew toward DeepTech and growth-stage companies. Vertical Apps
Horizontal Apps
Strategic M&A
Corporate acquirers will continue to pay strategic valuations for early- and mid-
stage DeepTech companies, continuing activity we saw in 2020. Last year, 4 years Analytics
old was the largest age cohort of acquired companies Advanced Analytics
Marketing Analytics
Unicorn Platforms Reporting
Most AI & DataTech unicorns today have achieved success by maniacal focus on
single product excellence. As they further grow into their valuations, they’ll broaden Data Governance
their offerings to becoming platforms. DataRobot underscores this prediction.
Data Management
Data Security
Opportunity Complexity Data Provider
We predict investment and M&A activity will be most active in the Data Apps layer, with PE being
particularly active here. Data Governance will continue to be a source of robust opportunity –
especially in data security and data management. Analytics companies will see the most premium
Data Infrastructure
M&A valuations. Database
Processing
However, the sheer number of companies throughout the DataTech stack is overloading and Query Engine
confusing investors and acquirers. For startups seeking acquisition or investment—precision, Management
preparation, and identifying the right targets is key.
AI & DataTech – 2021 Atlas
5
Detailed Market Segmentation
VERTICAL APPS HORIZONTAL APPS
Accounting Construction Farming Industrial Oil & Gas Shipping Asset Management Loss Prevention Security
Advertising CPG Finance Insurance Pharma Smart Cities Contact Center Marketing Smart Buildings
Agriculture Credit Food IT PR Sports Customer Support Networking Supply Chain
Data Apps Automotive Defense Forestry Law Enforcement Public Safety Supply Chain Drone Data Payroll Translation
Auto. Driving eCommerce Gaming Legal Publishing Telecom Economics Pricing Analytics
Batteries Education Geopolitical Logistics Railroad Traffic Fraud Product
Cities Energy Government Manufacturing Real Estate Transportation HR Research
Civic Entertainment Healthcare Materials Regulatory Utilities Industrial Risk
Commercial RE Environmental Hospitality Mining Retail Weather IT Sales
ADVANCED ANALYTICS MARKETING ANALYTICS REPORTING
AI Computer Vision Log Analytics Predictive Semantic Analytics Behavioral Analytics Media Intelligence BI
Analytics AutoML Content Analytics ML Prescriptive Social Analytics Customer Churn Mobile Analytics BPM
BPM Conversational AI Model Ops Prog. Languages Sound Recognition CDP Social Analytics CPM
Collaborative Analytics Decision Support Optimization/Solvers Quantum Computing Spatial AI Customer Journey VoC Embedded Analytics
Community Geo Analytics Platform Real-time Analytics CX Analytics Web Analytics Interactive Visual.
DATA MANAGEMENT DATA SECURITY DATA PROVIDER
Archiving & Recovery DataOps Metadata Management Search Data Discovery & Privacy Data as a Service
Governance Data Catalog eDiscovery Platform Sharing Data Loss Prevention Data Exchange
Data Lineage Integration Prep Training Data Encryption Data Extraction
Data Quality Master Data Management Quality Platform Web Scraper
DATABASE PROCESSING QUERY ENGINE MANAGEMENT
Infrastructure DBaaS GPU IaaS NoSQL/NewSQL Time Series Acceleration IMDG Access Virtualization Administration Deployment
Edge Comp. Graph Real-Time SQL/on-Hadoop Computing Data Lake Warehousing Automation Monitoring
AI & DataTech – 2021 Atlas Source: ICON
6 Setting The Stage AI & DataTech – 2021 Atlas AI & DataTech – 2021 Atlas
7
Snowflake’s Path To A Premium Valuation The Result
(September 16, 2020)
$68bn
Opening Market Cap
9,714x
Increase in valuation
since Series A
$3.4bn
Amount raised
AI & DataTech – 2021 Atlas Source: ICON research; Company reports; Pitchbook; Capital IQ
8
IPO Influence
• Amid global lows of 2020, AI and data
companies saw record highs in public Datadog 54.8x SNAPSHOT EV/TRAILING REVENUE
Data Apps
markets. VALUATIONS FOR SELECT PUBLIC
Verisk Analytics 12.4x DATATECH COMPANIES
• Data cloud provider Snowflake marked the
Health Catalyst 11.0x
largest-ever software IPO in its September
debut. Sumo Logic went public the next
day followed by Palantir two weeks later. C3.ai 78.8x
Analytics
C3.ai ended the year with a debut in
December. Telus International, new owner Palantir 43.1x
of AI annotation company Lionbridge, filed
its IPO prospectus in January 2021. SumoLogic 14.2x
Governance
Elastic 27.3x
• As of this analysis, Snowflake is valued at
a whopping 159x Enterprise Value /
Alteryx 16.5x
Trailing Revenue multiple.
Splunk 12.4x
• Public valuations like these influence
Infrastructure
future private company fundraising and Snowflake 159.3x
M&A.
MongoDB 40.3x
Exasol 25.2x
Nasdaq Average 5.0x
AI & DataTech – 2021 Atlas Data as of January 15, 2021.
Source: ICON research; Company reports; Capital IQ; Yahoo Finance
9 Fundraising Trends AI & DataTech – 2021 Atlas AI & DataTech – 2021 Atlas
10
12 45
$41.3m
VC Feeding 10
40
Frenzy $47.2bn
35
TOTAL RAISED
8 $28.2m 30
• Driven by cheap capital, seemingly
Total Raised ($bn)
Average Size ($m)
insatiable customer demand, and
25
growing competition among the VC $22.2m
universe, 2020 set records for the 6
amount of capital raised and the average $23.2m
size of rounds raised by AI & Data 20
Technology vendors. $16.1m
4 $13.6m 15
• 1,107 investors made at least one
investment last year, just shy of the $10.8m
$9.1m $9.6m
1,125 record set in 2019. However, the $8.4m 10
average number of investors per round
set a new record of 4, topping the 2 $6.2m
previous record of 3.2 in 2019.
5
• Although total capital raised and average $0.2bn $0.5bn $0.8bn $1.0bn $2.0bn $3.7bn $3.2bn $6.5bn $7.1bn $10.0bn $11.4bn
round sizes reached new highs, the total 0 0
number of rounds announced dropped to 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
the lowest level since 2016. Total Raised Average Round Size
AI & DataTech – 2021 Atlas Excludes rounds of11
Total Raised By Sector By Year
$12bn $70m
$60m
$10bn
$50m
$8bn
Average Round Size
Total Raised
$40m
$6bn
$30m
$4bn
$20m
$2bn
$10m
$0bn $0m
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Infrastructure Governance Analytics Data Apps
Avg. Infrastructure Avg. Governance Avg. Analytics Avg. Apps
AI & DataTech – 2021 Atlas Excludes rounds of12
NUMBER OF ROUNDS ANNOUNCED
Trends in
180
160
Transaction 140
Sizes 120
100
• Early-stage financings in AI & DataTech
continued to decline while the number of
rounds worth more than $100m reached 80
a record percentage of total rounds
announced.
60
• In the second half of 2020, a total of 20
rounds worth >$100m were announced 40
– equal to one nearly every week.
20
• Mid-stage rounds in the $10-30m range
declined slightly, while deals in the $30-
50m range set a new record. 0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
>1m to 10m >10m to 30m >30m to 50m >50m to 100m >100m
AI & DataTech – 2021 Atlas Excludes rounds of13
2020 DEAL DISTRIBUTION BY SECTOR AND SIZE
Financing
>1m to >10m to >30m to >50m to
10m 30m 50m 100m >100m
Data Apps
Frequency &
25 31 13 9 15
Analytics
35 40 11 5 3
&Valuations
Valuations Governance
18 21 3 7 5
Infrastructure 2020 MEDIAN POST-$ VALUATIONS
11 8 8 4 3
• With the exception of the Data
Infrastructure sector, $10-30m rounds
were most common for our three other Data Apps $100.0m
macro sectors. Data Apps vendors raised
more rounds of at least $100m than they
did in each of the two immediately
smaller tiers. Analytics $65.0m
• Median post money valuations in two of
our four macro sectors reached $100m
Governance $47.3m
or more last year.
• Data Governance vendors, which are
becoming increasingly critical to Infrastructure $110.0m
producing accurate analytics, are
attractive investment opportunities.
AI & DataTech – 2021 Atlas Excludes rounds of14
Andreessen Horowitz LLC
New Enterprise Associates, Inc.
Battery Ventures
Data Collective
Lightspeed Venture Partners
Sequoia Capital
GV
Accel Partners
Intel Capital
Bain Capital
First Round Capital
Khosla Ventures, LLC Most
Index Ventures SA
Y Combinator Management LLC
Sapphire Ventures, LLC
Active
Investors
Bessemer Venture Partners
Kleiner Perkins Caufield & Byers
AME Cloud Ventures
SV Angel Management, LLC
General Catalyst Group Management, LLC Infrastructure Governance Analytics Data Apps
AI & DataTech – 2021 Atlas Includes rounds across all stages and sizes. Excludes rounds of15 M&A Activity AI & DataTech – 2021 Atlas AI & DataTech – 2021 Atlas
16
2020 Quarterly Deal Volume & Value Volume by Sector
Rebound & 140 $14bn Infrastructure
Governance
Resilience 120 $12bn Analytics Apps
100 $10bn
• Alongside all other economic activity, Major M&A
M&A volumes and value halted in the
18
second and third quarters of 2020 as 80 $8bn
global uncertainty weighed on acquirers’ ≥$100m
12 Deal
acquisition strategies.
Volume
6
60 $6bn ≥$1bn
• In Q3 of last year, however, US GDP grew 0 Deal
a remarkable 33.4% Q/Q, more than Volume
1Q20
2Q20
3Q20
4Q20
recouping GDP lost in Q2.
40 $4bn
Value by Sector
• That led to a boom in activity in the
fourth quarter. Twilio kicked off Q4 Infrastructure
20 $2bn Governance
announcing it would acquire customer
data platform startup Segment for $3.2 Apps
billion – it’s largest-ever acquisition. By
our estimates, the deal values Segment 0 $0bn
Analytics
at roughly 13-20x trailing revenue. 1Q20 2Q20 3Q20 4Q20
PE Deal Volume Strategic Deal Volume Total Value
AI & DataTech – 2021 Atlas Includes ICON proprietary data, estimates, and publicly reported deal values.
Source: ICON research; Company reports; Capital IQ; Pitchbook; Bureau of Economic Analysis17
Broadening Of The Buyer Pool
• As the need to become data-driven has grown over $635m / NA
the years, so too has the pool of acquirers of data
vendors. The diversity of the buyer pool has
expanded to include agriculture, publishing, and $935m / 4x
even fast-food conglomerates.
$4.4bn / 2x
• Atypical acquirers are seeking both commercial and
operational benefits of AI and data technologies,
but also financial returns. In November 2020,
Canadian telco Telus announced it was acquiring AI $325m / 10.8x
annotation company Lionbridge for $935m. Two
months later, Telus announced it was taking its
newly acquired Lionbridge business public as a $525m / 8.8x
separate entity.
• We expect this ‘broadening’ trend to continue as $500m / 10x*
VCs fund ever more data-driven applications
vendors that can become data empowerment
targets for digitizing industries.
$600m / NA
$930m / NA
AI & DataTech – 2021 Atlas *Includes ICON proprietary data, estimates, and publicly reported deal values.
Source: ICON research; Company reports18
Strategic
ICON PROPRIETARY GAP ANALYSES
Opportunity
Snapshot
• Nimble and well-capitalized startups are
developing disruptive technologies at
breakneck speed. With nothing to do but
work during the pandemic, development
cycles have shortened significantly.
• Acquirers have frequently maintained
pace via M&A, and they oftentimes
acquire companies that appear to
overlap. Available one-on-one only
• For startups seeking an acquisition—
identifying the right acquirers and
precise messaging are key to
differentiate from the scores of other
companies with similar positioning.
AI & DataTech – 2021 Atlas Source: ICON research19
Premium Valuations For Deep Technology
• Financial performance is typically the
greatest influencer on M&A valuations. Transaction Date EV ($m) Rev. ($m)* EV/Rev.* Description
However, in DeepTech sectors such as AI
and DataTech, the value of a startup’s 11/30/20 230 23x AI platform
technology and talent oftentimes
supersedes financial metrics. 11/3/20 60* 20x AI infrastructure & ModelOps
10/27/20 50* 17x Computer Vision
• ServiceNow has been among the most
frequent premium buyers of AI and data 10/20/20 38 13x Digital experience monitoring
management companies in recent years.
True to its core business, it has preferred 6/22/20 28.1 9x Configuration data management
IT-leaning targets but its most recent and
largest acquisition is that of horizontal AI 1/22/20 58.4 19x Log analytics
startup Element AI.
1/15/20 ~200* 67x Edge AI platform
• Coinciding with the rise of DevOps, over 1/3/20 128.1 43x Computer vision
the past few years the acquirers paying
strategic valuations most often focused on 12/11/19 117.5 12x Database monitoring
the IT market.
11/1/19 24 8x Streaming data integration
• This selection of 12 acquisitions over the
4/24/19 39 13x Mobile data infrastructure
past two years highlights technical value:
approximately $1 billion spent for less
than $50 million of revenue. 2/6/19 37 12x ML-based event analytics
AI & DataTech – 2021 Atlas *Includes ICON proprietary data, estimates, and publicly reported deal values.
Source: ICON research; Company reports; Capital IQ; Pitchbook; Bureau of Economic Analysis20
PE DEAL VOLUME, 2020 SELECT TRANSACTIONS BY SECTOR
Private Apps
Carlyle Group acquires VC-
backed clinical trials data
Equity
management provider
TriNetX.
Primetime Accel-KKR-backed
SugarCRM acquires VC-
Analytics
backed AI-based customer
analytics startup Node.io.
• Buoyed by record-setting fundraises in
2019, private equity firms entered the
pandemic period hungrier than ever.
Providence Strategic Growth
• Historically, PE generally were acquires bootstrapped
underbidders on acquisitions that traded Governance
master data management
to strategic acquirers. That’s all in the startup Semarchy.
past – they are now offering competitive
valuations and should be considered in
nearly every M&A or financing process.
Great Hill & Catalyst
• In 2020, PE firms acquired more in the Investors-backed EDB
Infrastructure continues PostgreSQL
data-driven vertical and horizontal
applications market than any other consolidation by acquiring
sector. We expect that to continue. bootstrapped 2ndQuadrant.
AI & DataTech – 2021 Atlas Infrastructure Governance Analytics Apps Source: ICON research; Company reports; Capital IQ; Pitchbook21 About ICON Corporate Finance AI & DataTech – 2021 Atlas AI & DataTech – 2021 Atlas
22
Deep Experience
Industry Specialization
AI & Data Enterprise
180+
250+
Cloud FinTech
8
Combined years’
experience
Cybersecurity Digital Media
Languages spoken
Closed transactions
25+ 1
Focus – Tech Investment
Countries we’ve Banking
transacted in
Banker Backgrounds
AI & DataTech – 2021 Atlas23
Global Transaction Record
Select Transaction Experience Across Verticals, Geographies & Structures
For further details, contact:
Ben Kolada, Head of AI & DataTech,
Head of US Tech Investment Banking
+1 415 385 8189
ben@iconcorpfin.com
Alan Bristow, CEO
+44 (0) 207 152 6375
alan@iconcorpfin.com
ICON Corporate Finance
• San Francisco
• London
• Bristol
www.iconcorpfin.com
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