Funds Pour Into Big-Data Vendors

Investors jump on the big-data bandwagon. Many see it as a good bet, but others warn about hype.

Investors have taken note of the surging enterprise demand for tools that can manipulate and analyze massive volumes of structured and unstructured data.

In recent months, top venture capital firms have poured hundreds of millions of dollars into companies that make products designed to manage so-called big data, generally defined as very large and diverse sets of structured and unstructured data gathered from a websites, clickstreams, email messages, social media interactions and the like.

Venture capital firm Accel Partners has even established a $100 million fund to finance big data vendors that are in the early stages of growth.

One of the latest beneficiaries of the largesse is software maker Birst, which this month disclosed that it had received $26 million in funding from Sequoia Capital, Hummer Winblad and DAG Ventures. To date, Birst has raised $46 million overall.

Birst was launched in 2005 as a cloud-based business intelligence service, and more recently positioned its cloud-based and on-premises products as tools for analyzing and gleaning intelligence from petabyte-scale data sets.

Birst is just the latest provider of big data tools to feel investor love.

In November, Cloudera closed a $40 million round of funding led by Ignition Partners, Greylock Partners and Accel Partners. Cloudera, which sells and supports a commercial version of the open-source Hadoop big data technology, has so far raised more than $75 million overall from investors.

Meanwhile, Cloudera rival MapR has raised more than $25 million; 10Gen, maker of the MongoDB big data database, has secured some $32 million; and DataStax, a provider of products based on Apache Cassandra database technology, has raised $11 million.

And the list goes on.

Greg McDowell, an analyst at investment banker JMP Securities, said that the investor interest stems from massive enterprise demand for tools that can manage data stores that are growing at breakneck speeds.

He added that investment firms clearly noticed last month's initial public offering of big data software maker Splunk that raised about $230 million.

"Big data has become big business," McDowell said. "Companies are looking for tools to store, manage, manipulate, analyze, aggregate, combine and integrate data."

A key driver of the data explosion is the spread of cloud computing, mobile computing and social media technologies, along with business globalization, he said.

McDowell estimated that the market for big data tools will rise from last year's $9 billion to $86 billion in 2020, when spending on big data tools will account for some 11% of all enterprise IT spending.

Curt Monash, an analyst at Monash Research, noted that startup big data firms ignored by venture capitalists may find that they're attractive to established data management vendors like IBM, Oracle and Microsoft, which are increasingly looking to buy their way into the big data business.

At the same time, though, Monash warned investors to beware of the hype surrounding the technology.

"A great example of hype is anybody calling Birst a ' big data' or 'big data analytics' company," he said. "If anything, Birst is a 'little data' analytics company that claims, as a differentiating feature, that it can handle ordinary-sized data sets as well."

"The great growth in database sizes is both caused and balanced out by Moore's Law," Monash added. "The net effect is healthy but not enormous growth in the overall data management and analytics markets."

This version of this story was originally published in Computerworld's print edition. It was adapted from an article that appeared earlier on Computerworld.com.

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