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Investment analysis of the natural language industry


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BY : Diego GutiérrezSeptember Tue, 2014
translationNatural language processing (NLP) is a field of ICT that studies the interactions between computers and human language. The level of performance has improved substantially in recent years. As an effect of this phenomenon, more than 200 companies developing NLP-related technology have been formed in recent years, and already in the last year, these companies are growing considerably, as evidenced by last year's 73% increase in funding rounds in this sector from 41 in 2012 to 71 in 2013.

Companies in the sector

companies

Of the total number of companies analysed, we have captured almost 200 companies engaged in NLP. The years 2011 and 2012 have been the peak years with almost 25 new companies in the latter year and 2013 has seen a reduction in new companies. The sector is not so much at a time when new companies are starting up, but rather when those already established are attractive to investors and, once they have received funding, they are looking for a path to growth.

Most active sectors

operations

The spectrum of sectors where NLP is applied is very broad. The most common are software, analytics and web, where the focus has been on better understanding the content and communications generated with customers. The standard bearer of this trend is Clarabridge which offers customer experience management software, founded in 2005 and headquartered in Reston (USA) raised 80M$ last year.

"We are however in a year where large investment (last year there was an increase in funding rounds of 73%) is enabling technology and product development and in the coming years the applications and sectors in which natural language is applied are expected to increase" says Diego Gutierrez of Abra-Invest.

Evolution of operations per year

rounds year

Since 2011, the number of investment rounds in companies working in the NLP field has been growing. 2013 has been the highest point with 71 different deals and 2014 continues to mark very high levels.

Companies that have received the most rounds

financing rounds

The ranking of companies that have convinced investors the most is made up of 3 companies: Netbase solutions, Narrative scienceHakia. Each of them has completed 6 rounds of investment. San Francisco-based Netbase solutions received its first round of venture capital in 2005 and this summer in July 2014 received its latest. The company is one of the leaders in the application of NLP to improve customer relationships.
There are 6 companies that have exceeded 40M$ of cumulative investment. These include Clarabridge and the aforementioned Netbase solutions.

Acquisitions in the sector

acquisitions

After a few years in which purchases in the sector had dropped considerably (from 12 in 2010 to 1 in 2013) it seems that in 2014 there has been a revival and so far this year there have been a total of 7 purchases in the sector.

The most active sub-sector in 2014 was the advertising sector, 3 of the 7 companies belonged to this sector. Among them is the purchase of Gravity by AOL by $90M.

Other posts that may interest you

List of companies for Natural language processing (NLP)

List of investors in Natural language processing

List of acquisitions natural language processing companies

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