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Investors are pouring funds into big data

Venture and growth capital firms make big bets on big data; this week's $26M investment in Birst is latest of many by venture capital firms

May 4, 2012 06:05 AM ET

Computerworld - Surging enterprise demand for tools that can manipulate and analyze massive volumes of structured and unstructured data has caught investor attention in a big way.

Top venture and growth capital firms in recent months have poured hundreds of millions of dollars into companies selling the so-called "big data" technologies. Venture capital firm Accel Partners has even established a $100 million fund to finance the early stages and growth of big data companies.

The latest beneficiary of the trend is big data software maker Birst, which on Wednesday announced that it has received $26 million in funding from Sequoia Capital, Hummer Winblad and DAG Ventures.

Birst has raised $46 million from investors since its founding in 2005.

Birst was launched as a cloud-based business intelligence (BI) service. It recently began positioning the technology as tools for analyzing and gleaning intelligence from massive 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, while 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.

Domo, a company that offers cloud-based BI services for big data sets, has attracted investments totaling more than $60 million, while Karmasphere's data analytics technology has pulled in close to $12 million to date from investors.

Big data software maker Splunk has successfully moved beyond the venture capital phase, raising some $230 million in an initial public offering last month that saw its share price double and its market cap reach some $3.3 billion, 25 times its revenue of $120 million last year.

Shares of other publicly traded companies that sell big data technology, including Teradata, Tibco and Qlik Technologies, have all surged in recent months.

Much of the investor interest stems from massive enterprise demand for big data tools, said Greg McDowell, an analyst with investment banking firm JMP Securities.

Companies like Splunk have been growing at a frenetic pace over the past few quarters adding hundreds of new customers each quarter, he said.

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

McDowell said the market for big data tools is projected to rise from $9 billion in 2011 to $86 billion in 10 years. By 2020, spending on big data tools will account for some 11% of all enterprise IT spending, he added.

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