True Ventures and Social Capital are among the most active smart money VC investors in sales tech startups.
The top venture capitalists — our “smart money” investors — decreased the pace of their deals to sales tech startups in 2016, with just 16 deals, the lowest number of deals since 2012.
We looked at how overall smart money VC activity has trended in the sales tech space and used our Business Social Graph to map overlapping relationships between startups and smart money investors.
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 also chose to include companies that improve upon customer experience, engagement, and booking processes for companies in the restaurant, travel, health, and other industries. We exclude companies that primarily focus on tech-enabled marketing or advertising.
For more on how we selected our 24 “smart money VCs,” please see the explanation and full smart money list at the bottom of this post.
In 2016, smart money VCs participated in 16 funding rounds to startups operating in the sales tech space, with funding from those deals totaling $272M. The deals and dollars amounts represented declines of 36% and 42%, respectively, compared to 2015.
Taking a closer look at deal activity, smart money investors participated in 6 deals worth at least $30M in 2015. These include a $60M Series D round in Q1’15 to artificial intelligence sales acceleration platform InsideSales.com that included Kleiner Perkins Caufield & Byers, and a $50M Series D round in Q4’15 to customer success platform Gainsight which included Battery Ventures and Bessemer Venture Partners.
By comparison, smart money investors participated in only 2 deals that were worth over $30M in 2016, including a $55M Series E+ round in Q4’16 to customer success platform Freshdesk, that included Accel Partners, as well as a $50M Series C round in Q2’16 to customer communication platform Intercom, that included Bessemer Venture Partners, Index Ventures, and Social Capital.
Smart money investors have not participated in any of the largest deals in the sales tech space, such as the $2.5B private equity round in Q4’16 to Infor, and or the $900M private equity round in Q3’16 Genesys Telecommunications Laboratories. However, smart money investor Kleiner Perkins Caufield & Byers did participate in a $100M Series C mega-round in Q2’14 to InsideSales.com.
Quarterly smart money VC participation in sales tech deals fluctuated widely between 2012 and 2016. Smart money investor participation declined from 7 deals in Q2’16 to 4 deals in both Q3’16 and Q4’16. Although deal count remained stagnant last quarter, Q4’16 still represents a rebound from Q1’16, in which smart money investors participated in only one deal worth $2M.
Dollars also increased between Q3’16 to Q4’16 from $40M to $82M, primarily due to the $55M Series E+ round of funding to Freshdesk, which included Accel Partners.
Business social graph
We used our Business Social Graph to visualize how smart money VC investors and their portfolio companies in the sales tech space are interrelated.
Please click to enlarge – image includes investments from 2012 through 2016.
A few key takeaways from the business social graph below:
Artificial Intelligence: Several sales tech companies using artificial intelligence (AI) have garnered attention from smart money investors. Notably, AI-based sales analytics company Lattice Engines received multiples rounds of funding from both Sequoia Capital and New Enterprise Associates. Additionally, AI-powered sales assistant platform Tact has received multiple rounds of funding from Accel Partners and Redpoint Ventures.
Heavy co-investing: Between 2012 and 2016, smart money investors have co-invested many times. Greylock Partners, Bessemer Venture Partners, and Social Capital have all invested in ClearSlide, a sales enablement platform offering sales content, communication automation, and customer intelligence. Greylock Partners and Bessemer Ventures Partners both participated in Series B ($28M Q3’12) and Series C ($50M Q1’14) rounds of funding to the company. Social Capital participated in the company’s C round.
Bessemer Venture Partners, Social Capital, and Index Ventures have all invested in customer communication software company Intercom. Social Capital participated in Series A ($6M Q2’13), Series B ($23M Q1’14), Series C ($35M Q3’15), and Series C – II ($50M Q2’16). Bessemer Venture Partners participated in the company’s Series B, C, and C – II rounds, while Index Ventures participated in only the company’s most recent Series C – II round.
Top smart money VCs: In terms of investments to unique sales tech startups, True Ventures came in first place with investments to 7 distinct companies between 2012 and 2016. In terms of absolute number of deals, Social Capital took the top spot with its participation in 13 deals between 2012 and 2016.
Note: To analyze smart money trends, we looked at the activity of 24 top VC firms, selected according to portfolio valuations and investment outcomes. Some of the investors are linked to relevant research briefs. Here’s our full list of 24 smart money investors:
- Sequoia Capital
- Benchmark Capital
- Accel Partners
- Greylock Partners
- Andreessen Horowitz
- Union Square Ventures
- First Round Capital
- Bessemer Venture Partners
- Kleiner Perkins Caufield & Byers
- New Enterprise Associates
- Founders Fund
- Lightspeed Venture Partners
- Foundry Group
- Index Ventures
- Khosla Ventures
- Social Capital
- Emergence Capital Partners
- True Ventures
- Floodgate Fund
- General Catalyst Partners
- Spark Capital
- Battery Ventures
- Redpoint Ventures
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