The big data analytics market is worth big bucks. A recent report by Market Research Future pegged its value at $275 billion by 2023, and Gartner recently predicted that AI-derived business revenue will reach $3.9 trillion in 2022. With that sort of capital at stake, it’s no wonder investors are throwing their weight around to the tune of hundreds of millions of dollars.
Fractal Analytics, an analytics service provider, today revealed that it has received a $200 million investment from funds advised by Apax Partners. As the Mumbai and New Jersey company explained to VentureBeat, the investment is a two-parter, consisting of a primary infusion and a secondary acquisition of equity interests from a few existing investors, including the Malaysian government investment fund Khazanah Nasional Berhad, TA Associates, and others. It’ll give Apax a “significant” minority stake in Fractal.
The financing rockets the startup toward the top of the list of the world’s most well-funded artificial intelligence (AI) providers, with $325 million raised to date, building on a $100 million private equity round in May 2016 and a $25 million venture round in June 2013. And it puts Fractal in a position of strength as it looks to make strategic mergers and acquisitions and expand its workforce of 1,200 employees across 16 offices.
“Khazanah is proud to have been Fractal’s largest shareholder during a period in which it scaled up rapidly into a leading global analytics player,” Chinta Bhagat, head of Khazanah in India and chairman of Fractal, said. “In addition to providing growth capital, Khazanah worked closely with Fractal on streamlining the board, supporting product innovations, and bringing Fractal’s capabilities to Khazanah’s portfolio companies. We wish everyone at Fractal the very best as it embarks on its next stage of growth, and look forward to being supportive partners over the coming years.”
Srikanth Velamakanni, Pranay Agrawal, Nirmal Palaparthi, Pradeep Suryanarayan, and Ramakrishna Reddy cofounded Fractal Analytics in 2000, with the ambitious goal of combining AI, data engineering, and design to “solve every decision problem” for Fortune 500 and FTSE 100 businesses. Nearly 19 years later, it’s well on its way, with clients like Google, Visa, Kimberly-Clark, RB, Colgate-Palmolive, and Wells Fargo contributing to 40 percent growth over seven successive quarters.
Consultancy makes up the bulk of Fractal’s business. It works with brands in the consumer packaged goods, financial services, health care and life sciences, retail, technology and media, and insurance sectors to build bespoke machine learning-driven solutions to enterprise problems. It’s optimized a client’s marketing spend by feeding AI systems point-of-sales data, worked with a health care provider to determine algorithmically the likelihood a person would visit the emergency room, and created an AI framework for a retailer that improved digital sales by 25 percent.
Beyond bespoke solutions, Fractal incubates a small but growing number of internal AI startups — a group to which it plans to devote $30 million over the next few years.
A top performer is Qure.ai, a health care company based in Mumbai that developed an AI-powered, CE-certified CT algorithm that identifies brain hemorrhages and bone fractures, as well as a product that can detect 15 of the most common chest x-ray abnormalities with 95 percent accuracy. Another is Trial Run, which provides an AI platform for testing, measuring, and refining businesses strategies — one that can answer questions like “What if I remodel my store?” and “What if I introduce new promotions to drive conversions?” Yet another — Cuddle.ai — describes its product as a “voice-enabled analysis platform” that delivers contextually relevant insights to employees.
Fractal has had an impressive run thus far. In 2007, it became India’s second-largest analytics company. And between 2015 and 2018, it’s made four acquisitions:
- Imagna Analytics, a San Mateo-based data science company with a focus on ad targeting
- Singapore startup Mobius Innovations, which specialized in personalized marketing solutions
- Chicago strategy and analytics firm 4i, which tapped analytics to identify growth opportunities for corporate clients
- Final Mile, a startup that integrated cognitive neuroscience and behavioral economics design to solve business challenges
Fractal Analytics competes with companies such as Tata Consultancy Services, Wipro, Tredence, LatentView, and Mu Sigma, the latter of which is valued at over $1 billion and recorded $180 million in revenue in 2017. Fractal decline to provide metrics for the most recent fiscal quarter; according to Inc, its last reported revenue was $33.2 million in 2015.