Capital investment in market research and analytics is shrinking overall but two areas will push growth

By Simon Chadwick

2015 saw a substantial decline in inward capital investment in the market research and analytics industry, and inflows again decelerated considerably in 2016, according to the Cambiar Capital Funding Index (CCFI).

In total, the Index counted 106 transactions last year (down from 120 the year before and 152 in 2014) amounting to US$ 1.67 billion – a 35% decrease year on year. Since CCFI probably only captures around 80% of total transactions (many are not announced publicly), this would equate to just under US$ 2.1 billion in aggregate, a far cry from the heady days of 2014 when nearly US$ 5.8 billion found its way into the coffers of new entrants into the sector.

Source: Cambiar Capital Funding Index 2016

Source: Cambiar Capital Funding Index 2016

 

 

 

 

 

 

 

 

 

 

Ultimately, what this represents is the beginning of an end to the infatuation with big data analytics as well as a period of maturation for many of the investments made over the past three years. While there are sectors that remain vibrant (mobile and predictive analytics in particular), there is evidence that appetites are waning for investing large amounts in the industry as a whole. Not only was the total invested down but so too was the average amount invested per transaction – US$ 16.3 million as opposed to US$ 22.3 million last year and US$ 35 million in 2014.

Investment in market research

When CCFI first appeared in 2011, investment in market research firms slightly outstripped that in analytics. Even though this was strongly reversed in the following years, there remained strong interest in the market research side of the equation all the way through to 2014. Last year, interest in market research declined markedly and this year it has disappeared almost entirely.

Source: Cambiar Capital Funding Index 2016

Source: Cambiar Capital Funding Index 2016

 

 

 

 

 

 

 

 

 

 

Simon Chadwick is managing partner of Cambiar and editor-in-chief of Research World.

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