For investors, the enterprise is bringing sexy back
December 14, 2012 —
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The enterprise is sexy again. While big-dollar investors for much of 2012 chased after the likes of Groupon, Zynga and even the colossal photo share failure of Color, investors are once again turning to the enterprise world as a more lucrative place to build a business.
Carl Rydbeck, vice president at investment firm Crosslink Capital, said that his company has investors focused specifically on both consumer and business markets, and that the firm does not pick and choose only one or the other. “That said, I think there are lots of reasons to be excited about enterprise right now,” he said.
“There's more innovation there right now than there has been in a long time, both in terms of business models, like SaaS, freemium and recurring revenue, as well as technology. Some of these changes aren't new, but they've become mainstream over the past couple of years, along with cloud.”
Crosslink Capital's most famous investments were decidedly consumer: Pandora and Tivo. But the firm also recently invested in DataStax, the NoSQL company based on Cassandra. And while this investment was a tough decision at first, the results and growth have been extremely encouraging for Crosslink.
This investment interest is somewhat cyclical, with the 2000 dot-com boom being the last major era of enterprise investment enthusiasm. This time, however, things have changed, said Rydbeck.
“I think there’s renewed recognition now that the enterprise markets are enormous in terms of the aggregate dollar amounts that are spent,” he said. “At that point [in 2000], there were less consumer dollars spent online, so building out IT infrastructure was naturally a huge piece of the bubble. If you look at the whole economy, consumer markets are bigger than B2B markets, but the online IT market during the dot-com boom consisted of a lot of companies building a lot of infrastructure ahead of consumer demand. In the mid 2000s, e-commerce and the consumer Internet continued to grow and caught up, and the investors realized how big those markets were, leading to a lot of investment.