Private Equity Investing in Data Analytics Companies
Data centric companies have become one of the most favored sectors for private equity investors in recent years. This trend started gaining momentum in 2011. Although private equity began exploring data analytics companies as an investment thesis in 2007 and 2008, the recession of 2009 – 2010 halted most PE investments across all sectors during this time.
The increased focus on data analytics companies is largely fueled by the adoption of predictive analytics (initially), and subsequently by machine learning and the rise in artificial intelligence. These applications require data (preferably good data) as the atomic input unit from which to learn. Input data informs machine learning much the same way our five senses input data into our brain, from which we derive patterns and develop predictive skills.
Data-as-a-product resonates with private equity investment preferences precisely because it is scalable, potentially quite profitable and not capital intensive (relative to scalability).
Evolution of PE Investments in Data Analytics
Early investments in data and analytics companies often focused on marketing analytics, to better understand consumer behavior (circa 2011+). This is where data analytics gained early traction, and consequently, significant private equity investments.
Offering data driven decision making to what was traditionally considered a black box appealed to a broad audience of corporate customers. The idea that companies could better quantify the effectiveness of their marketing budget and better tailor their messaging to specific customer segments was an attractive proposition.
Early Example PE Investments in Data Companies Focused on Marketing & Consumer Behavior
rio SEO provides interactive marketing analytics software to global organizations enabling robust interactive and search marketing analytics solutions for display advertising, paid search advertising and organic search engine optimization across the enterprise and throughout the channel.
June 2012 – GCP Capital Partners and Madison Capital Funding completed a $70 million growth capital investment in XL Marketing. (Zeta Global later secured $140 million in financing from GPI Capital and Franklin Square Capital Partners in 2017.)
Zeta Global (formerly Zeta Interactive) is a customer life-cycle marketing company that integrates Big Data (both real time behavioral and demographic data), proprietary technology and analytics to create digital marketing programs to help leading brands acquire, grow and retain customers.
Upsight’s comprehensive analytics and marketing platform allows mobile and social developers to better understand user behavior, decide what it means, and act to impact their key business goals.
Recent Private Equity Acquisitions of Data Analytics Companies
As the use (and usefulness) of data spread to other end applications, private equity acquisitions of data companies migrated to those serving the healthcare and education markets (circa 2013 – 2014)… two large sectors that could substantially benefit from data-driven insights.
As of early 2020, private equity investments in data analytics companies (~400 current platform companies) now include diverse end applications across a wide array of industries, including:
- Call tracking
- Clinical trial
- Financial services
- Real estate
…and many more.
Centauri Health Solutions is a provider of technology-enabled analytics and services, specializing in hosted software solutions, data-driven services, and data management designed specifically for risk adjustment and quality-based revenue programs.
Medical Knowledge Group is an analytics-driven and technology-enabled multi-channel healthcare marketing and communications provider servicing the biopharmaceutical industry.
December 2019 – J.D. Power merged with Autodata Solutions. The merger marks the completion of J.D. Power’s acquisition by Thoma Bravo. The newly combined company will operate under the name J.D. Power.
J.D. Power is a data analytics and consumer intelligence company. The company offers new and pre-owned automobile transactional data, valuation tools, vehicle feature information and consumer analytics to the automotive industry.
November 2019 – Trilliant Health received a major growth investment from Primus Capital. Primus joins existing investors who also participated in the recapitalization, including Providence Ventures, Martin Ventures, Noro-Moseley Partners, and Nashville Capital Network.
Trilliant Health is an analytics and data science company that empowers intelligent patient acquisition.
November 2019 – AiCure recieved a Series C fundraising round totaling $24.5 million. The financing was led by Palisades Growth Capital with new investors from Singtel Innov8, Asahi Kasei Corporation, Accelmed Growth Partners and SpringRockVentures. Participants in this round included all prior institutional investors, including BairdCapital, New Leaf Venture Partners, the Pritzker Group, Biomatics Capital, Tribeca VenturePartners, and Silicon Valley Bank.
AiCure is an artificial intelligence and advanced data analytics company targeting the healthcare industry. AiCure provides a patented mobile software-as-a-service (SaaS) platform that visually confirms medication ingestion.