VCs Front Cloud Investment Downpour
Patrick Houston — VCs devoted $6.9 billion in 2011 to “Internet-specific” startups, a proxy term for “cloud” because that’s what most of them are doing, according to Steve Bengston, a director of a startups practice at PricewaterhouseCoopers. That’s up 68% from last year.
In Q4 alone, cloud-related investments of $1.8 billion outdistanced the dollars that went into biotech ($1.3 billion), cleantech ($883 million,) and medical devices ($498 million.)
It’s not just the amount. It’s the number of deals, too. During all of 2011, VCs funded 1,004 software startups that were mostly in the cloud–or more than double the 446 biotech companies that received dough.
Not all those companies will survive to deliver a product one day, of course. A large number of startups makes the chance of success more likely.
Remember, VCs have a clear imperative to find the money. But it’s only partly about the big money, such as Facebook’s anticipated $100-billion-plus IPO valuation. You can also learn from where they’re scouting, digging into real work, and making their claims, actions that all offer directional guidance for what IT leaders can expect in two to seven years.
Osman Ahmed of Scale Venture Partners, which invests in mid-to-late-stage startups, said his firm sees a lot of action in three areas: big-data analytics, telephony, and data-storage services.
You could also get an instructive glimpse into the future by the names of the companies rolling off the VCs’ tongues. Here are three that piqued my interest for enterprise IT use:
– CloudFlare, a cloud-based service that protects and accelerates any website. Once you sign up to its network, your Web traffic is optimized for speed and your site shielded from threats, bandwidth-hogging bots, and crawlers.
– Apperian, which helps companies manage and secure mobile apps across platforms. This startup plays to the Bring-Your-Own-Device (BYOD) revolution befuddling so many IT groups as they struggle to address the issues of personal smartphones used for business purposes.
– Stormpath, a developers’ tool, helps companies manage user access, authentication, and identity across mobile and enterprise apps in the cloud and behind a firewall.
I’ll be keeping a critical eye trained on these and other potentially promising companies, trends, and technologies emerging from the vibrant Silicon Valley startup scene. And when I say critical, I mean critical. VCs are like baseball players. They might be pros, but even the Hall of Famers fail at the plate more often than they succeed.
Please find Patrick’s original article here.