Venture capital (VC) funding and mergers and acquisitions (M&A) activity in the cloud space largely maintained an upward year-over-year (Y-o-Y) trajectory until 2020 when the COVID-19 pandemic reversed the trend. Although there was a decline in 2020 compared to 2019, there is a significant growth when compared with 2016’s deal volume and value, according to GlobalData, a leading and data analytics company.

VC funding deal value in the cloud space showed consistent growth from 2016-2019, while it shrank by 22.4% in 2020. On the other hand, M&A deal volume registered consistent growth during 2016-2019, while it shrank by 4.5% in 2020. After recovering from the decline in 2017, M&A deal value registered growth in 2018 and 2019 before declining again in 2020.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Last year’s decline could be seen as a temporary jolt in deal-making sentiments as, when comparing 2020’s deal activity with 2016, we can see a significant growth indicating that cloud is here to stay.”

VC deal volume and value increased at a compound annual growth rate (CAGR) of 8.9% and 18.8% during 2016-2020, respectively. On the other hand, M&A deal volume and value increased at a CAGR of 16.9% and 10.3%, respectively, during the past five years.

VC deal volume in the cloud space shrank by 6.9% from 2,476 in 2019 to 2,305 deals in 2020 and the deal value declined by 22.4% from US$35.4bn in 2019 to US$27.5bn in 2020.

The number of M&A deals in the cloud space fell by 4.5% from 1,638 in 2019 to 1,564 in 2020 and the deal value declined by 4.8% from US$217.1bn in 2019 to US$206.8bn in 2020.