September 20th, 2012
LUMA Partners has published LUMAscapes that map over 1,500 companies across seven sub-sectors of digital: search, display, video, mobile, social, commerce and gaming. Next, we developed the Digital Capital LUMAscape, showing ~350 financial firms that actively invest in digital start-ups, arranged by type, stage and geography. Judging from the over 600,000 views and downloads to date, these maps have certainly proven popular and useful.
(Download this LUMAscape here.)
Today we are publishing the most important industry map – the Strategic Buyer LUMAscape. Historically, digital acquisitions were dominated by four core companies: Google, Microsoft, Yahoo and Aol. While this group remains relevant, we have witnessed an expansion of the buyer universe as digital business models converge across media, software, services and commerce. This chart shows 150 of the largest relevant buyers of digital start-ups arranged by type, propensity, capability and motivation. Here’s the legend:
- Type – We have grouped the buyers into four sections: media, marketing, technology and commerce/network. The last group is a mix of firms that derive large network effects from the delivery of media, communications or commerce.
- Propensity – The concentric circles denote a buyer’s likelihood of pursuing future digital acquisitions, which is informed by past activity and strategic direction. The closer to the center, the more likely a buyer of digital assets.
- Capability – The coloration indicates a buyer’s capacity to make sizable acquisitions based roughly on trading multiples. Green is higher than yellow which is higher than red. This slide represents a tremendous amount of buying potential: companies within the circles alone represent approximately $3 trillion of market capitalization and $450 billion of cash and securities.
- Motivation – The background words denote the generalized motivations of the sector buyers. Most media and marketing companies have been disrupted by digital and are making acquisitions defensively whereas technology companies are buying digital start-ups as an offensive strategy.
These categorizations are generalized and subjective and no doubt have exceptions. The goal of the slide was to graphically depict all the likely strategic buyers of digital start-ups on one page. We anticipate this slide will be utilized in board presentations and investor meetings, and hope it provides utility to the industry.
As always, we note that our LUMAscapes are not perfect but rather a continual work in progress. If you have any comments or suggestions, please email us at LUMAscapes@lumapartners.com.