Covering Disruptive Technology Powering Business in The Digital Age

The overall pace of investments by venture capitalists slowed over the first six months of the year, according to new report issued last week. While the software industry as a whole did well, the number of investments in startups is trending down. After several years of heavy investments in big data startups, the industry could be due for a course change, data suggests.

Venture capitalists invested about $30.0 billion across all industries from January through June, according to The MoneyTree Report by PricewaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. That’s about a 10% decline compared to the first six months of 2015.

The number of investments was down too. The first six months of the year saw 1,972 deals, compared to 2,318 deals over the first six months of 2015. While it was the 10th straight quarter in which VCs invested $10 billion or more, it was also the first quarter in two-and-a-half years that saw fewer than 1,000 deals.

“The second quarter data confirms what we’ve heard anecdotally from our members, which is that venture investors remain active through a string of strong fundraising periods but are becoming more selective in where they deploy capital,” Bobby Franklin, President and CEO of NVCA, said in a statement.

The software industry as a whole continues to do well, accounting for $13.8 billion in venture capital investments over the first six months of the year, the biggest single industry for VC  money. That’s up about 6% compared to the first six months of 2015. However, nearly a third of that total comes from just two deals, including Uber’s $3.5 billion round Snapchat getting $1.3 billion.

The data shows that a smaller number of companies are seeing more of the VC pie. Venture capitalists are essentially shifting money from early stage to later stage investments. The MoneyTree report tracks this as so-called “megadeals” of $100 million. It was the ninth straight quarter in which there were 10 megadeals or more.

To be sure, big data is still attracting plenty of investments from VCs as our list of notable big data funding rounds shows. In a May E&Y report, it was estimated that big data analytics drove an estimated 70 percent of merger and acquisition activity during the first quarter of 2016.

“Big data analytics is a perfect example [of digital disruption] as tech and non-tech companies alike seek new data sources to feed their analytics capabilities, especially where machine-learning technologies are involved,” said Jeff Liu, the head of EY’s Transaction Advisory Services.

But there are signs we’re entering a consolidation phase in the big data field, which analysts have been expecting. For starters, we haven’t seen the sort of megadeals in the big space that we saw in years past, such as the $740 million Series F funding round in Cloudera in May 2014, the $110 million venture round in MapR Technologies in June 2014, the $150 million invested inHortonworks (NASDAQ: HDP) that same year (before it IPO’d in December), or the $106 million Series E round that bolstered Datastax in September 2014.

While the big data boom (as measured in petabytes and exabytes) shows no sign of slowing down, the big data software industry may be due for a course change, if not a correction. Because so many big data startups planted flags in the 2013-to-2015 timeframe, it’s possible that there’s an excess of technology suppliers in particular fields.

That doesn’t mean we’ll see an implosion in the field. Quite the contrary: growth is the order of the day, according to Gartner, which sees the advanced analytics market growing 14 percent this  year to drive $1.5 billion in spending. Clearly big data as a movement has legs.

But not all segments of the market are equal, and historic spending patterns on enterprise software may not apply. Much of the big data world runs on open source software, and many big data projects are heavily dependent on developers stitching things together. Companies that try to follow the traditional software licensing and product development pattern in the big data world may not find the results they were hoping for.

While advanced analytics surges, the classic business intelligence and visualization space is a tough place to be, thanks to rampant competition and a “tipping point” in self-service. When Tableau (NYSE: DATA) missed its earnings numbers earlier this year, the company lost half its market value in a day. We’re also seeing equity capital move into the space, with acquisition of Qlik earlier this year, and the Vista Equity Partners’ 2014 acquisition of Tibco for $4.3 billion.

In any event, the big data industry is still nascent, and experts expect to see big data software offerings evolving from the “Wild West” phase we’re currently in, and maturing considerably over the coming years.

Here’s the list of notable VC rounds of big data companies completed during the first half of the year:

January

• RDBMS-on-Hadoop supplier Splice Machine took in an addition $9 million of funding in a January round led by Mohr Davidow Ventures;
• Datadog, a provider of cloud monitoring as a service, brought home $94.5 million in a Series D funding round led by ICONIQ Capital;
• Sisense, which provides machine learning-based intelligence to IT groups, closed $50 million in Series D led by Bessemer Venture Partners;
• Advanced analytics library provider RapidMiner closed a $16 million equity financing round led by new investor NGP;
• Hadoop as a service provider Qubole took in $20 million in Series C financing in a round led by IVP;
• Euclid Analytics, a provider of customer behavior tracking solitons for retailers, closed a $20 million Series C funding round led by Cox Enterprises.

February

• In-memory data grid provider GridGain raised $15 Million in Series B financing in a round led by Sberbank and MoneyTime Ventures;
• Data science education startup DataCamp received $1 million in seed funding from Accomplice;
• Trifacta, which provides self-service data transformation tools, took in a $35 million growth-stage round from existing investors, including Accel Partners;
• Jask, a provider of artificial intelligence and cybersecurity solutions, announced $2 million in seed financing in a funding round led by Battery Ventures;
• Next-gen data visualization tool provider Zoomdata closed a $25 million Series C funding round led by Goldman Sachs’ Principal Strategic Investments Group;
• Machine learning startup DataRobot closed a $33 million Series B round led by New Enterprise Associates;
• NewSQL database developer NuoDB received $17 million in mid-stage financing led by Hummer Winblad Venture Partners;
• Wavefront, another real-time analytics software provider, received $11.5 million in Series A funding led by Sequoia Capital;

March

• AI software developer DimensionalMechanics received $4.7 million in Series A financing from an angel investor;
• Software container maker Mesosphere raised $73.5 million in a Series C funding round led by Hewlett-Packard Enterprise (NYSE: HPE);
• Zaloni, which develops data management and security tools for Hadoop, raised $7.5 million in Series A financing round led by Sierra Ventures;
• Striim, developer of real-time analytics software, closed a $10 million Series B round led by Atlantic Bridge Capital;
• NoSQL database maker Couchbase secured a $30 million Series F round led by North Bridge Venture Partners & Growth Equity;
• data Artisans, the company behind the new Apache Flink framework, secured about $6 million in a Series A round led by Intel Capital

April

• Levyx, a developer of software to make Apache Spark easier to use, raised $5.4 million in an April Series A round led by Chicago-based OCA Ventures;
• SnappyData, a Pivotal Software spinoff doing stuff with GemFire and Spark, received $3.65 million in Series A round;
• NewSQL database maker MemSQL raised $36 million in a Series C round led by REV and Caffeinated Capital;

May

• Big data software developer and Hadoop distributor Pivotal Software closed a $253 million round of Series C financing led by Ford Motor Company and EMC;
• Maana, provider of big data mining solutions, raised $26 million in Series B funding led by Saudi Aramco Energy Ventures;
• Search engine appliance maker ThoughtSpot raised $50 million in May from General Catalyst Partners

June

• Keen IO, which develops a fully managed data science cloud, raised $14.7 million in a Series B round led by Pelion Venture Partners;
• Apache Spark-backer and Spark-as-a-service provider Databricks received an undisclosed amount of funding in June from In-Q-Tel, the U.S. intelligence community’s venture funding arm
• Qumulo, a storage startup, raised $32.5 million in a Series C round;
• Armorway, a provider of AI solutions raised $2.5 million in seed funding

This article was originally published on www.datanami.com and can be viewed in full

(0)(0)