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2021: The Year of the Geospatial Market Consolidation

18 March 2021

2021: The Year of the Geospatial Market Consolidation

The geospatial market is in transition. In 2019, the commercial geospatial business officially turned 50 years old. In “IT years”, geospatial technology and geographic information systems (GIS) could be considered a “mature” software business. But in the last 10 years the industry has also seen a great deal of investment from venture capital as well as private equity companies. During the last five years, over $2 billion has been invested in new startups. Venture firms such as ACCEL Partners, Salesforce Ventures and Goldman Sachs have invested in multiple geospatial firms. More recently, however, and certainly within the last year, the geospatial market size has increased and is expected to triple by 2027 but somehow, the number of players has consolidated. There is a trend now toward mergers and acquisitions (M&A).

This consolidation of geospatial companies can be tied to several factors including the explosion of location-based data, startups seeking to fund innovation, the recognition by corporations— the very consumers of this type of technology—of the indispensable use of location-based information, and finally, the pandemic.

All factors point to continued growth but also the need for geospatial software and data companies to consolidate and gain a competitive advantage through vertical solution integration. When this occurs, M&A activity tends to accelerate. As a result, newly merged companies exhibit a more monopolistic posture to better and more completely serve their client base. However, it is also an indication of how geospatial has become an embedded and vital factor for analytics to serve a business objective.

Growth Through Acquisition

While the GAFAM (Google, Amazon, Facebook, Apple and Microsoft) and other tech giants have given credibility and helped democratize the use of geospatial technology and data, the fact remains that these companies don’t have geospatial at the core of their business model, nor are they structured to provide consulting and professional services to drive the successful adoption of this technology.

Still, as a consequence of all the tech titans investing in geospatial information and monetizing these data in a variety of services, well-established companies in the geospatial business have begun to see some of their market share impacted and they have begun to reposition themselves through mergers and acquisitions.

The recent spate of market consolidation started roughly 18 months ago.

In December 2019, Pitney Bowes sold their software and data division to Syncsort, a company backed by Centerbridge, a private equity firm. The two companies merged to become Precisely and repositioned their brand to leverage the growing importance of data integrity. The new company brings best-in-class capabilities in location intelligence, data enrichment, customer information management and engagement solutions with powerful data integration and optimization software, to help large enterprises gain a competitive advantage from their data.

Soon after Foursquare’s acquisition of Placed in 2019, Foursquare merged with Factual in April 2020 to position itself as one of the most innovative location technology companies, providing rich and dynamic mobility data to the AdTech sector. The combined entity now represents some of the largest location data sets in the world, spanning more than 500 million devices, a panel of opted-in, always-on users who are constantly sharing their location data with Foursquare and more than 14 billion user-confirmed check-ins.

In December 2020, Environics Analytics, a Canadian software and data company was acquired by Bell Canada, the telecommunications entity, in an effort to enhance Bell Media’s offerings by combining online and offline data. The objective was to position the company to target, identify and connect with the right audiences, and allow advertisers to plan, purchase, and measure more effective campaigns.

We’re only in the first quarter of 2021, and yet there have been rash of announcements this year:

On February 1st, BuildingFootprintsUSA was acquired by Lightbox, a proptech company, which had earlier acquired Digital Mapping Products in 2019. With this move Lighbox is looking to replace existing information silos within the commercial real estate industry with a pre-aggregated and connected data sets approach, integrating parcels and property data with rooftop-level geocodes, addresses, and boundaries.

On the same day, Skyhook’s Geospatial division was acquired by PlaceIQ to further develop products for mobile footfall data and additional audience metrics.

Couple of days later, CoStar Group, a leader in commercial real estate information, announced on February 16th that they were acquiring CoreLogic. For years CoreLogic was recognized across the location intelligence and geospatial market, as one of the leading providers of property data, mostly to the insurance, financial and residential real estate industry.

That brings us to March 3rd when Precisely announced that they signed a definitive agreement to be acquired by Clearlake and TA Associates. Centerbridge Partners, the previous majority shareholder and partner for nearly the past four years, will retain a minority equity stake in the company. Precisely says the deal will give it funds necessary to expand its M&A strategy and accelerate growth in the fields of data quality, integration, enrichment, and protection.

Clearly, there’s more to come!

Complexity: A Need for Independent Advice

The result of the growth of geospatial data, the recent spate of M&A activity and the influence of both the gig economy and tech leaders like Amazon and Google has created complexity in the geospatial marketplace, making it more difficult for more potential users of the technology to find their path to success.

In the next five years we will see the development of an entirely new generation of geospatial information users because it will become a necessary component of analytics. For example, as more Salesforce users begin to understand just how much they rely on location-based data for analyses from retail planning to insurance underwriting, an important question arises: Who will support the need to educate and help deploy applications for companies looking for a competitive advantage? Here, as the vendor market seems to consolidate and as the demand for location data grows exponentially, there is a mounting need for a more independent, agnostic voice.

Experts in systems integration and value-added services are needed to support new users, who find GIS software too complicated to navigate and don’t have the time to explore the growing list of data providers, each developing niche products that serve very narrow user communities. Many organizations lack the institutional knowledge to implement, maintain and keep up-to-date with the latest innovations. As a result, the organization cannot dissociate the technology required from the expertise needed. Vendors of software and data cannot provide objective advice because of their inherent bias. But as a solution provider with over 25 years of experience working with many providers of geospatial technology, Korem can serve clients with sound counsel as they leverage geospatial information.

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