We just published our list of more than 160 enterprise software startups that could be acquired this year. To compile it, we screened hundreds of privately held companies and singled out those worth more than $1 billion that haven't raised a publicly announced financing since June 2024. To understand the M&A forces across enterprise software, I spoke with more than 30 founders, investors, and bankers. The list has nearly doubled since we last put it together. The reason: as AI takes center stage, venture capitalists have shied from backing traditional software companies and are pouring their money into AI instead. Stock prices for publicly traded enterprise software companies have fallen at least 30% in the last year, dimming the older startups’ prospects for an IPO—especially when SpaceX, Anthropic and OpenAI are seen to suck up much of the available investor demand.
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Welcome back! It’s Alix.
We just published our list of more than 160 enterprise software startups that could be acquired this year. To compile it, we screened hundreds of privately held companies and singled out those worth more than $1 billion that haven't raised a publicly announced financing since June 2024. To understand the M&A forces across enterprise software, I spoke with more than 30 founders, investors, and bankers.
The list has nearly doubled since we last put it together. The reason: as AI takes center stage, venture capitalists have shied from backing traditional software companies and are pouring their money into AI instead. Stock prices for publicly traded enterprise software companies have fallen at least 30% in the last year, dimming the older startups’ prospects for an IPO—especially when SpaceX, Anthropic and OpenAI are seen to suck up much of the available investor demand.
One theme surfaced in several conversations: founders, bankers and investors say they expect more acquisitions of startups that manage, analyze or store data. That’s because large tech companies and AI model makers are interested in software that works with data used to customize or train models, or that can help agents tap raw information.
“M&A will mostly be concentrated in security and data, or anything around the data centers,” said Tomasz Tunguz, a venture capitalist at Theory Ventures, which backs early-stage startups.
Anand Babu Periasamy, co-founder and CEO of MinIO, which stores massive volumes of unstructured data—information without defined formats—said the AI era is “forcing enterprises to capture more data than ever.”
Other tech leaders have recently echoed this sentiment. “Lots of emphasis on getting data (structured and unstructured) into a setup that can work with agents properly,” Box CEO Aaron Levie posted on X in a summary of remarks from a dinner with leaders of large companies.
Demand for data tools is good news for the roughly dozen startups involved in some kind of data software in our list this year. Some have told me they’ve fielded approaches this year from both tech companies and private equity firms.
Take, for instance, Project44, a logistics company whose software pulls shipment data from thousands of carriers and systems, cleans it, and puts it into a live map of the supply chain. Founder and CEO Jett McCandless says this proprietary data set, known as a data graph, has made it a target of interest from potential buyers. (Read about Microsoft, Databricks and the tools that hold the key to developing useful agents.)
Big tech and large software firms are scouting for software that organizes and manages large amounts of corporate data so that AI agents can access them.
“Data used to be the thing you wanted to deal with in 14 years,” said Douglas Gourlay, CEO and president of Qumulo, which sells a system for storing and managing files and unstructured data. “Now everyone has woken up to data being such a valuable asset.”
Such interest hasn’t resulted in any meaningful recent deals yet. But that soon could change.
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