In 2012, the funding pendulum swung away from consumer Internet companies and back toward startups that serve businesses—enterprise technology, as it's known in the business.
The focus will stay there in 2013, say four venture capitalists from Kleiner Perkins Caufield Byers, the storied firm that backed Amazon and Google, among other world-changing companies. But that's only as long as startups can tap into some crucial shifts in what businesses are spending moeny on.
KP made investments in almost 20 new enterprise companies in 2011 and 2012, to the tune of more than $300 million. As with other tech investors, the emphasis has been on companies working in the areas of cloud, big data, software-as-a-service, mobile, security, and networking. The portfolio includes investment in companies like Nebula, Jive, Datameer, PuppetLabs, Egnyte, Aerohive, AppDynamics, Clearstory.
We gathered four partners together to tell us what's hot and what's not in the enterprise startup world and where they see their money going in the upcoming year. They are:
- Security guru Ted Schlein
- Former Amazon Web Services exec Ray Bradford
- Mobile app guru Matt Murphy
- Twitter's former head of engineering Mike Abbott
How will enterprise startups fare with funding in 2013?
Ted Schlein: Venture funds are going to continue to allocate more to the enterprise space than they have, if we are an indication of where venture funds are going.
In the last two and half years or so, we've probably invested close to $300 million or more across 20-something companies.
That is up. I wouldn't say it's up significantly but it's certainly higher than it was in previous years.
That coupled with the few major trends in the area of cloud, mobile, big data all hitting at the same time, will lead to greater investments.
Beyond Apple and Android, is there room for a third smartphone player?
Matt Murphy: You've got Android and iOS as the kings and BlackBerry and Symbian disappearing — no one really cares about them.
But I do think you'll start to see Windows get a wedge into the market. I'm not predicting it will be huge, but I think they'll be a player. Certainly carriers will distribute devices and there will be enterprise interest.
So I think you'll see them emerge in 2013 from not-on-the-map to 10%–15% market share.
Enterprise will be important to all of them. Windows will be more successful in the enterprise than 10%–15% but maybe not much more given [the bring-your-own-device trend] that individuals are making those decisions.
In 2012, big data was a big buzzword—which meant CIOs had to learn to speak Hadoop, NoSQL, and social media. What's next?
Ray Bradford: Enterprises all get they need to have a big-data strategy as a core technology.
They know they need Hadoop, but don't know how to deploy it and to get value out of it. So there's an opportunity in things that make it easy to deploy without a lot of expertise in-house because there's a big talent shortage on these kinds of new technologies. We're believers in that with our investment in Clearstory.
An interesting trend is more in-memory analytics. There's a lot of large, commercial proprietary vendors like SAP with Hana and now there's a lot popping in the open source communities like Shark and Spark.
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