Automation vs. AI: Our October 2017 Enterprise Data and Analytics M&A Update

Oct 18, 2017

Automation vs. AI: Our October 2017 Enterprise Data and Analytics M&A Update

Enterprise Data, In the News, Market Update 0 Comments

Dear Clients and Friends,

The report found here covers m&a trends, values and deals in the four segments of the Enterprise Data and Analytics sector that we follow and sometimes lead. Please click here for our October 2017 Enterprise Data and Analytics Update.

Recently, I wrote a blog piece that referenced the new focus of investor Masayoshi Son (the founder of Softbank) on “AI” (artificial intelligence). It’s the future and we know it. China is investing billions in AI. IBM, Intel, Google, GE, Microsoft, Salesforce, Softbank and so many others are investing in the space. The CIA and the Pentagon are investing heavily. We have no doubt that AI will change much of the landscape. Maybe that’s why so many firms are claiming to be leveraging AI. The problem is that for many of them what they are really doing is not exactly AI, its automating repetitive processes. That’s cool. But it’s different.

Collecting massive amounts of information from disparate sources, matching records, finding exceptions and applying algorithms to determine next steps is complicated, challenging and the results are valuable. It’s an important ingredient of AI. But it’s not AI. AI starts with all the inputs of automation and then goes further – with software that learns from the effectiveness of past actions, develops new algorithms itself, makes judgments, predicts future outcomes, and then adjusts recommendations based on those outcomes.

Wealthfront is an example of a fintech firm that seems to get AI. They combine data on customer assets, with external data and then apply a combination of algorithms and behavioral observations to make personalized investment recommendations. The system is designed to continuously monitor and analyze the environment as well as to assess how individual account holders are actually spending, investing and making their financial decisions. They aren’t the only ones. We haven’t figured out yet how much more effective the results are. But, it’s clear to us that this is the direction we are headed in fintech, healthcare, marketing and many other sectors, where data is plentiful and the consequences of decisions meaningful. It’s an exciting time.

Some of the more interesting m&a transactions, trends and values in the AI, Big Data, and analytics sectors are discussed in our Market Update found here. Among other transactions, we note:

•​Nasdaq (NASDAQ:NDAQ) agreed to acquire eVestment for $705mm, valuing the company at an implied 8.7x LTM revenue,
•Verisk (NASDAQ:VRSK) agreed to acquire Sequel for $323mm, valuing the company at an implied 20.8x LTM revenue and 9.6x LTM EBITDA,
•Redis Labs (Santa Clara, CA) raised $44mm in a Series D funding round led by Goldman Sachs Private Capital,
•Logtrust (Madrid, Spain) raised $35mm in a Series B funding round led by Insight Venture Partner,
•HouseCanary (San Francisco, CA) raised $31mm in a Series B funding round led by new investor PSP Growth and included Alpha Edison and other existing investors,
•Dataiku (NY, NY) raised $28mm in a Series B funding round led by Battery Ventures.

We are pleased to be attending the Money2020 conference next week in Las Vegas. Please email Jordan Wittbrot at jwittbrot@marlinllc.com to set up a meeting.

Please see our October 2017 Enterprise Data and Analytics Update here.

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