Startups which focus on exploiting Big Data are now creating huge enthusiasm among investors.
Investors pumped $3.6 billion into Big Data startups in 2013 alone. This is big money by any standards. However, to see the true extent of the current enthusiasm for Big Data specialists, we need to put this figure into the context of investments made in the last few years. Between 2008 and 2012 just under $5 billion was invested in fledgling companies in this field. It appears that between concerns over a possible financial bubble and an unexpectedly promising economic environment, the Big Data field now offers extremely valuable opportunities for young entrepreneurs. A glance at the infographic published by Big Data Startup, the online Big Data knowledge platform, which provides a summary of the financing and investment picture for the top startups of 2013, reinforces this impression.
Substantial, diverse investment
The $3.6 billion invested last year did not however go to just a few large startups but was spread around in a relatively even way, with funds obtained by Big Data startups in 2013 averaging out at $210 million per company. The number one recipient, US-based Big Data analytics solutions Palantir, raised $556 million. However, the number two fund-magnet, document-oriented database company MongoDB, received ‘only’ $231 million. The ecosystem also showed a variety of models in terms of mergers and acquisitions. While it is not uncommon for startups to take over other fledgling companies, the top money deals were still takeovers of startups by major firms. These include Monsanto’s record purchase of weather-forecasting Big Data company Climate Corporation last October, Facebook’s takeover of media measurement platform Atlas in March, and Apple’s acquisition of crowdsourced location data company Locationary in July.
Streamlining the funding approach
So while 2013 may go on record as the year of Big Data startup deals, perhaps equally importantly last year’s enthusiasm seems to now be crystallising into a longer-term pattern for investment and deals. The Gartner Institute predicts that Big Data software solutions developed by startups will drive $232 billion in IT spending by 2016. And following the publicity generated by the record amounts paid for startups, a stable system for financing Big Data specialists is being established. In fact three new Big Data venture capital funds were set up in 2013 – two of them being KPMG Capital and Accel Big Data Fund 2. This is a good illustration of the fact that many major players now recognise the opportunities offered by Big Data exploitation.