Melted waterwhich first made its name around media monitoring and then branched out into business intelligence using artificial intelligence and big data analytics techniques, is picking up a new investor. Verdan, a Norwegian private equity firm that earlier this year closed a $1 billion+ fund to make investments in scale-up technology companies, is taking an 11% stake in Meltwater, a company valued at €542 million ($592 million), valuing the stake at about 65 million dollars. But that’s not the only deal falling apart with this transaction.
The investment comes via Verdane’s acquisition of a significant stake in Fountain Venture, the investment vehicle controlled by Meltwater founder and current chairman Jørn Lyseggen.
Meltwater was, until the beginning of the year, publicly traded on the Norwegian stock exchange. Lyseggen oversaw the company going private again earlier this year in a deal with two private equity firms, Altor and Marlin, and held the remaining stake through Fountain. (The take-private deal was the last called valuation and the one Meltwater currently reports.) Verdane invested in Fountain Venture and not Meltwater directly because the plan will be to work with Fountain to make future investments together in startups working in areas such as ALL INCLUSIVE.
Joakim Kjemperud, director of Verdane, said the deal also gives his company a stake in an HR firm, Jobylon, although Meltwater is by far the biggest asset.
“The deal here is that it’s very much a portfolio transaction,” he said. “We are buying into Jørn’s investment company and taking an implicit direct stake in Meltwater and Nordic HR company Jobylon, but Meltwater is the biggest asset in the portfolio.” Jobylon’s ARR is currently around €5m, while the ARR for Meltwater – which was founded in Norway but now calls San Francisco its home – is around €500m, he added.
The deal highlights some important issues in the European tech and VC world.
The first of these is the fact that tech companies continue to come under tremendous pressure on their valuations. Meltwater’s current market cap, just under $600 million, is actually less than what the company raised over the years when it was a private startup (over $700 million, per PitchBook data), and less than half its valuation when it went public in December 2020 at over $1 billion.
The second is the nature of dealmaking right now and the efforts investors are making to de-risk. The market is particularly tight right now in Europe: VC firm Atomico’s annual deep dive into the funding landscape in Europe (which combines with a number of third-party research firms and the participation of others in the ecosystem) found that funding in 2023 has halved at just $43 billion, and private equity firms are making a much larger appearance in deals to cover some of the drop from VC.
In this context, it is notable that Verdane chose to invest in Fountain Venture rather than Meltwater directly. This will give Verdane not only a stake in Meltwater, but also a stake in Jobylon and whatever else Fountain and Lyseggen find interesting. This, in turn, will weaken the focus on a single business. Verdane itself has only recently started to spread its wings to invest in startups across Europe and beyond: hooking up with a partner to help steer it is a very risk-free approach while trying to be more ambitious.
When it comes to technology, companies like Meltwater are at a crossroads these days. The company would have its origins in businesses where people would physically sift through piles of newspapers, every day, to cut out mentions of a company’s name, collate them and send them to those clients to help them better track how it is covered in the media.
The decline of print media digitized this effort and then the rise of social media turned it into a wider game, sentiment analysis and words became structured and more commonly unstructured data. The influx of a whole new set of tools to extract insights from this data turned a media challenge into a technique. Meltwater built AI in-house and has acquired a number of businesses in an analytics integration play. (The most high-profile of these acquisitions was undoubtedly DataSift, the pioneering company that was an early friend of Twitter’s monetization firehose only to have that relationship sour.)
But now it has a much bigger competitive threat: Companies like OpenAI and innovations in genetic artificial intelligence will once again change the game for search — consumer and enterprise — and how all kinds of business intelligence work is done.
Lyseggen, unsurprisingly, believes that while Meltwater’s focus feels a bit like a throwback to a problem that’s essentially been solved — and may well be made more efficient by would-be competitors — he thinks there’s more opportunity for his company regardless.
“I consider OpenAI’s ChatGPT to be the ‘Netscape moment’ that ushers in this new era,” he said. This is interesting to say: Netscape certainly changed the way people search for information, although it is far from being part of what we use today. “Artificial intelligence is changing the game for players to challenge the old guard. I think Meltwater’s tech stack is already the most modern and AI-centric in its class. We will continue to invest in artificial intelligence and that is something we are very excited about. We are pushing very hard.” Meltwater today says it analyzes about 1 billion documents every day for clients in the communications, marketing and PR sectors.
