4 biggest surprises from 2016 vertical software report
Summary
In the Healthcare space, Flatiron Health raised a $175 million Series C round in early 2016 at a $1.2 billion valuation, allowing it to achieve the ranks of unicorn status. The bulk of activity this past year has been buyouts by large private equity funds and strategic players looking to roll up best-of-breed vertical software companies at compressed valuations. As a firm, we see marijuana spending eclipsing $10 billion within five years, with significant upside given recent upswells in popular support for the end of prohibition (now a majority of Americans). Consumer-facing retail technologies, the most visible sub-sector in the space thus far, are only the beginning; the opportunity spans wholesale, logistics, compliance, testing, security (especially physical), and the full ERP gamut. Outside of regulatory issues, the cannabis technology market’s biggest current challenge is a dearth of capable founders, something we hope (and project) will change fast as we move into 2017.
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