The Investor Panel offered a wide-ranging and fast-paced discussion to close the day at SlatorCon Zurich 2023. The panel was moderated by Slator’s Esther Bond, who was joined by language industry investors Markus Zejermann from Mayfair Equity Partners, and Fernando Chueca from Carlyle.
The discussion spanned the topics of industry growth vectors, machine translation (MT), and large language models (LLMs) as well as the impact of rising interest rates over the past 12-18 months and tips for LSPs and language technology providers when talking to investors.
Carlyle’s Chueca recounted how his company’s acquisition of Memsource in 2020 was, in fact, its second time investing in the language industry. The firm’s investment in media localization provider BTI more than a decade ago enabled Caryle to understand the role of technology in the industry, and its second investment — in Memsource (now Phrase) — was very deliberately a technology player focused on automating and optimizing the process of translation.
Mayfair, by comparison, only recently placed its bet on the language industry, with the acquisition of tech-enabled language services provider (LSP) Jonckers, based in Belgium, having completed in April 2023.
Zejermann said the language industry, viewed as an Enterprise services industry, ticked boxes for Mayfair. He praised its resilience, citing “near double-digit growth” and “quite stable” margins over two decades. Moreover, the vision of Jonckers’ CEO, Silke Zschweigert, to create a “large enduring growth story” helped cement Mayfair’s decision to invest in the company specifically. As Zejermann put it, “it’s history in the making since [the investment] was only six months ago.”
“Every multinational that has a website should have a multilingual CMS that is connected to the software, websites, user manuals, etc.” – Fernando Chueca, Managing Director, The Carlyle Group
Must-Have a Multilingual CMS
Chueca identified two “vectors” that offer growth opportunities for language industry participants. One, he said, “is technology penetration and the other is expansion from localization to content creation because that’s going to be massive.”
Regarding technology penetration, Chueca’s assertion is that “every multinational that has a website should have a multilingual CMS that is connected to the software, websites, user manuals, etc.” Further, translation and localization companies have an opportunity to embed themselves into that ecosystem to provide the technology and / or services around it.
Zejermann said LSPs can derive organic growth from “providing better solutions for your customers.” For example, he observed that it’s important to be ahead of the curve when it comes to integrating technology, such as large language models (LLMs), within a services offering.
Another potential growth vector for Jonckers is acquisitive growth. As Zejermann shared, “it has a buy and build platform, so we’re very much looking for other LSPs who are potentially in the founder transition, looking for a stronger platform, and are just at the right time and place to join a bigger group.”
Breaking the Silo
On the topic of MT, Zejermann described Jonckers as “machine translation agnostic,” which means it leverages the likes of DeepL, Google Translate, and other custom MT engines in combination with Jonckers’ AI-powered workflow technology platform. The company is also “experimenting” with LLM applications across half a dozen use cases.
“It may just be another wave of innovation and technology that will be brought into the industry by the industry and the leading LSPs.” – Markus Zejermann, Managing Director, Mayfair Equity Partners
Chueca said Phrase is also “machine translation neutral,” embraces third-party MT, and is seeing a growing opportunity to “help customers to build their custom AI models” from data that has been created by linguists. Phrase is also assessing how it can help its customers utilize LLMs and is working on the area of machine translation quality estimation (MTQE).
Generally, both Chueca and Zejermann view LLMs and AI as an opportunity for the language industry. Chueca made the point that “all of us are going after small local, localization budgets that are not being elevated to the C-level yet.” Whereas, LLMs were an external trigger that have created an opportunity “to break that silo” and talk to the C-suite because the question of how to embed LLMs is front of mind for execs.
Meanwhile, given the timing of the Jonckers’ investment, the matter of LLMs was naturally a topic of reflection for Mayfair. Zejermann said, “In the end, we came to the conclusion that it may just be another wave of innovation and technology that will be brought into the industry by the industry and the leading LSPs.” He echoed Chueca’s view that “In every application of LLMs going forward, you can put a multilingual in front and then it is up for grabs for an LSP.”