Large software companies like SAP and IBM draw a lion’s share of the attention surrounding “Big Data” and analytics platforms. But thanks to the resource-magnifying abilities of cloud and a variety of open-source tools, more startups are emerging with products designed to chop, sort, and analyze massive amounts of information.
Many of these startups focus on a narrow aspect of data analytics, and are snatched up quickly by larger companies looking to buttress their Big Data portfolio. That’s a lucrative development for those startups’ founders and investors—hence the appearance of VC firms such as Data Collective.
Data Collective’s earned a lot of press over the past few days because one of its co-founders, Zachary Bogue, is the husband of newly minted Yahoo CEO Marissa Mayer. It’s also attracting a fair bit of buzz over its corporate structure: in addition to the founders, the firm draws collective knowledge from a group of more than 35 “equity partners” either formerly or currently employed at Apple, Facebook, Zynga, and other notable tech companies. Those partners’ pooled investment gives the firm more reach, and all share in any financial upside to the fund.
But Data Collective might end up drawing the most attention as one of a number of VC firms investing in Big Data and analytics projects. Early investments in the portfolio include a handful of data management, database and analytics companies still in stealth mode; in addition, there’s MemSQL, Citus Data, and other small firms. In all, Data Collective has invested (sometimes with co-investors such as Andreessen-Horowitz) in some 46 organizations.
“We believe that Big Data, like the PC revolution of the 80s, the emergence of the Internet in the 90s, and Web 2.0 in the 2000s, represents a several hundred billion dollar wealth creation opportunity,” read Data Collective’s launch document. “The companies that solve these problems, from infrastructure providers at the bottom to corporate customers at the top of the stack, will enjoy huge competitive advantage over the years.”
Even with a knowledgeable executive bench, one capable of reading code and understanding how analytics works, investing in Big Data firms can be a risky business. Signing a check for a startup building the next great Hadoop-based app is the same as pouring money into a “Facebook killer”: that Little Company That Could might blossom into the Next Big Thing (or sell to Oracle for tens of millions), or it could just as easily crash and burn, leaving an empty office filled with cool furniture in its wake.
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