Salesforce Ventures, one of the largest technology space VCs, put a screeching halt to investments in new startups. Its spending is really just too far down to consider it a slow down or a cut back. The metaphorical waterspout of funds for new VC opportunity is at a drip.
Salesforce VC only reported quarterly spending of $22 million compared to $144 million last year, according to Business Insider. In 2015, the company spent more than $366 million on VC investments. In fact, Venture Beat listed Salesforce Ventures as the third most prominent technology VC in 2015 behind Google Ventures and Intel Capital. Its trend for 2016 is sizably lower.
The VC arm of the $50 billion dollar Salesforce, known for cloud software development has large holdings in companies like Dropbox, DocuSign, and Evernote. Its change in strategy marks the beginning of a conservative trend in technology and cloud investments. Technology startups as a result, find it more difficult to raise funds to meet valuations. This is not a completely new trend, as Salesforce’s VC spending initially decreased during the second half of 2015, but spending trends in 2016 show startup investing has all but ceased.
Admittedly, Salesforce has been more active in the Mergers and Acquisition space, and has been aggressively perusing acquisitions. To provide perspective, Salesforce only acquired six companies in 2014 and 2015 combined. That number skyrocketed to seven that Salesforce purchased since third quarter 2015.
Salesforce states on its Venture site that it is still committed to supporting and working with tech startups, and provides a set of tools and offerings for fledgling startups. The company also hosts a community forum that provides technology startup companies an opportunity to share experiences and best practices.
From outward appearances, the company is still interested in technology startups, even if the numbers do not support that assertion. Some speculate that Salesforce’s change in strategy is in response to decreased opportunity available in the market, but more likely, it is a result from loss of growth from its VC portfolio.
