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

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.

"The key growth driver of big data is the proliferation of data" that is spreading at breakneck speeds amid trends like cloud computing, mobile computing, globalization, and social media, McDowell said.

The term "big data" is generally used to describe very large and very diverse sets of both structured and unstructured data gathered from websites, clickstreams, emails, social media interactions and the like.

Big data technologies fall into multiple categories.

Vendors with products based on the open-source Hadoop and NoSQL technologies, such as Cloudera, MapR, Couchbase and 10Gen, operate largely at the data management layer. Their technologies are designed to help companies more easily gather and manage massive, diverse data sets and to make it easier for actionable data to be extracted from these data sets.

Several other vendors focus on building business intelligence, data analytics and data visualization tools that can help companies best utilize the information to improve their businesses.

Vendors of such tools include both relatively new companies -- like Domo, Pentaho, Jaspersoft and Karmasphere -- and long-established tech vendors -- such as Teradata, Oracle, IBM and SAP.

Curt Monash, an analyst at Monash Research, suggested that at least some of the intense investor interest stems from the hype surrounding big data technology over the past year or so.

"A great example of hype is anybody calling Birst a 'big data' or 'big data analytics' company," Monash said in an email to Computerworld. "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," he said. "The net effect is healthy but not enormous growth in the overall data management and analytics markets."

Startup big data companies are posing problems for established vendors such as Oracle, IBM and Microsoft, which are often responding with strategic acquisitions, Monash said.

Jaikumar Vijayan covers data security and privacy issues, financial services security and e-voting for Computerworld. Follow Jaikumar on Twitter at @jaivijayan, or subscribe to Jaikumar's RSS feed . His email address is

Copyright © 2012 IDG Communications, Inc.

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