Jonathan Cantwell, Partner & Head of Software at GP Bullhound, said: “Several trends emerged across the software space in Q3. Machine Learning is starting to play a larger role in the SaaS space; chatbots are increasing in popularity as businesses adopt 24/7 customer support; and Earned Wages Access companies bridge the gap between work and pay, given the tighter job market and shrinking workforces. We are also seeing API-centric security solutions gaining rapid adoption, and vertical SaaS solutions rising in popularity due to their cost-saving solutions for businesses.”
Matt Stamp, Partner in the Software team at GP Bullhound, commented: “The broader macroeconomic and geopolitical environment has continued to influence the market in Q3. Public markets continue to be shut to IPOs and while M&A and private placement volumes are down quarter on quarter, 2022 YTD numbers are higher than any year aside from 2021. The significant dry powder, that both investors and strategics have accumulated, is focused on top-quartile investment opportunities, buy-outs, and funding consolidation strategies across multiple subsectors. We expect M&A-driven market consolidation to be a key theme in Q4, in addition to the ongoing trend of public to private transactions.”
What’s trending this quarter in Software?
Chatbots enter centre-stage
- Chatbots are becoming increasingly popular among businesses and consumers, with growth largely driven by the adoption of 24/7 customer support
- The Chatbot ecosystem continues to develop and scale: by 2024, consumer retail spending via chatbots worldwide is likely to reach $142bn – up from just $2.8bn in 2019
EWA companies to alter current financial system
- Earned Wages Access (EWA) companies remove the gap between work and pay, and adoption is being driven by a tight job market and shrinking workforce
- Fintech companies are partnering with financial institutions to enter the space
The evolution of MLaasS
- Machine Learning (ML) is starting to play a larger role in the SaaS space, making MLaaS will increasingly essential for AI-based SaaS businesses
- Large players in the space are integrating MLaaS into their current cloud offerings
- By 2028, Market Growth Reports predicts that the MLaaS market will be valued at $8.3bn, up from $900m in 2022, representing a tremendous 43.5% CAGR
Enquiries
For any enquiries, please contact:
Jonathan Cantwell, Partner (US), at jonathan.cantwell@gpbullhound.com
Matt Stamp, Partner (Europe), at matt.stamp@gpbullhound.com
About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.
Oliver Schweitzer and Ravi Ghedia, Executive Directors at GP Bullhound, said: “We have highlighted various key and growing Digital Services trends in Q3. Privacy pressures are driving M&A and investments in adtech towards innovative cookieless technologies, such as contextual advertising. Latin American countries are seeing significant M&A activity, as rapid technology adoption in the region leads to increased demand for digital services providers. Lastly, as industry players seek to supercharge their customer acquisition processes, there is growing demand for innovation in UX design to stay ahead of competition. Q3 saw a reduction in deal activity versus the last 2 years, in response to macroeconomic factors in the market.”
What’s trending this quarter in Digital Services?
Contextual advertising resurgence driving significant consolidation and investments
- Privacy pressures are driving advertisers towards cookieless technologies
- Advances in machine learning and AI have enabled a number of other technologies, such as contextual advertising, direct sales and digital fingerprinting, to also gain traction
- A hive of investment activity is going on in the space including Advent’s €250m investment in Spanish adtech provider, Seedtag
Growing LatAm digital services market leading to increased M&A
- Rapid technology adoption in the region has led to increased demand for digital-first services
- Large incumbents are recognising the need to have Latin American presence in order to win large global clients
- Significant deals within the space include WPP’s acquisition of Jeffrey Group and Accenture’s acquisition of Tenbu
The need for seamless UX design is driving consolidators into M&A mode
- Companies need to offer innovative digital products that work flawlessly across all media channels and that collect and utilise data in an ongoing feedback loop
- The UX design software market is likely to reach $20bn by 2028 at a CAGR of c16%
- Multiple high-profile deals were signed in Q3, including the acquisition of London-based design and UX agency Rufus Leonard, by Capgemini
Enquiries
For enquiries, please contact:
Oliver Schweitzer, Executive Director (US), at oliver.schweitzer@gpbullhound.com
Ravi Ghedia, Director (Europe), at ravi.ghedia@gpbullhound.com
About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.
Claudio Alvarez, Partner at GP Bullhound, commented: “Several key trends continued to emerge in Q3 2022. India has solidified itself as a leading fintech hub, with over 4k fintech companies and more than 20 fintech unicorns. Further innovation and adoption in the space are expected across the country. Crypto wallets are bridging the gap between consumers and blockchain, with the opportunity for a market-leading wallet wide open. Lastly, behavioural authentication continues its rise, with growing numbers of users recognising its potential against online banking fraud. On the dealmaking side, fintech activity remained muted due to continued macroeconomic uncertainty, but category leaders like Klarna and wefox continued to raise capital, despite the difficult fundraising environment.”
What’s trending this quarter in Fintech?
India is now being recognised as a leading fintech ecosystem
- India is now home to 4,200+ Fintech’s and 20+ Fintech unicorns, establishing itself as a leading Fintech economy globally. Key Fintech verticals include Payments, Lending and Neo-banking
- Positive regulatory reform and increased digital penetration has encouraged innovation and adoption of Fintech across India. This has attracted interest from leading institutional investors, with the likes of Sequoia Capital opening offices in the country
The next step in web3 adoption lies with simplified crypto-wallet onboarding
- Crypto wallets are the bridge between consumers and blockchain technology, naturally solidifying the importance of wallets in the adoption of Web3 and cryptocurrency
- 2 million active wallets interacted with blockchain technologies on average per day in September 2022. With over 5 billion people in the world having access to the internet, the opportunity to be the market leading wallet is wide open
Is behavioral biometrics the future of fraud prevention?
- As 93% of all banking fraud attacks occur online, strong authentication and financial crime prevention technologies have become a key focus area for online banking providers
- Behavioural biometrics technologies measure unique patterns in human activity and compare them to past actions to detect anomalies and block bad actors
Enquiries
For enquiries, please contact Claudio Alvarez, Partner, at claudio.alvarez@gpbullhound.com
About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.
Alec Dafferner, Partner at GP Bullhound, said: “We are seeing various trends shaping the digital media landscape in Q3. Competition for the ownership of sports rights is heating up among Big Tech, as high viewership traffic promises new subscribers in the future. We are also seeing non-gaming apps surpass gaming apps for the first time this year. Lastly, streaming companies continue thinking of ways to reinvent themselves through ad-supported models and new original content. On the dealmaking side, digital media remains active, with a healthy pace of investments in the sector as global consumption of digital media increases.”
What’s trending this quarter in Digital Media?
Big Tech aims for sports
- Sports rights have become a valuable asset and tech giants like Apple and Amazon have taken notice, both recently winning major sports rights deals with the National Football League, Major League Baseball, and Major League Soccer in the US
- The value of sports rights is at all-time highs and as trillion-dollar tech companies enter the playing field, they will only rise higher – in 2024 alone, Disney, Comcast, Paramount, and Fox will pay a combined total of $24.2bn for sports rights
- Most of the rights still belong to legacy media companies but the pressure is on as tech giants can leverage large cash balances
Gaming apps revenue buffers
- US app store revenues have historically been dominated by gaming apps; for the first time, non-game apps have surpassed gaming apps in revenue generation
- This shift is driven by the subscription model adopted by non-game apps, compared to the microtransactions of gaming apps
Streaming shifts strategies
- Streaming services have evolved into a dichotomy of free or ad-supported models versus subscription-based – so far, the free option is winning ground
- Subscription-based services are feeling the heat: The largest paid-TV providers in the US, representing 93% of the market, lost two million subscribers in Q1. Netflix alone lost nearly one million in Q2. Paramount+ added 3.7 billion subscribers globally in Q2, but their other streaming services lost 2.4 million
- Meanwhile, ad-supported video-on-demand platforms (Tubi, Pluto TV, Freevee, Xumo) and ad-supported versions of subscription services (Hulu, HBO Max) are expected to generate nearly $19bn in revenue this year, doubling from 2020
- Media companies are looking to cash in on free-streaming platforms
- Paramount bought Pluto TV for $340m in 2019, which is expected to bring in $1.2bn in ad revenues this year. Tubi was acquired by Fox Corp in 2020 for $490m and is projected to generate $830m this year. Amazon launched its own ad-supported streamer, Freevee, in 2019, and Comcast bought Xumo in 2020
- Other major streaming players are looking to re-strategise; most notably, Netflix is highly focused on the rollout of its ad-supported model, having partnered with Xandr to provide a cheaper ad-supported tier that targets 40 million viewers by Q3 2023. Other players are engaging in M&A and creating original content to drive subscriber growth
Enquiries
For enquiries, please contact Alec Dafferner, Partner, at alec.dafferner@gpbullhound.com
About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s best entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.
Alessandro Casartelli, Executive Director at GP Bullhound, said: “We have seen different trends emerge strong in Q3. Gamification in education is continuing to surge, with the game-based learning market likely to reach $62bn by 2030. Enthusiasm from educators and learners alike is driving the space. Retailers continue to personalise shopping experiences for consumers, as best-in-class companies see a 25% uptick in revenue from personalisation strategies. Lastly, trading in the agriculture sector is increasingly transitioning online, as farmers benefit from greater visibility and consumers take advantage of more precise product information. On the M&A side, acquisitions by Shopify and Prosus stood out in an otherwise slow quarter. Investors and buyers are taking advantage of lower valuations to target high quality businesses at attractive prices.”
What’s trending this quarter in Digital Commcerce?
Gamification of education increasingly popular with enthusiasm from educators and learners
- The Game-Based Learning Market is projected to reach $62bn by 2030, a 21% CAGR from 2022
- Gamification proves to improve engagement both at work and in education
- As the market matures and continues to grow at >20% p.a. we expect to see increasing amounts of M&A activity, as key players look to consolidate their positions
Personalisation an increasingly important CX differentiator for e-commerce providers
- 75% of consumers experienced new shopping methods during the pandemic
- 80% of consumers are more likely to make a purchase if the company offers a personalised shopping experience
- Retailers see themselves increasing investment into personalisation efforts by 75% over the next three years
Agriculture industry undergoing transformation led by e-commerce
- >85% of farmers are selling and buying online in 2022, a 790% increase from a decade ago
- Agriculture e-commerce platforms can increase market efficiency and reduce waste, resulting in improved margins and higher-quality produce
- The agriculture market was sized at $11bn in 2021 and set for an 8.2% CAGR until 2026
Enquiries
For enquiries, please contact:
Alessandro Casartelli, Executive Director, at alessandro.casartelli@gpbullhound.com
About GP Bullhound
GP Bullhound is a leading technology advisory and investment firm, providing transaction advice and capital to the world’s entrepreneurs and founders. Founded in 1999 in London and Menlo Park, the firm today has 12 offices spanning Europe, the US and Asia. For more information, please visit www.gpbullhound.com.
