• Venture Capital
  • Experfy Editor
  • JUN 11, 2014

VC Funding Trends in Big Data (IDC Report)

Between 2009 and the second quarter of 2013, venture capital funds amounting to a generous $3 billion was pumped into the information access, management, and analytics software market. It is interesting to note that a majority of these highly funded software vendors positioned themselves as big data solutions.

The big data wave opened up a “multi-billion dollar” opportunity for both hardware and software vendors serving the IT infrastructure and services markets. IDC predicted that the big data technology and services market would reach $11 billion, and the analytics market would reach $104 billion by the end of 2013.

IDC’s market research efforts on the big data VC funding scene revealed:

  1. 121 software companies received funding through 290 funding rounds conducted between January 2009 and August 2013.
  2. According to the info-graphic below, 5% of the total funding went to IT consulting companies. The IT consulting sector rarely receives capital funding due to the “less scalable nature.”
  3. The investment funding capital reported in the eight months of 2013 was significantly higher than the investment funding capital reported in entire 2012.
  4. 85% of VC funding activities has taken place in the last three years (2011-2013), as shown in the Info-graphic below. However, the pace of VC funding has not gone down since August 2013.
  5. As much as 92% of the funded companies are headquartered in the U.S.  Furthermore, California leads the acquisition of the funding dollars (60% of total funding), followed by Massachusetts, New York, Washington, and Texas.
  1. The general funding patterns suggest the venture capitalists are targeting IT vendors with similar technologies or solutions—addressing the same customer issues.
  2. Described by IDC as the 3rd Platform, big data & analytics technology are playing a key role in transforming industries and market growth.
  3. Few of the funded startups will reach the IPO stage; far more vendors will be acquired by larger IT vendors (17 cases till August 2013); and a small number of funded companies will remain privately held for a temporary period till they transition into the broader analytics market.
  4. Many of the funded companies have also been predicted to “run out of cash and go out of business.”
  5. Over the years till the market growth plateaus or settles down, big data technologies and enabled solutions will continue to make marked progress.
  6. The following info-graphic demonstrates the shift in VC funding trend from the information management layer to the top two layers of the software stack.

The info-graphic reveals that a large number of VC firms and angel investors are actively present in the big-data analytics market, with Andreessen Horowitz, Greylock Partners, and Sequoia Capital leading the largest number of VC funding rounds. Greylock Partners have invested the highest dollars in this market, but Andreessen Horowitz and Sequoia Capital have funded the most number of companies (7 each).

The current IT market is experiencing, what can be best expressed as “mad rush to capitalize on a business opportunity that is likely to surface only once in several decades.  The overwhelming interest in VC funding of IT startups has managed to prove that the market is responding to the strong wave of innovation pursued by the startups. The general air of innovative products and solutions will gradually lower costs to manage and analyze large data sets, and popularize the trend of using new information management and analysis techniques that were not economically feasible a few years ago. The presence of startups has put tremendous pressure on established IT vendors to innovate new products and improve the existing products.

If you are interested in finding out about the funding patterns in the IT (big data)industry, refer to IDC’s report Venture Capital Funding for Big Data and Analytics Software. This report shows an abnormally high proportion of funding activities across vendors focused on the data analytics market—non-relational analytics solutions, text analytics, predictive analytics, rich media analytics, or the Hadoop ecosystem.

Source: IDC

Source: IDC

 

Boston city bkg

Made in Boston @

The Harvard Innovation Lab

350

Matching Providers

Matching providers 2
comments powered by Disqus.