2021 Channel Tech M&A: Capital Investments Reflect Partner Program Complexity, Their Future Value Too

As Jay McBain, Forrester’s Principal Analyst – Channels, Partnerships & Ecosystems, commented after sharing a list of M&A and investment activity with Channel Marketer Report (CMR), “Over $1 billion of new money has come into the space in 2021 and M&A has been clicking along nicely.”

McBain believes that the increasing complexity of channel programs will help to drive the growth of channel stack companies.

“In the decade of the ecosystem, we predict the average channel size of an organization will need to grow by 10X in the next 5 years to support the end customer's early, mid, and now recurring, late journey moments,” he wrote in a recent blog. “Companies who have focused on the transactional elements only are getting surpassed by those who look at partner-assisted value throughout the entire journey.”

With more companies seeking to grow their businesses through expanded channels, “Improving efficiency and driving new levels of innovation within the ecosystem are increasingly being demanded by senior executives and board members in many organizations,” McBain wrote. “This is the quintessential act of doing more with less.”

Technology “sits underneath everything that needs to be done this decade,” he told CMR. Still, McBain stressed that the majority of channel stack companies need to do a better job of engaging partner-focused vendors. Channel organizations have been “laggards in automation,” McBain wrote. “We estimate that over 80% of companies (in all industries) run their indirect sales in a silo — completely separate from sales, marketing, and other lines of business. In many cases, the channel organization has its own sales, marketing, finance, and operations groups inside, collaborating little with other divisions.”

Larry Walsh, CEO and Chief Analyst at Channelnomics, a business strategy and research firm, sees the M&A activity as a way for the providers of management and automation tools to facilitate simpler means for vendors to administer their channels and interact with partners. The deals reflect “the evolution of channel management from an analog to a digital state, especially as channels become more sophisticated and data-driven. The need for better and more complete automation tools will drive the providers of these applications to either develop or acquire the resources that will enable them to provide their customers with one-stop shops for their channel management needs,” said Walsh.

“We are in the midst of a channel automation and support consolidation wave,” he continued. “The landscape is replete with well-rounded providers of channel applications and support services. Rolling up these companies into consolidated providers will clean up the landscape, simplify purchasing for the customer, and create greater value for the stakeholders of these respective businesses.”

Still, Walsh cautions that not all M&A activity is good. “The concept of a ‘channel automation stack’ is flawed on its face, given that many of the applications and resources are not equal in their application, applicability, interoperability, or use cases. Chances are we’ll see some acquisitions and consolidation that will not accrete the promised value.”

Making Connections With Consultants Is Critical

To drive great adoption of the technologies they offer, McBain said that the “183 companies in the tech stack have to do more quantification of the opportunity and build better relationships with the top 100 channel consultancies.” They may need to move fast, as some of these companies are being acquired, or are buying up their competitors.

For example, the shopping spree for channel solutions and services provider kicked off in the first quarter of 2021 with Gorilla Corporation, a global partner marketing technologies and services provider, acquiring MarketingXpress, a software company that specializes in building channel marketing platforms.

This past Spring, Incentive Solutions, a channel incentive management technology provider, acquired through-channel marketing solutions and services vendor OneAffiniti. Fielo, a Salesforce-native provider of incentive automation for channel incentive, employee incentive, and customer loyalty programs, acquired Gage Marketing Group, a channel management software provider.

And in November, 360insights, another incentive management company, acquired the partner program consulting agency, Channel Maven, and Spark Your Channel, a demand generation technology provider. The deal followed 360insights’ purchase in the Spring of Channelcentral.net, a software provider for organizations in the IT channel.

Seismic, a sales enablement platform provider, acquired training, coaching and enablement solution Lessonly to help users provide seamless sales experiences from within the Seismic platform.

In addition, Seismic completed its latest series G funding round, raising $170 million and bringing its total valuation to $3 billion.

Investing In Partner Ecosystem Solutions Soars

Investors made many big bets on the growth of several channel-related companies in 2021. Crossbeam, a provider of a collaborative data platform that enables vendors and their partners to determine overlapping accounts, announced a $76 million Series C investment.

The round was led by Andreessen Horowitz, with participation from prior round lead investors Redpoint Ventures, FirstMark Capital, First Round Capital and Uncork Capital, along with Salesforce Ventures, HubSpot Ventures and Okta Ventures. The company has now raised almost $117 million with this investment, according to Crunchbase data.

Impartner, a pure-play SaaS-based channel management and partner relationship management (PRM) provider, raised $50 million in funding. Brighton Park Capital, a growth equity investment firm that specializes in partnering with growth-stage software, healthcare and tech-enabled services businesses, led the round with participation from existing investors Savant Growth, Emergence and Golub Capital. The investment raised Impartner’s total funding to date to more than $113 million.

Mirakl, the provider of an enterprise marketplace SaaS platform, raised $555 million in a Series E funding round led by Silver Lake, with participation from long-term investors 83North, Elaia Partners, Felix Capital, and Permira. The new funding increases the company’s valuation to more than $3.5 billion. Mirakl’s valuation has more than doubled since its $300 million Series D funding round announced last September

Impact, a global partnership management platform provider, announced $150 million in funding led by Qatar Investment Authority (QIA) and joined by Providence Public. This strategic growth investment brings Impact’s valuation to $1.5 billion.

Tackle.io, a software company dedicated to helping software providers generate revenue through the Cloud Marketplaces, raised $35 million in Series B funding, in a round led by Andreessen Horowitz and joined by existing investor Bessemer Venture Partners. This round of funding will be used to further Tackle’s platform innovation and mission to transform the experience of selling and buying enterprise software.

PartnerStack, a partner relationship management solutions provider, raised $29 million USD in Series B funding. The investment, which was led by 3L Capital and with participation from Whitecap Venture Partners, HarbourVest, and existing investor RRE Ventures, will be used to bring in more high-value partners into the PartnerStack network.

And E2open, a provider of supply chain and channel management software, and CC Neuberger Principal Holdings I, a special purpose acquisition company, completed their business combination. The common stock of the combined company is traded under the symbol “ETWO” on the New York Stock Exchange.