Amidst a slowing of funds into the e-commerce and start-ups space, analytics players might buck the trend as they draw insights from raw data to help CEOs make crucial decisions. Sources say Fractal Analytics is in advanced talks to raise $100 million for a minority stake. Fractal’s performance is what will fetch it the funds; the company doubled revenues from about $35 million in 2013 to $70 million in FY15 and its operating margins are 40%.
India’s largest independent data analytics player Bengaluru headquartered Mu Sigma, raised $45 million in 2013 from Fidelity and others for around 3% stake and was reportedly valued at more than $1 billion.
The company, backed by Sequoia Capital, has been doing well; revenues crossed $300 million in 2015 and a quarterly run rate of 7% could well sustain. With the global data analytics market growing by more than 20% annually and estimated to reach a size of $124 billion by the end of 2016, analytics players seem to be on a good wicket. That’s one reason Sasha Mirchandani, who runs Kae Capital Fund, has stayed invested for more than 16 years in Fractal Analytics.
In February, 2015, Singapore’s Temasek led a $60 million investment round in Bangalore-based Manthan Software Services a provider of business intelligence and Big Data analytics solutions for enterprises in which existing investor Norwest Venture Partners ( NVP) also participated. Sohil Chand, managing director, NVP India says top players in this space have operating margins close to 50% in some segments which makes them attractive bets.
Manthan’s annual revenues are in the range of $40 million to $50 million, it is believed to be valued at $500 million. Bimal Raj, Partner, Singhi Advisors, says typically analytics firms are valued at eight times sales but a good product could result in a better valuation. Industry experts say players like Mu Sigma and Fractal Analytics, for instance are targeting Fortune 500 companies as clients. Manthan, meanwhile, is hoping to specialise in areas such as retail performance management systems.
Alokik Advani, managing director Goldman Sachs Principal Strategic Investments Group (GSPSI), the arm of the global investment bank that focusses on making long-term strategic bets in fast growing technology companies, says his firm is looking at potential investments in the data analytics space “We will invest between $2 million to $9 million in funding to promising start-ups in the fintech space,” Advani says.
In February this year, UK based Millward Brown, one of the leading global players in brand, media and communications research acquired Analytics Quotient, a Bangalore based data analytics company founded by former WNS employees. The company started as a four member team in 2008 and its team size has grown to more than 500 employees in the span of eight years with annual revenues around $30 million currently.
Earlier in January this year, Qubole which offers big data services to clients across sectors raised $30 million in series C funding from IVP Capital a US based late stage venture capital fund. Other players which have attracted investments—A series A to Cseries—include Absolute data, Latent View Analytics, Bridgei2i and Fine Analytics.