Approaching year-end, it’s not unusual to see a flurry of mergers and acquisition activity as firms hustle to clear their books and close deals that often come with New Year expiry dates. And while M&A activity takes place year round, it’s uncommon to see such a flurry of investment mid-year as we report on this week.
First, crowd-sourced estimates startup Estimize announced a $3.6 million investment from London-based publisher Euromoney Institutional Investor, which already owns a growing suite of data assets in addition to news and commentary businesses, such as FOW TradeData, BCA Research—with which Estimize will work to share content and clients, and to collaborate on developing joint services—and EMIS (formerly ISI Emerging Markets). “They understand that the future of content is data,” says Estimize founder and chief executive Leigh Drogen.
That $3.6 million—part of an overall $8 million series B funding round—bought Euromoney a 10 percent stake in Estimize. Meanwhile, startup consensus credit ratings provider Credit Benchmark isn’t disclosing how much equity its investors received in return for a $20 million funding round to continue its content acquisition and contributor onboarding initiatives, and strengthen its technology platform and data quality functions.
Also being somewhat cagey about a new investment is MDX Technology, which recently completed its first-ever funding round since setting up the company five years ago, raising an unspecified “seven-figure” sum from private investors and clients to accelerate growth and allow the vendor to put dedicated resources on the ground to respond to business opportunities in the US and Asia, rather than relying on a network of partners.
And there’s every reason to suspect that the fundraising flurry isn’t over: companies with ambitious growth plans, such as Koris International, which is preparing to roll out North American and Asian versions of its existing European TrackInsight exchange-traded fund analysis platform, may well choose to seek third-party investment to support those expansions, rather than waiting until existing assets and revenues are sufficient to fund such a move. The advantage is that external funding provides a fast injection of cash, allowing you to move quickly to exploit opportunities that may have disappeared—or been taken advantage of by competitors—by the time organic growth would allow you to address them. The disadvantage is that for each dollar in private equity money, you’re ceding control of your company, little by little to people who may expect a larger return in the short term than you envisage, and who may not be in it for the long haul. That’s why it’s so important to find backers who are on the same page, such as in the case of Estimize, where Drogen describes Euromoney as having the same philosophy and outlook.
Plus, it’s not just about the money—there’s also a big people aspect to this, since those investors often bring with them subject matter experts with plenty of experience that you can tap into.
Indeed, people are a big component of both Credit Benchmark’s and MDX’s funding initiatives: Credit Benchmark will use the investment in part to expand its growing data quality team with more data scientists and content experts to derive insight from its data, and to set up a US office, headed by former S&P Capital IQ exec Harry Chopra, while MDX plans to hire dedicated staff in international locations previously served by third parties.
The willingness of investors to pony up money for market data may reflect what research firm Burton-Taylor International Consulting says is a marked increase in optimism this year and projected for 2016, as data consumers and providers alike anticipate increases in data spend, following a 4 percent increase in industry value to $26.5 billion in 2014.
If the investors currently pouring money into data startups are as smart as their roles suggest, then we can expect that optimism to manifest in the form of a flurry of data deals that will give them a quick return on their investment.
Bill Murphy, CTO of Blackstone, once again joins the podcast to discuss the private equity firm's new offices, designed to house its innovations team.Subscribe to Weekly Wrap emails