Meltwater Secures $65M Investment from Verdane: Boosting Media Monitoring Innovation in 2023

Meltwater, a company renowned for its media monitoring services, is expanding its horizons in business intelligence through AI and big data analytics. Recently, it welcomed a new investor: Verdane, a Norwegian private equity firm that this year launched a fund exceeding $1 billion to invest in scaling technology companies. Verdane has acquired an 11% stake in Meltwater, valuing the company at €542 million ($592 million) and this stake at approximately $65 million. However, this investment is part of a larger strategy involving another entity.

The funds are being directed through Verdane's significant stake in Fountain Venture, the investment vehicle controlled by Meltwater’s founder and current chairman, Jørn Lyseggen.

Just earlier this year, Meltwater transitioned from a public company on the Norwegian stock exchange to a private entity overseen by private equity firms Altor and Marlin, with Lyseggen retaining his shares through Fountain. This "take-private" deal represents the most recent disclosed valuation and serves as Meltwater’s current reference point. Rather than investing directly in Meltwater, Verdane aims to collaborate with Fountain to support future investments in startups, particularly those innovating in AI.

Joakim Kjemperud, a principal at Verdane, emphasized that this deal encompasses multiple assets; alongside Meltwater, it includes a stake in Jobylon, a growing HR firm. While Jobylon has an Annual Recurring Revenue (ARR) of approximately €5 million, Meltwater—a company originally founded in Norway but now headquartered in San Francisco—boasts an ARR of around €500 million.

This transaction highlights critical trends within the European tech and venture capital landscape. Firstly, tech companies are experiencing significant pressures on their valuations. Meltwater's market cap, under $600 million, is now less than the over $700 million raised during its earlier years as a private startup. Moreover, this figure represents less than half of its valuation post-IPO, which exceeded $1 billion in December 2020.

Secondly, the current deal-making climate reflects investors' efforts to mitigate risks. The European funding environment has tightened considerably; Atomico's annual report indicates that funding halved in 2023, dropping to $43 billion. In response, private equity firms like Verdane are stepping into the void created by reduced venture capital activity.

Interestingly, Verdane's decision to invest in Fountain Venture rather than Meltwater directly allows for a diversified approach. This strategy not only secures a stake in Meltwater but also places Verdane in a position to explore opportunities with Jobylon and other prospects identified by Fountain and Lyseggen. Such partnerships facilitate greater resiliency and ambition, reflecting Verdane's recent shift to broader geographic investment in tech startups.

Meltwater stands at a pivotal crossroads within the technology sector. Initially, its services stemmed from manually sifting through newspapers for mentions of clients—a task that evolved with the decline of print media and the rise of social media, expanding the parameters of their analytics and insights capabilities. As technological advances brought about real-time data processing, Meltwater built proprietary AI systems, bolstered by notable acquisitions, including DataSift, an early partner of Twitter in monetizing its data streams.

Yet now, Meltwater faces formidable competition from businesses like OpenAI and innovations in generative AI that are poised to redefine search interactions—both consumer and enterprise—and the realm of business intelligence.

Lyseggen perceives this changing landscape positively, likening the influence of OpenAI's ChatGPT to a transformative moment reminiscent of Netscape's impact on information retrieval. "AI is reshaping the industry, allowing new players to challenge established ones," he remarked. He believes Meltwater is uniquely positioned, touting its technology as the most modern and AI-focused within its sector. Committed to further investment in AI, Meltwater currently analyzes around 1 billion documents daily for its clients in communications, marketing, and public relations.