Always Be Closing: Corporates Step Up Their Deals To Sales Tech Startups

Large corporations such as Salesforce, Google, and Bloomberg have been active funding sales tech startups in the last five years, helping to push corporate-backed deal activity above the 55-deal mark for three years straight.

In fact, deals with corporate participation to sales tech reached a high of 62 in 2016, which was a significant increase from the 55 deals with corporate backing in 2015. Deals backed by corporate investors — including those made by their corporate venture arms — accounted for 15% of deals to the broader category.

Corporates — including Salesforce Ventures, Microsoft, and the Chinese owner of supermarkets and department stores Beijing Hualian Group — have participated in notable deals including $100M+ mega-rounds to cloud sales software company Apttus ($108M Series C) and AI-focused InsideSales.com ($100M Series C), as well as a $70M Series E round to China’s FXiaoKe.

Using CB Insights data, we analyzed corporate and corporate venture capital participation deals to private sales tech companies from 2012 through 2016. We define the sales tech category broadly to include companies developing tech-enabled solutions that directly serve sales teams or improve upon the sales process, as well as customer relationship management (CRM) platforms. We exclude companies that primarily focus on tech-enabled marketing or advertising.

For more on the growth of the corporate venture capital or CVC ecosystem, see our semiannual CB Insights Corporate Venture Capital Report.

• Annual financing history
• Quarterly financing history
• Deal share by stage
• Dollar share by stage
• The most active corporate and CVC investors
• The most well-funded companies

Annual financing history

In 2016, corporate and CVC investors participated in a record 62 deals to sales tech startups in deals that totaled a combined $443M.

Taking a closer look, there were 7 deals with corporate participation in 2015 that were $40M or more in size, including a $108M deal to Apttus in Q3’15. By comparison, there were only 2 deals with corporate participation that were $40M+ in 2016, the largest of which was a $70M Series E round of funding to FXiaoKe in Q3’16.

Corporate-backed deal activity and funding has grown significantly since 2012. Between 2012 and 2016 corporate-backed deals increased by 313% and funding from these deals increased more than 15x. Corporate participation trends are similar to the overall investment trends we’ve observed in sales tech broadly, which has seen increased investment over the last few years.

Quarterly financing history

Drilling into quarterly data, Q3’16 was the top quarter for corporate-backed deals to sales tech companies, with 24 deals.

Dollars from these deals were buoyed by a few top few deals including a $70M Series E round to Apttus which included corporate investor Beijing Hualian Group, and a $50M Series B round to Vlocity which included Accenture, Salesforce Ventures, and New York Life Insurance Company.

Deal share by stage

In 2016, early-stage deals (seed/angel and Series A) accounted for 53% of corporate-backed deal share, while mid-stage deals (Series B and C) made up 24%. Since 2012, more than half of all deals that included a corporate or CVC investor have been early-stage deals.

Although still representing a slim majority of deals in 2016, early-stage corporate-backed deals have yielded to investments in a more diverse array of later-stage deals.

Some corporate-backed late-stage sales tech deals in 2016 include FXiaoKe ($70M E+), InsideSales.com ($60M Series D), and Gainsight ($50M Series D).

The most active corporate and CVC investors

Not surprisingly, Salesforce Ventures is the most active corporate investor and has participated in deals to nearly 40 sales tech companies. Salesforce Ventures’ top investments include its participation in a $108M Series C investment to Apttus, a provider of software to streamline sales; a $100M Series C and $60M Series D investment to InsideSales.com, an artificial intelligence sales platform; and a $50M Series B to Vlocity, a cloud CRM platform provider.

The next 2 most active corporate investors in sales tech startups are Google Ventures and Bloomberg Beta.

Google Ventures’ top investments include its participation in multiple rounds to Yesware, an email platform for salespeople. Bloomberg Beta’s top investment is its participation in two rounds, a $15M Series B and $10M Series A, to Aviso, which develops predictive insights software for sales teams.

More than half of the most active corporate and corporate VC firms in sales tech are also in the top 10 most active corporate VC firms globally overall in H1’16, which indicates that they may be active in the category as a side effect of being more active in general, rather than because of a special focus in sales tech.

Notable corporate-backed companies

The most-well funded sales tech company that has a corporate or CVC investor is Apttus. Salesforce Ventures has participated in several rounds of funding to Apttus including a $108M Series C round in Q3’15, a $41M Series B round in Q1’15, and a $37M Series A round in Q3’13. The next two most well-funded companies are InsideSales.com which has raised a total of $264M, and FXiaoKE which has raised a total $233M in funding. The list below factors in both equity and debt rounds of funding.

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