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

Vendor Amount Raised, $M Market Key Investors
Skillsoft 2325 eLearning Charterhouse Capital Partners
Applied Systems 1800 Insurance ERP Hellman & Friedman
UNIT4 1600 ERP Advent International
Dropbox 1100 Collaboration Black 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 Network 1050 CRM Vista Equity Partners
SurveyMonkey 900 Collaboration Tiger Global Management, ICONIQ Capital, Social+Capital Partnership, Laurel Crown Partners, TPG Growth, Google
Kronos 750 HCM Blackstone, GIC, Hellman & Friedman
Box 546 Collaboration Andreessen 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
Deem 467 eCommerce Fidelity, Keating Capital, Foundation Capital, Oak Investment Partners, American Express, JPMorgan Chase & Co
Vocus 447 CRM GTCR
Evernote 250.5 Collaboration Meritech Capital, CBC Capital, Sequoia Capital, Morgenthaler Ventures, and DOCOMO Capital
P2 Energy Solutions 250 Energy ERP Vista Equity Partners sold P2 to Advent International for undisclosed amount in October 2013
Domo 248.6 BI Benchmark, GGV Capital, IVP, Greylock Partners, Founders Fund, Andreessen Horowitz, Hummer Winblad, WPP
Viewpoint Construction Software 230 Construction ERP Bain Capital
Atlassian 210 PPM T. Rowe Price, Dragoneer Investment Capital, Accel Partners
DocuSign 203.5 Collaboration Kleiner Perkins Caufield & Byers, Accel Partners, Scale Venture Partners, Sigma West, Ignition Partners, SAP Ventures, Frazier Technology Ventures, Second Century Ventures, WestRiver Capital, Google Ventures
EventBrite 200 Collaboration DAG Ventures, Sequoia Capital, T. Rowe Price, Tenaya Capital and Tiger Global
SilkRoad 192 HCM Keating Capital, NTT Finance, Intel Capital, Crosslink Capital, Foundation Capital, Azure Capital and Tenaya Capital
HootSuite 189.9 CRM Blumberg Capital, Hearst Interactive Media, Geoff Entress, Social Concepts, Millennium Technology Ventures, OMERS Ventures, Insight Venture Partners, Accel Partners
Lithium Technologies 151.7 CRM Emergence Capital Partners, Shasta Ventures, Benchmark Capital, New Enterprise Associates, SAP Ventures, DAG Ventures, Tenaya Capital, Greenspring Associates
Anaplan 144.4 BI Shasta Ventures, Meritech, Salesforce, Granite Ventures
SugarCRM 143.7 CRM Goldman Sachs Group, Draper Fisher Jurvetson, Walden International, New Enterprise Associates
Intacct 139.8 Accounting Battery Ventures, Costanoa Venture Capital, Emergence Capital, Sigma Partners, Split Rock Partners, Morgan Creek Capital Management, Silicon Valley Bank
Zuora 132.5 Subscription Management Vulcan Capital, Northgate, Next World Capital, Benchmark Capital, Shasta Ventures, Tenaya Capital, Redpoint Ventures, Index Ventures, Greylock Partners
ServiceMax 122 ERP Adams Street Partners, Crosslin Capitalk, Emergence Capital, Mayfield Fund, Salesforce.com, Trinity Ventures
Shopify 122 eCommerce OMERS, Insight Venture Partners, Bessemer Venture Partners, FirstMark Capital, Georgian Partners, Felicis Ventures
MINDBODY 108 Healthcare ERP Bessemer Venture Partners, Institutional Venture Partners, Catalyst Investors, W Capital Partners, Montreux Equity Partners
Ipipeline 104.4 CRM NewSpring Capital, Technology Crossover Ventures, Volition Capital
Sage Nonprofit 101 Nonprofit ERP Accel KKR
HubSpot 100.5 CRM General Catalyst, Matrix Partners, Scale Venture Partners, Sequoia Capital, Google Ventures, Altimeter Capital, Salesforce.com, Cross Creek Capital
Avalara 100 Financials Battery Ventures, Sageview Capital, Benaroya Capital, Buckhead Investment Partners, Pioneer Venture Partners
Dude Solutions 100 School ERP Warburg Pincus
Other 6500    
Total 21029.5    

 

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