Capitalizing on widespread interest in companies built around “Big Data”, VC firm Accel yesterday unveiled its “Big Data Fund 2”, a $100M fund aiming to make investments in technology companies which help their customers make sense of the massive volumes of data that they are now able to gather and generate.
While I personally have gotten a little sick of the “Big Data” moniker (its become like “cloud computing” – just one of many buzzwords that companies slap on their websites and press releases), what jumped out to me in reading the press release and the tech blog coverage was the emphasis of the fund away from companies commercializing Big Data infrastructure technology and towards companies building “data driven software”.
Now, no VC’s “rules” about a fund are ever absolute – they will find ways to put money into (what they perceive as) good investments, regardless of what they’ve said in press releases – but the message shift jumped out to me as potentially a very bold statement by Accel on how they perceive the state of the “Big Data” industry.
All industries go through phases – in the early days, the focus is around laying the infrastructure and foundation, and the best tech investments tend to be companies working on infrastructure which ultimately serves as a platform for others (for example: Intel [computing] and Cisco [internet] and Qualcomm [mobile]). Eventually, the industry moves on to the next phase – where the infrastructure layer becomes extremely difficult for small companies to compete in and the best tech investments tend to be in companies which take advantage of the platform to build new and interesting applications (for example: Adobe or VMWare [computing] and Amazon.com [internet] and Rovio [mobile]).
Of course, its hard to know when that transition happens and, as often happens with tech, the “applications” phase of one industry (e.g., Facebook, Salesforce.com, etc.) can oftentimes serve as the infrastructure phase for another (e.g., social applications, CRM-driven applications, etc.). But, what Accel’s “Big Data Fund 2”’s mission suggests is that Accel believes the “Big Data industry” has moved beyond infrastructure and is on towards the second phase where the most promising early-stage investments are no longer in infrastructure to help companies manage/make use of Big Data, but in applications that generate the value directly.