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Is the Big Data Shakeout Coming in 2013?

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Is the Big Data Shakeout Coming in 2013?

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Is the inevitable Big Data shakeout coming?  If you are an enterprise customer, how do you prepare for this? What strategies do you adopt to take advantage of the situation?

The Big Data ecosystem is exploding with exciting start-ups, new divisions and new initiatives from established vendors.  Everyone wants to be the vendor/platform of choice in assisting firms deal with the data deluge (Data growth curve: Terabytes -> Petabytes -> Exabytes -> Zettabytes -> Yottabytes -> Brontobytes -> Geopbytes), translate data to information to insight, etc.

In both U.S and Europe, several billion dollars of venture money has been invested in the past three years alone in over 300+ firms.  In the MongoDB space alone – a small market of less than 100M total revenue right now, over $2 Billion is said to have been invested in the past few years.

An interesting sampling of start-up vendors and the amount of venture capital each has raised, including lead investors is listed at Wikibon here.  This list includes only Big Data pure-plays delivering products and/or services in one of the following markets: Hadoop, NoSQL, Next Generation (MPP) Data Warehousing, predictive analytics and/or advanced data visualization.

A narrow slice of the Big Data Market but illustrates the vibrant big data startup activity taking place. This list doesn’t include all the Social Intelligence and Analytics firms that are living off Facebook or Twitter data that represent a different slice of Big Data.  Several hundred firms easily in that segment alone.

The temporal clustering of major innovations under the banner of big data is definitely one of the catalysts for the next wave of innovation and economic growth.  We have seen this pattern before where advances in technology have combined to bring about a series of coordinated technological transformations that are correlated with waves of investment and business efficiency. (Joseph Schumpeter’s studied these business cycle patterns in the 1930s. These were later labeled creative destruction in innovation management circles.)

Most recently we saw this innovation pattern in the late 1990s around e-commerce.  Thousands of new companies were created, bought, and merged during the 1997 – 2000. At the end of the cycle we saw a massive creative destruction period with a washout that lasted from late 2000 to end of 2003.

My hypothesis is that in 2013 we are going to see a similar shakeout pattern around Big Data and Social Intelligence/Analytics.  The evidence… we have too many startup companies chasing customers.  Most of the projects are low-cost ($100K or less) or free pilots.  Enterprise customers who are innovative are piloting technologies to understand the business value but are having a hard time moving these into production deployments.

The shakeout will start slowly but will pickup pace towards the end of this year.  The catalyst for creative destruction is always the same – lack of next round of funding, lack of enterprise customers,  declining valuations that prompt investors to pull back, and finally big established firms like Oracle, SAP and others moving to protect their turf by creating fear, uncertainty and doubt.

So what does this mean if you are a Big Data startup firm?  It means managing your funding aggressively and making sure it lasts till you get paying customers.  A simply analogy – a car with gas in the tank will win always against another car that is running out of gas.

What does this mean if you are an enterprise customer?  Create a roadmap and continuously learn. If you are in the experimental mode, it’s ok to do several pilots. But make sure you are learning something and bringing this knowledge back into the organization.  I see a lot of companies that are doing interesting pilots but have no plans to assimilate, scale or leverage the insights.  So lot of effort is wasted.

Birth and death of firms is a natural phenon in entrepreneurship.  The survivors in Big Data will be those that are actively planning for the impending shakeout and acquiring assets – customers, technology, IP, patents — from the weaker players.

Big Data Start-up Ecosystem

Innovation in Big Data – Hadoop, NoSQL, Next Generation (MPP) Data Warehousing, predictive analytics and/or advanced data visualization… How many of these will survive?

Consolidation via mergers/acquisitions has already started.  Vertica (HP),  Kitenga (Dell), Salesforce.com (Buddymedia, Radian6), Oracle (Vitrue), EMC (Greenplum), IBM (too many to name).

If you know of other firms that should be added to this list…

Big Data Start-up Funding by Vendor (adapted from Wikibon)

Vendor Founded Funding (in $US mil.) # of Institutional Rounds Investors
Palantir 2004 $301 7 SAC Capital, The Founders Fund, Glynn Capital, In-Q-Tel, Reed Elsevier Ventures, Ulu Ventures, Youniversity Ventures and Jeremy Stoppelman
Cloudera 2008 $146 5 Accel Partners, Greylock Partners, Ignition Partners, In-Q-Tel and Meritech Capital Partners
Mu Sigma 2004 $133 2 General Atlantic and Sequoia Capital
Opera Solutions 2004 $84 1 Silver Lake Sumeru, Accel-KKR, Invus Financial Advisors, JGE Capital and Tola Capital
10gen 2008 $81 6 Intel Capital, Red Hat, New Enterprise Associates, Sequoia Capital, Flybridge Capital and Union Square Ventures
Guavus 2006 $78 3 Investor Growth Capital, QuestMark Partners, Intel Capital, Artiman Ventures and Sofinnova Ventures
ParAccel 2005 $73 5 Amazon, Menlo Ventures, Mohr Davidow Ventures, Bay Partners, Walden International, Tao Venture Capital Partners and Silicon Valley Bank
Talend 2005 $61.6 5 Silver Lake Partners, Balderton Capital, Galileo Partners and IDInvest Partners
GoodData 2007 $53.5 3 Andreesen Horowitz, General Catalyst, O’Reilly AlphaTech Ventures, Windcrest Partners, Tenaya Capital and Next World Capital
Splunk 2003 $40 3 Ignition Partners, August Capital, JK&B and Sevin Rosen Funds
DataStax 2010 $38.7 3 Meritech Capital, Lightspeed Venture Partners, Sequoia Capital and Crosslink Capital
1010data 2000 $35 1 Norwest Venture Partners
Couchbase 2009 $31 3 Ignition Partners, Accel Partners, Mayfield Fund, and North Bridge Venture Partners
MapR 2009 $29 2 Redpoint Ventures, Lightspeed Venture Partners and NEA
Tidemark 2011 $28 2 Andreesen Horowitz, Redpoint Ventures and Greylock Partners
Factual 2007 $27 1 Andreesen Horowitz and Index Ventures
Platfora 2011 $25.7 2 Battery Ventures, Andreessen Horowitz, Sutter Hill Ventures and In-Q-Tel
MetaMarkets 2010 $23 2 Khosla Ventures, IA Ventures, AOL Ventures, Neu Venture Capital, Joshua Stylman, Village Ventures and True Ventures
Hopper 2007 $22 3 Atlas Venture, OMERS Ventures and Brightspark Ventures
Lattice Engines 2006 $21.6 2 Battery Ventures and New Enterprise Associates
SumoLogic 2010 $20.5 2 Sutter Hill Ventures, Greylock Partners, Shlomo Kramer
Hortonworks 2011 $20 1 Benchmark Capital, Yahoo and Index Ventures
RainStor 2004 $19.2 3 Storm Ventures, Doughty Hanson Technology Ventures, Informatica, Rogers Venture Partners and The Dow Company
DataXu 2009 $18.8 2 Menlo Ventures, Atlas Venture and Flybridge Capital Partners
Datameer 2009 $17.8 3 Kleiner Perkins Caufield & Byers and Redpoint Ventures
Revolution Analytics 2007 $17.6 2 North Bridge Venture Partners and Intel Capital
Hadapt 2010 $16.2 1 Atlas Venture, Norwest Venture Partners and Bessemer Venture Partners
Lucid Imagination 2007 $16 2 Shasta Ventures, Granite Ventures, In-Q-Tel and Walden International
Continuity 2011 $12.5 2 Andreessen-Horowitz, Ignition Ventures, Battery Ventures, Data Collective and Amplify Partners
Connotate 2000 $12.3 2 Castile Ventures, Prism VentureWorks and .406 Ventures
ClearStory Data 2012 $12.25 1 Kleiner Perkins Caufield & Byers, Andreessen Horowitz, Google Ventures and Khosla Ventures
Karmasphere 2005 $11 2 Presidio Ventures, Hummer Winblad and US Venture Partners
Loggly 2009 $10 1 True Ventures, Trinity Ventures, Matrix Partners
Oragami Logic 2012 $8 1 Accel Partners
Alpine Data Labs 2010 $7.5 1 Sierra Ventures, Mission Ventures, Sumitomo Corporation Equity Asia and Stanford University
SpaceCurve 2009 $7.5 1 Triage Ventures, Reed Elsevier Ventures and Divergent Ventures
ParStream 2008 $5.6 1 Khosla Ventures, Baker Capital, Crunch Fund, Data Collective and Tola Capital
SpaceCurve 2011 $5.2 2 Reed Elsevier, Divergent Ventures, and Triage Ventures
MemSQL 2011 $5 1 First Round Capital, SV Angel, Y Combinator, IA Ventures and Ashton Kutcher
WibiData 2010 $5 1 New Enterprise Associates, SV Angel, Mike Olson and Eric Schmidt
InsightSquared 2010 $4.5 1 Atlas Venture, Bessemer Venture Partners, NextView Ventures and salesforce.com
Chartio 2010 $4.4 1 Avalon Ventures, Bullpen Capital, Y Combinator, Crosslink Capital and Jeff Hammerbacher
Trifacta 2012 $4.3 1 Accel Partners, X/Seed Capital, Data Collective LLC, Dave Goldberg, Venky Harinarayan and Anand Rajaraman
Digital Reasoning 2000 $4.2 2 In-Q-Tel and Silver Lake Sumeru
SiSense 2008 $4 1 Opus Capital, Genesis Partners and Eli Farkash
Calpont 2000 $3.27 1 Austin Ventures and GF Private Equity
StackIQ 2006 $3 1 Anthem Venture Partners and Avalon Ventures
Zettaset 2009 $3 1 Draper Fisher Jurvetson and Epic Ventures
GridGain 2005 $2.5 1 RTP Ventures
NGDATA 2011 $2.5 1 ING, Sniper Investments, Plug and Play Ventures
Sqrrl 2012 $2 1 Atlas Venture
Feedzai 2008 $2 1 Espirito Santo Ventures and Novabase Capital
Nodeable 2011 $2 1 True Ventures and Matrix Partners
RelateIQ 2012 $1.25 1 Accel Partners, Morgenthaler and SV Angel
Zoomdata 2012 $1.1 1 Hemang Gadhia
AppEnsure 2011 $1 1 Citrix Accelerator, TiE, Ignition Partners
DataHero 2012 $1 1 Neu Venture Capital, The Foundry Group, David G. Cohen and Tasso Argyros
Drawn to Scale 2009 $0.93 1 RTP Ventures, IA Ventures, and SK Ventures

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