AI & Data Technologies 2021 Atlas
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AI & Data Technologies IICCONN 2021 Atlas I C O N C O R P O R A T E F I N A N C E I C O N Strategic Analysis for AI & DataTech Fundraising & M&A AI & DataTechInvestment – 2021 Banking Atlas for DeepTech Disruptors N 2 Contents AI & DataTech Overview • ICON’s Expertise • Key Insights • DataTech Stack AI & DataTech • Detailed Market Segmentation Setting The Stage Overview • Snowflake’s Path • 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 markets. VALUATIONS FOR SELECT PUBLIC Verisk Analytics 12.4x DATATECH COMPANIES • Data cloud provider Snowflake marked the Data Apps 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 C3.ai ended the year with a debut in December. Telus International, new owner Palantir 43.1x of AI annotation company Lionbridge, filed Analytics its IPO prospectus in January 2021. SumoLogic 14.2x Elastic 27.3x • As of this analysis, Snowflake is valued at a whopping 159x Enterprise Value / Alteryx 16.5x Trailing Revenue multiple. Governance Splunk 12.4x • Public valuations like these influence future private company fundraising and Snowflake 159.3x M&A. MongoDB 40.3x Infrastructure 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 40 10 Frenzy $47.2bn 35 TOTAL RAISED 8 $28.2m 30 • Driven by cheap capital, seemingly 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. $16.1m ($m) Size Average Total Raised ($bn)Raised Total 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 of <$1m, undisclosed rounds, acquired companies, and companies that went public. Source: ICON research; Company reports; Capital IQ 11 Total Raised By Sector By Year $12bn $70m $60m $10bn $50m $8bn $40m $6bn $30m Total Raised Total $4bn Size Round Average $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 of <$1m, undisclosed rounds, acquired companies, and companies that went public. Source: ICON research; Company reports; Capital IQ 12 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 of <$1m, undisclosed rounds, acquired companies, and companies that went public. Source: ICON research; Company reports; Capital IQ 13 2020 DEAL DISTRIBUTION BY SECTOR AND SIZE >1m to >10m to >30m to >50m to Financing 10m 30m 50m 100m >100m Data Apps 25 31 13 9 15 Frequency & Analytics 35 40 11 5 3 Governance &ValuationsValuations 18 21 3 7 5 Infrastructure 2020 MEDIAN POST-$ 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