Deal activity to sales tech startups reached record levels in 2016, with an average of over 100 deals per quarter for 2016. For full-year 2016, the category attracted a total of just over $5B in investment across 425 deals, compared to $1.6B across 400 deals in 2015.
The significant increase in dollar funding from 2015 to 2016 was driven largely by a $2.5B private equity mega-round in Q4’16 to Infor, a provider of CRM and sales intelligence applications for mid-sized businesses. The company also raised $133M in a separate private equity round in Q3’16.
Other top deals of 2016 include: a $900M private equity investment in Genesys Telecommunications Laboratories, a company which offers a customer experience platform and consulting services to help clients increase customer engagement, a $88M Series D investment in Apttus, a provider of software that consolidates and streamlines the sales process; and a $70M Series E investment in FXiaoKe, a provider of mobile-based tools for sales teams in China.
Using CB Insights data, we analyzed funding trends from 2012 through 2016 in the sales tech space. We define sales tech 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.
This report contains detailed information on:
- Annual financing history
- Quarterly financing history
- Financing trends by stage
- The most active VC investors
- The most well-funded companies
Annual financing history
Deal activity in sales tech has more than doubled since 2012, reaching 425 deals in 2016. However, deal activity grew only 6% between 2015 and 2016. The major bump in deal activity took place between 2012 and 2013 when the number of deals grew 77% in one year.
In contrast to the deceleration in deal activity growth, total funding to the industry has grown at a rapid rate in the last year, up 205% between 2015 and 2016. However, as mentioned above, 2016 funding was driven by a private equity mega-round totaling $2.5B to unicorn Infor. The mega-round, funded by Koch Industries, accounts for nearly 50% of total industry funding in the year. Excluding that deal, total industry funding would have reached $2.5B in 2016, representing a sizable, yet more modest, increase of approximately 53% over 2015 dollars.
Quarterly financing history
Looking at private sales tech companies on a quarterly basis, trends mirror annual activity.
Nearly 74% of total funding to the category in 2016, more than $3.6B, was driven by Q3’16 and Q4’16 deals to these four aforementioned companies: Infor, Genesys Telecommunications Laboratories, FXiaoKe, and Apttus.
In comparison, the largest deal of Q1’16 was a $25M Series A investment in Cyara, a software platform that helps clients test and monitor the functionality of their systems related to customer experience (i.e. customer contact center).
Five of the last eight quarters (and three of the last four) have seen 100+ deals to sales tech.
Financing trends by stage
Although the number of annual sales tech deals has more than doubled since 2012, the distribution of investment stages has remained relatively static. Historically, approximately two-thirds to three-quarters of deals in the industry are in early-stage deals (Seed/Angel and Series A), with 2016 seeing the smallest share of early-stage deals at 66%.
This could point to increased maturity in the industry as investors allocate a greater share of deals to later-stage investments.
Mid-stage deals (Series B and C) accounted for 9% of deals in 2016, up from 6% in 2012.
Our “Other” category, which includes minority investments by corporates along with convertible notes, accounted for 20% of deals in 2016.
Dollar share has fluctuated much more significantly, particularly over the last two years. Series E+, which includes both growth equity and private equity deals, increased from 9% of dollar share in 2015 to 75% of dollar share in 2016 due to the private equity mega-rounds to Infor and Genesys Telecommunications Laboratories in the second half of the year.
Although seed/angel as well as Series A through Series D deals accounted for 86% of dollar share as recently as in 2015, the same categories made up only 24% of dollar share in 2016.
The largest early-stage deals in 2016 (including seed/angel and Series A) went to Takt, a machine learning customer personalization platform ($30M Series A) and Gladly, a customer service communications platform ($27M Series A).
The most active VC investors
Salesforce Ventures claimed the top spot as the most active investor in sales tech companies between 2012 and 2016. Most recently, the company participated in a $50M Series B round of financing to Vlocity, a cloud CRM platform provider. 500 Startups, with investments in Intercom and ToutApp, and BoxGroup, with investments in Kustomer and SevenRooms, were the second- and third-most active investors, respectively.
|8||New Enterprise Associates|
|8||Bessemer Venture Partners|
The most well-funded companies
The most well-funded sales tech company is Infor, having raised a total of $2.63B. After the company’s $2.5B private equity mega-round with Koch Industries in Q4’16, it has been valued at $10B. Genesys Telecommunications Laboratories, which received $900M in private equity funding in 2016, is now valued at approximately $3.8B.
Other well-funded companies on the list include Apttus, InsidesSales.com, and DealerSocket. Apttus (mentioned above), a provider of software that consolidates and streamlines the sales process, has raised a total $274M in funding and is valued at $1.3B. InsideSales.com, an artificial intelligence sales acceleration platform, has raised $264M in total funding. Close behind, Dealersocket, a CRM platform for auto dealers that also offers sales solutions, has raised almost $240M to date. Nine of the ten companies on the most well-funded list have raised above $100M.
|Rank||Company||Total Disclosed Funding (M)|
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