Startup acquisitions in 2015: deep learning, data science and m-payments

Startup acquisitions in 2015: deep learning, data science and m-payments

Keeping track of these operations is an excellent thermometer to know what, how and why a particular sector is an opportunity for software developers.
BBVAOpen4U
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13 Apr. 2015

The world of startups is constantly changing. Many giants of the technology, retail and finance sectors are now using their muscle to invest or buy innovative companies that allow them to open new business lines.

Keeping track of these operations is an excellent thermometer to know what, how and why a particular sector is an opportunity for software developers. These are so far the most important acquisitions of startups in 2015:

1. IBM acquires AlchemyAPI, a deep learning startup

IBM is possibly the company with the best cognitive computing solutions in the world. IBM Watson is a machine able to act as a person thanks to its capabilities related to artificial intelligence, machine learning and natural language processing. Its great added value is that it is a machine capable of learning from its own experience.

AlchemyAPI, a startup born in Denver in 2005, provides deep learning solutions: it is capable of doing advanced data analysis such as categorization of taxonomies, keyword extraction and sentiment analysis (extraction of subjective opinions of sources of information). IBM saw the startup as a future competitor in the field of cognitive computing, but also as an opportunity to improve its platform. IBM's idea is to:

- Integrate the deep learning technology of AlchemyAPI.

- Incorporate its advances in visual recognition.

- Maintain the community of 40,000 developers who were implementing new solutions for the AlchemyAPI platform. This will increase the potential of the Watson ecosystem; in particular, it will contribute to improve Bluemix, IBM’s digital innovation platform that allows developers to create and deploy applications across the cloud (private, public or hybrid). AlchemyAPI also offers high-performance cloud services for real-time text analysis, and that is something highly interesting for IBM.

- IBM wants the developer community to expand Watson’s cloud-based development services, aiming to encourage other organizations to create new applications for the platform.  

2. Microsoft buys Revolution Analytics, a predictive analysis startup

If there is a professional field currently in full swing, that is Big Data, and particularly the statistical and predictive analysis areas. In January, Microsoft announced the acquisition of Revolution Analytics, a startup specialized in data science, statistical calculation and predictive models.

Revolution Analytics is a leading provider of software and services for R, a programming language used in the analysis of data to extract insights. Since the arrival of the new CEO Satya Nadella, Microsoft is showing a firm commitment to data, and this acquisition is a perfect example of it.

What is Microsoft looking for with the acquisition of Revolution Analytics?

- Microsoft buys the leading R-language company within the professional community of programmers. A key element in the world of Big Data, R is an open source language, and Microsoft has to understand that to have that community on its side it has to invest and promote the open philosophy intensively, or the tech giant will find its rejection.

- It’s a qualitative leap in the Business Intelligence. With this acquisition, Microsoft can provide solutions and services to companies that allow executives to make decisions based on complex data.

- Revolution Analytics already has a complete line of scalable solutions in R. This blends perfectly with cloud services offered by Microsoft, such as Microsoft Azure.

- In addition, Revolution Analytics offers technical assistance and training for companies that decide to use R as the basis of their data analysis.

- Microsoft also buys Revolution Analytics’ clients, including some of the largest international banks in the world.

3. PayPal buys Paydiant, a mobile payments startup

PayPal took control at the beginning of March of Paydiant, one of the leading companies in providing third-parties the technology and services necessary to develop their own mobile payments platforms. According to some reports, the transaction amounted around 280 million dollars.

The reasons for the acquisition are simple but powerful:

- PayPal wants to become the leading provider of technology for retailers who want to develop their own m-payments platform.

- Retail companies know that having their own payments platform has great advantages: they can control the whole process and improve it. Paydiant is a startup that enables retailers to design and control their proprietary platform using its technology.

- With the purchase of Paydiant, PayPal also incorporates as clients some major retail chains, especially through MCX, a consortium of merchants leaded by Walmart and with partners such as Target, Best Buy and Kohl. MCX plans to launch this year its own mobile payments platform, called CurrentC. A way to control your enemy.

- The idea of PayPal is to give a qualitative leap forward in the m-payments battle: Apple (Apple Pay), Google (Android Pay, which could be ready in May 2015) and Samsung (Samsung Pay) are offering  their payments platforms to retailers, but now PayPal has a service that others don’t have, and that can mean a significant added value.

 

4. Dropbox buys CloudOn, a cloud-based content company

Dropbox is a cloud storage service, and CloudOn is an Israeli startup that sells services for creating and editing documents on mobile devices (smartphones and tablets).

The consumption of information is changing at lightning speed, and so is the need to create information. We read and write in phones and tablets…and cloud services must adapt to these conditions.

Why did Dropbox acquire CloudOn?

- Dropbox is a collaborative cloud storage service, and now it wants to be a cloud-based collaborative content creation service. The idea is to compete with Google (Google Docs + Google Drive) or Microsoft (Office Mobile + Microsoft OneDrive) and direct rivals such as Box.  

- Many American companies are acquiring Israeli startups to position themselves in this promising market of international innovation.

- This deal is similar to the partnership announced between Dropbox and Microsoft, which allows the former to step into the Redmond’s giant universe by developing desktop plugins and integrating Office 365 within its services.

 

5. BBVA acquires Coinbase, a bitcoins platform

BBVA has long been making movements in the financial technology sector. One of the latest is the investment of BBVA Ventures, the Group’s venture capital arm, in Coinbase, a leading platform for buying and making transactions with bitcoins.

What is BBVA looking for with this investment?

- Coinbase has more than 2 million customers who use their bitcoins wallet to buy products. For some time, the company has shown its willingness to work in new services for banks. Meanwhile, banks are investing in bitcoin payment platforms to keep under control a phenomenon that still has to show its true dimension.

- More than 38,000 businesses already use the services of the Coinbase platform to make transactions with the virtual currency.

- And, finally, a key element: Coinbase has a community of 7,000 developers who are creating services based on its API. BBVA also has interfaces for programming applications which can lead to the development of high-value services. The relationship with the developer community has great significance for BBVA.

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