Big Data, Big Exits… Big Future for Startups?


They’re going public and getting snapped up by strategics, but how enterprise clients use big data and analytics has yet to define the burgeoning industry. For now, however, VCs have big love for big data on the heels of some big exits.

The data and analytics industry is facing similar questions cloud computing has been challenged with: at a time when the technology being presented has no real stable cost to the provider, or, as of yet, determinable value to the user, how can startups position and pivot themselves to maximize trajectory? Enterprise clients like hedge funds and media companies finally have acknowledged the potential value of social media analysis and metrics; they are also struggling to make the best decisions from the ocean of data with which they are faced.

Jive Software’s David Gutelius summed it up at GigaOm Structure Data in New York: “If you don’t know what you’re measuring, you’re not going to get there.”

Jive, in all likelihood, is ‘there,’ however. Its stock price doubled, netting primary backer Sequoia Capital mega returns in just a few months after its late 2011 IPO. It is one of many recent stories that helped validate big data. Quite a few companies in the industry have gotten ‘there,’ at least by the standard being applied to Jive. Qlik Technologies’ shares have approximately doubled in value since the company’s 2010 IPO, netting retail investors a VC-like multiple.

While some startups maintain their independence with a public listing, traditional tech and data firms are also looking to buy their way into the business. Earlier this week, EMC bought Pivotal Labs for an undisclosed sum; murmurs regarding the price tag at the GigaOm event ranged from the plausible to the absurd to the downright hilarious. Google Ventures is buying in, too, committing a portion of its war chest to big data—as well as a potential strategic buyer for every startup it backs.

Cost has become a growing barrier to entry in the space—especially in terms of recruiting qualified engineers, one source tells peHUB. And while investors and entrepreneurs are easily tantalized by the prospect of some recent exits, another industry expert said that strategics like Google, EMC and SAP are making strides in the nascent industry. With big players increasingly coming into big data, the business may not be friendly to startups for long.

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