Investors Pile Into Cloud Apps Vendors

Cloud apps vendors raise $19B

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The drive to bankroll some of the fastest-growing Cloud applications vendors has reached a milestone with at least $21 billion being raised so far. That includes recent investments from private-equity firms, venture capitalists, and sovereign funds as well as measures by these entities to place some vendors under their control often by going private.

One of the largest investments was the $2.3-billion purchase of Skillsoft in March 2014 by UK private-equity firm Charterhouse Capital Partners from Berkshire Partners LLC, Advent International Corp and Bain Capital LLC. That followed the $1.8-billion purchase of Applied Systems in November 2013 by PE firm Hellman & Friedman from Bain Capital LLC. There were similar purchases such as UNIT4, Active Network and Vocus as shown in the following table.

The majority of the transactions involved follow-on financing by new investors that are increasingly drawn to the Cloud applications space. Dropbox and Box Inc. were the shiny examples of over-the-top investments that VCs and PE firms have piled onto these collaboration vendors without blinking their eyes. Between them, investors have put in at least $1.6 billion in debt financing, direct and indirect ownerships. Box’s valuation has reached more than $2 billion, while Dropbox’s hovers around $10 billion.

Cloud apps vendors raise $19B
Cloud apps vendors raise $19B

The table shows 32 transactions with each Cloud applications vendor raising at least $100 million in recent funding rounds – mostly within the past three years. Not shown are more than 200 deals that other Cloud applications vendors have raised through the same period. The total amount of funding raised so far for these 230 vendors reaches more than $21 billion, or about $91 million for each vendor.

The outsized investment comes at a time when many of these Cloud applications vendors have begun to gain wide acceptance, albeit at a steep cost. Box, for example, has secured over 27 million registered users including 39,000 paying customers for its storage and collaboration offerings in the Cloud. Over the past three years, Box has secured about $207 million in aggregated revenues, but its sales and marketing expenses have exceeded $310 million during the same period.

It’s difficult to draw the conclusion that these vendors have been prodded by investors to spend lavishly on sales and marketing in order to succeed in the Cloud or if they have been emboldened to invest heavily in order to get the attention of customers and investors.

In either case, the piggybank of these Cloud applications vendors appears to show no sign of shrinking. Check back this space often since we are going to track and update the status of these big money grabbers in order to show the flow of money coming in and changing hands among investors in the coming quarters.

Cloud Applications Vendors With At Least $100M In Private Funding and/or Private-led Acquisitions

VendorAmount Raised, $MMarketKey Investors
Skillsoft2325eLearningCharterhouse Capital Partners
Applied Systems1800Insurance ERPHellman & Friedman
UNIT41600ERPAdvent International
Dropbox1100CollaborationBlack Rock, JP Morgan, Sequoia Capital, Accel Partners, Index Ventures, Benchmark Capital, Goldman Sachs, Greylock Partners, Institutional Venture Partners, RIT Capital Partners, Valiant Capital Partners.
Active Network1050CRMVista Equity Partners
SurveyMonkey900CollaborationTiger Global Management, ICONIQ Capital, Social+Capital Partnership, Laurel Crown Partners, TPG Growth, Google
Kronos750HCMBlackstone, GIC, Hellman & Friedman
Box546CollaborationAndreessen Horowitz, Bessemer Venture Partners, Draper Fisher Jurvetson, Emergence Capital Partners, General Atlantic, Meritech Capital Partners, Social+Capital Partnership, NEA, Scale Venture Partners, and U.S. Venture Partners, and strategic investors salesforce.com and SAP
Deem467eCommerceFidelity, Keating Capital, Foundation Capital, Oak Investment Partners, American Express, JPMorgan Chase & Co
Vocus447CRMGTCR
Evernote250.5CollaborationMeritech Capital, CBC Capital, Sequoia Capital, Morgenthaler Ventures, and DOCOMO Capital
P2 Energy Solutions250Energy ERPVista Equity Partners sold P2 to Advent International for undisclosed amount in October 2013
Domo248.6BIBenchmark, GGV Capital, IVP, Greylock Partners, Founders Fund, Andreessen Horowitz, Hummer Winblad, WPP
Viewpoint Construction Software230Construction ERPBain Capital
Atlassian210PPMT. Rowe Price, Dragoneer Investment Capital, Accel Partners
DocuSign203.5CollaborationKleiner Perkins Caufield & Byers, Accel Partners, Scale Venture Partners, Sigma West, Ignition Partners, SAP Ventures, Frazier Technology Ventures, Second Century Ventures, WestRiver Capital, Google Ventures
EventBrite200CollaborationDAG Ventures, Sequoia Capital, T. Rowe Price, Tenaya Capital and Tiger Global
SilkRoad192HCMKeating Capital, NTT Finance, Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital
HootSuite189.9CRMBlumberg Capital, Hearst Interactive Media, Geoff Entress, Social Concepts, Millennium Technology Ventures, OMERS Ventures, Insight Venture Partners, Accel Partners
Lithium Technologies151.7CRMEmergence Capital Partners, Shasta Ventures, Benchmark Capital, New Enterprise Associates, SAP Ventures, DAG Ventures, Tenaya Capital, Greenspring Associates
Anaplan144.4BIShasta Ventures, Meritech, Salesforce, Granite Ventures
SugarCRM143.7CRMGoldman Sachs Group, Draper Fisher Jurvetson, Walden International, New Enterprise Associates
Intacct139.8AccountingBattery Ventures, Costanoa Venture Capital, Emergence Capital, Sigma Partners, Split Rock Partners, Morgan Creek Capital Management, Silicon Valley Bank
Zuora132.5Subscription ManagementVulcan Capital, Northgate, Next World Capital, Benchmark Capital, Shasta Ventures, Tenaya Capital, Redpoint Ventures, Index Ventures, Greylock Partners
ServiceMax122ERPAdams Street Partners, Crosslin Capitalk, Emergence Capital, Mayfield Fund, Salesforce.com, Trinity Ventures
Shopify122eCommerceOMERS, Insight Venture Partners, Bessemer Venture Partners, FirstMark Capital, Georgian Partners, Felicis Ventures
MINDBODY108Healthcare ERPBessemer Venture Partners, Institutional Venture Partners, Catalyst Investors, W Capital Partners, Montreux Equity Partners
Ipipeline104.4CRMNewSpring Capital, Technology Crossover Ventures, Volition Capital
Sage Nonprofit101Nonprofit ERPAccel KKR
HubSpot100.5CRMGeneral Catalyst, Matrix Partners, Scale Venture Partners, Sequoia Capital, Google Ventures, Altimeter Capital, Salesforce.com, Cross Creek Capital
Avalara100FinancialsBattery Ventures, Sageview Capital, Benaroya Capital, Buckhead Investment Partners, Pioneer Venture Partners
Dude Solutions100School ERPWarburg Pincus
Other6500  
Total21029.5  

 

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