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Why most large Data-as-a-Service companies are private
It's a party you don't want to be at.
In most industries, it’s a given that the largest companies are public. From the largest tech and financial services companies to retail and energy, the vast majority are publicly traded under ticker symbols investors can recite offhand.
The same doesn’t hold for data. While a few large public data companies like ZoomInfo, CoStar, Factset, Moody’s are publicly traded, the vast majority of data companies are privately held (usually by private equity).
We recently published the list of the 60 public global DaaS companies. This isn’t the TOP 60 DaaS companies – these were the ONLY 60 public DaaS companies with a market cap over $100M we could find.
But there are hundreds of privately held data companies valued well over $100M including: Bloomberg, Nielsen, Preqin that aren’t public.
Is there something that makes data companies in particular less likely to go and remain public?
Framed another way, is the data business better positioned to grow without the added overhead/oversight associated with going public?
![](https://media.beehiiv.com/cdn-cgi/image/fit=scale-down,format=auto,onerror=redirect,quality=80/uploads/asset/file/d9a6a9e4-ad8a-43f2-a0d3-e3aeb7111b0c/Stocks.png?t=1722011474)
Cost Structures and Unique Verticals
The profile of the classic DaaS company is an asset light company that takes some time to reach critical mass and can be considered a pure-play investment concentrating on depth not breadth. There is inherent potential for high scalability limiting the need for additional capital. Combined with the hyper specialization of most private investors or acquirers intimately familiar with the space, DaaS companies have little incentive to go or remain public. Private investors are more likely to understand the nuances of a vertical and can provide less restrictive capital.
Control and Costs Benefits
Without the need for continual capital infusions, a private company can:
Make rapid pivots in response to market changes
Implement long-term strategies without pressure from public shareholders
Avoid the costs and complexities associated with an IPO
Keep overhead low by not building out the compliance, reporting bureaucracy the SEC (or local equivalents) require.
Additionally, the lower reporting requirements (although that is changing) allow DaaS companies to be more agile when dealing with privacy or security issues.
Preserving Competitive Advantage
Proprietary data sources resulting in unique data is one of the Six Data Moats described by Travis May. DaaS companies are very reluctant to share how “the sausage is made”. By remaining private, companies are able to avoid regulatory filings. This limits the disclosure of sensitive information and allows for safeguarding of intellectual property and preservation of competitive moats.
Room to Breathe
Private investors/buyers are more likely to understand the nuance and timelines of data business. Without the pressures of quarterly earning reports, DaaS companies are free to prioritize long-term growth strategies. This allows for data companies to:
Invest heavily in R&D and infrastructure improvements
Expand into new markets or develop new products without immediate profitability concerns
Build sustainable business models that may take years to fully mature
Public Market as a Last Resort
While going public can provide access to capital and increased visibility, it also comes with high scrutiny and pressure to meet short-term expectations. For DaaS companies that can grow without turning to public markets, staying private is often the preferred choice.
With the aforementioned benefits of staying private in mind, the lack of publicly traded DaaS companies becomes a lot less surprising. Given their less capital-intensive cost structures, greater control, and the ability to preserve competitive advantages, DaaS companies have few reasons to go public.
As long as private investors continue to provide the necessary support, we can expect to see more DaaS companies opting to remain private or returning to private ownership after brief stints under the harsh lights of the public markets.
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