The sales and marketing technology landscape has changed, says Craig Rosenberg, Co-Founder & Chief Analyst of Topo. Years of venture funding, resources, and buzz created a large swath of sales and martech companies.
In 2019 it will be time for these companies to show traction, and many of them won’t be able to. Looking to the new year, there is a long list of sales and marketing tech vendors that have had their growth stalled for a number of reasons: failure to find a use case with broad market appeal, product based on a feature, or quite simply couldn’t execute.
While these companies might have received more funding two or three years ago, in today’s climate VCs are not replenishing their offers. Today, there are big rounds for those with momentum and a big story, or no funding for those that don’t.
Looking ahead, says Rosenberg, we can expect to see the sales-martech stack consolidate heavily. Two market factors will drive this consolidation: the 2019 buyer’s market and the slowdown in Series A funding for new market entrants.
2019 is going to be a buyer’s market, predicts the report. Roll-ups will continue to dominate the martech/salestech landscape at least through the 1st half of 2019. And, barring an economic meltdown, these roll-ups will come from bigger vendors and emerging companies with fresh venture
capitol (e.g. Drift’s acquisition of Siftrock, Showpad-Learncore).
The Adobe-Marketo acquisition will force the other marketing clouds (like Oracle, SAP, Salesforce) to look more aggressively, and to use acquisitions in order to build the functionality to compete, says the report. Vista, the PE firm that owned Marketo and sold to Adobe, is one of the many to watch in 2019.
The other factor driving contraction in the sales and martech stack is the changing funding situation for seed and early stage. After years of funding hundreds of companies, the funding scene has slowed. Two years ago, for every company that was acquired or folded, three new ones were created. That is no longer the case, says the report.
The large volume of vendors competing with the entire tech landscape. Now they can understand their place in the market, focus on a smaller set of competitors, and fit into categories that actually have buying momentum, concludes the report.