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
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.
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.
Mike Abbott: Now that we see a lot of infrastructure for big data in place, we are going to start seeing what I call 'big apps.'
Apps haven't been rebuilt yet to take advantage of the large amount of data that we are actually storing.
So that's coming.
Matt Murphy: Android is bigger and iOS is monetizing better, with more engagement and app downloads. Android lags iOS monetization someone in the area of 3x to 5x.
I think you'll still see iOS continuing to monetise better than Android. But you'll see Android make it up on volume.
The smartphone ecosystem is now fairly concentrated in the U.S. at over 50%. So you'll see internationally Japan and China bumping up to the No. 2 and No. 3 position.
So for the developer, a lot of apps are focused on the U.S. first and then they think about international. But developers are going to have to think about distributing globally from the get-go.
Mike Abbott: Another big opportunity is, as people people bring tablets into the enterprise, they will need security and content management.
Ted Schlein: We've spent billions on securing networks and I don't think it works. People will continue to try. But ultimately we're going to have to come up with ways to secure the assets itself--not necessarily the room, but the asset in it.
We will need a lot of startups doing that.
Ray Bradford: It's amazing how much clouds like Amazon have matured in terms of the number of services they offer.
Next is to make it easier for enterprises to consume the cloud and also get their arms around their spend, efficiency, and management on the public cloud.
The ease of use of getting started with cloud also means that you can get runaway bills and it's hard to see if you are using the cloud efficiently and with compliance. We see opportunity there as well.
Matt Murphy: Mobile-first enterprise apps that change the way we work on mobile devices.
Mike Abbott: Big apps.
Ray Bradford: Open-source projects for in-memory analytics like Shark and Spark.
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