Fivetran, a prominent player in data movement, made headlines with its acquisition of Census in May, a strategic move aimed at enhancing its offerings as a comprehensive end-to-end data movement platform. This acquisition is indicative of a large trend within the data industry. Businesses are partnering to navigate the world of evolving tech, particularly in the field of artificial intelligence (AI).
Until this acquisition, it was an uphill battle for Fivetran customers to build truly complete and effective data solutions. They needed to engage Census in a collaboration just to be able to transfer data back out of their databases. Fivetran’s superpower is seamlessly replicating data from hundreds of sources to cloud data warehouses. It doesn’t have the core capability to pull data from these databases, one of the defining features Census offers.
The challenge of data movement is vast and complicated, as George Fraser, Fivetran’s co-founder and CEO reminded us at last week’s Summit. While bringing data in and out of warehouses looks easy on the surface, he added that it is a complicated endeavor. Yet, this due diligence process is sadly not as simple as it sounds. This complexity is what initially drove Fivetran to try to build an in-house solution for outbound data movement, a project they ultimately scrapped.
The Growing Landscape of Data Startups
The data industry has experienced a revolutionary change over the last 10 years. It has become a disconnected, expensive, complicated maze teeming with pitfalls and brave new worlds. Organizations are hungry to leverage data to gain strategic and operational insights. This unprecedented demand emphasizes more than ever the need for more streamlined, centralized data management solutions.
From 2020 to 2024, investors dumped more than $300 billion into startups using data. This jump happened on top of more than 24,000 transactions, a testament to the tremendous growth and energy behind the industry. Notable acquisitions include Databricks’ $1 billion purchase of Neon and Salesforce’s $8 billion acquisition of Informatica. These blockbuster deals are indicative of a rapidly increasing desire for consolidation among the largest players in today’s data ecosystem.
Sanjeev Mohan, a former Gartner analyst who is now the principal of his own advisory firm, SanjMo. He noted that the vast majority of data start-ups today are going through hellish market conditions. Still, he noted these companies have been hit hard on a double whammy of slowdown recovery for venture funding. They continue to struggle under difficult exit strategies.
The Shift Towards Acquisition
Against this backdrop of exacerbating industry trends, acquisition has become a more attractive exit strategy for data startups. Derek Hernandez, senior emerging tech analyst, PitchBook, shared wisdom on the current state of the market. He explained that acquisition has become a much more attractive path forward for many of these startups to pursue.
Hernandez highlighted how times are especially urgent right now to not get left behind as we quickly move into the AI future. He stated, “If Salesforce or Google isn’t acquiring these companies, then their competitors likely are.” This is raising a huge call for organizations to radically transform their data architectures. In this way, they can begin to realize the full potential of AI technologies.
Gaurav Dhillon, former co-founder and CEO of Informatica, is now chairman and CEO of SnapLogic. He is convinced we are currently in the middle of a total reset, in terms of the way that enterprises are thinking about and managing their data. He expounded on the need for enterprises to radically re-architect their data foundations at a core level to meet the demands of AI.
“If people want to seize the AI imperative, they have to redo their data platforms in a very big way. And this is where I believe you’re seeing all these data acquisitions, because this is the foundation to have a sound AI strategy.” – Gaurav Dhillon
The Future of Data Management
As Fivetran integrates Census into its platform, it enhances its ability to provide a comprehensive suite of tools that meet evolving customer needs. This acquisition furthers Fivetran’s emerging position as the major independent player in the burgeoning data movement space. It serves as a reminder of the industry’s broader consolidation trend, which has been accelerated by rapid technological change.
The data industry moves at an incredibly rapid pace. To this end, companies will be keying into and aggressively hunting for strategic partnerships and acquisitions to remain ahead of the game. With the leading industry players cosmically bolting for each other through mergers and acquisitions, the landscape will become even more concentrated.
Fraser’s insights on the complexities of data movement illustrate the challenges that many organizations face as they navigate this rapidly changing environment. Other companies are bound to take inspiration from Fivetran’s example. They will continue to proactively pursue acquisition opportunities so that they can round out their capabilities and better serve their clients.