The Marketing Technology (martech) sector has seen a lot of venture capital funding over the past few years. How have its funding trends evolved over time? On our martech research platform, we have analyzed the data through 2017 and can conclude that the investments in martech have become fewer in frequency but larger in amount.
We have come to this conclusion from the following three takeaways:
We will illustrate these takeaways with a series of graphics to show the trend of martech investments over time.
We will start off by examining the martech funding trends over the years stacked by quarter.
This graph illustrates that martech funding is on a stable upward trend at the annual level. Specifically, the CAGR in funding amounts from 2012 to 2017 is 19%.
We have seen that martech funding is steadily growing, but what about the total number of deals?
The following graph shows us the annual number of martech startup funding deals, stacked by quarters.
The above graphic illustrates that the number of martech funding events saw a healthy upward trend from 2011 to 2014 and declined thereafter. In fact, the CAGR in funding events from 2012 to 2017 is -5%, and the number of events in 2017 is 88% of that in 2016.
We have seen that martech funding amounts are increasing steadily but its funding events are seeing a decline. Let’s see if the trend in average deal size sheds any further insight.
The following graph shows the average funding deal size in Marketing Technology over different quarters from 2011 to 2017, as well as the trendline.
This graphic does indicate that the average martech funding deal size has experienced steady growth over the past few years. The trendline shows that from Q3 2011 to Q4 2017 the average deal size has grown by approximately 500%. This stable upward trend in average deal size demonstrates that the investments in Marketing Technology have indeed become weightier over time.
In summary, we have seen from the above graphics that martech funding amounts are on a general upward trend at the annual level, yet its event counts have seen a decline in recent years. Moreover, the average funding deal size has been growing consistently over time. These takeaways lead us to conclude that the investment rounds in martech have become more substantial–in that the bets have become fewer but larger over time. It’ll be interesting to see if this trend continues in 2018.
What are your thoughts on this? Let us know in the comments section below.