Enterprise Software Startups Make a Comeback

Enterprise Software Startups Make a Comeback

“Venture capitalists placed $2 billion with IT startups in the first quarter of this year, according to a survey by Dow Jones VentureSource, a 14% increase from the first quarter of 2011. Meanwhile, investors put 76% less investment in consumer internet companies. Software companies attracted the most funding, $1.3 billion, which is a 61% bump from 2011.”
-RWW

One of the things that will keep the startup bubble from bursting is finding another part of the ecosystem to fund and fund well.  Enterprise IT is one of those homes.  There are several trends in enterprise IT that make software startups a great place to be:

  1. Cloud – Enterprises aren’t ready for it yet.  However, a company’s ability to survive the next 20 years is as dependent on whether they can figure out the cloud as it was that they understood and incorporated e-commerce and a web presence 10 years ago.
  2. Automation – This isn’t exactly a new trend, but it’s not going anywhere for a while.  Especially with relation to how the enterprise manages workloads.
  3. Collaboration – It’s no mistake that Yammer! was a hot pickup for Microsoft: there is a lot of work left to be done on how the enterprise uses the concepts behind social media and cloud to enable higher productivity on the “creative” side of the business.

A word of caution though, the “wild west” will be just as wild as it was with Social Media.  Let’s think back.  In the early days of social media, Friendster and Blogger then mySpace showed a market for something we didn’t know about before.  Then as that market matured, a couple of leaders showed us how to really make it successful (Facebook, Twitter, Foursquare).  Finally, the world went crazy with a boom of startups and $100B valuations for the existing companies.  I can’t decide whether I think Box.com and Rackspace and Engine Yard and Heroku and Eucalyptus are the mySpaces or the Facebooks of this new wave, but I do know that there is about to be some serious money thrown at some seriously flawed ideas.