M&A activity in digital marketing and sales tech is heating up, while IPO-bound companies are raising increasing amounts of capital prior to testing public markets.
Over the last year, investors poured $2.4 billion into companies in the digital marketing and sales tech space ranging from B2B referral programs to marketing automation platforms. Investor interest in the space is no doubt being helped by the jump in exit activity int he space which has seen a jump since 2011.
In the past four quarters, 56 Digital Marketing and Sales (DMS) Tech companies exited via IPO or M&A. Interestingly, the M&A landscape has seen a diverse set of acquirers in the last year from traditional tech companies including Dropbox, Yahoo and Google to sales tech startups including ClearSlide and FiveStars. As shown below, exit levels in the DMS Tech space first started surging around late 2011.
DMS Tech companies exiting via IPO are raising larger and larger sums of financing prior to their IPO. The average amount of funding raised prior to an IPO exit was just $39M in 2010, but hit nearly $100M on average in 2012. And some private companies in the DMS Tech space who are part of the IPO Pipeline have raised eye-popping amounts of financing in private markets including SurveyMonkey which raised nearly $800M in debt and equity tender in January 2013 and Hootsuite which raised $165M in VC funding from Insight Venture Partners, OMERS Ventures and Accel Partners just last month. Of course, some portion of these financings were used to cash out executives and early employees and so not all of these proceeds went to the companies.