Big Data Attracts Big Money
More than $350 million has been invested in Hadoop and NoSQL technology to date. A top VC tells us why.
The move towards Big Data and NoSQL is being fuelled by big money, as investors bet on the next big thing in technology.
One of those venture capitalists is Frank Artale, a partner with Ignition Partners and an investor in Apache Hadoop startup Cloudera and NoSQL vendor Couchbase. In an exclusive interview with InternetNews.com, Artale explained that Ignition wanted to have a footprint in cloud and Big Data for a variety of reasons.
In his view, there is the potential for several large multi-billion dollar companies to exist in the Big Data space, which is one of the reasons the firm invested in Cloudera.
"Cloudera to me is one of the seminal companies in the Big Data space," Artale said. "We feel that Cloudera is one of the defining companies and has the opportunity to be the next Oracle."
Artale noted that as business data use is changing, there are going to be some big winners in the space. That said, he warned that while venture funding is flowing into the space now, it will take years to fully develop.
"What is driving this market is the change in the shape of the largest datasets that businesses of all sizes are going to use," Artale said. "In the past, data was rows and columns, things that were akin to spreadsheets, names, addresses and records for sales. Now the shape of the data is so much different."
Artale noted that data is now collected from diverse unstructured sources. For him, email is a type of unstructured data that can also be classified as Big Data. In his view, businesses of all sizes want to benefit from that information in the same way that organizations like Google and Facebook have been able to benefit from that data.
Apache Hadoop as the poster child for Big Data is also celebrated as a success for the open source community. The fact that Hadoop is open source does not represent a risk of commoditization, according to Artale, at least so far as it relates to what Cloudera is doing.
"With Cloudera it's not so much a risk, it's more an opportunity and a question about how big can they get being strictly open source," Artale said. "Cloudera does leverage the Apache Hadoop project, but they also sell proprietary software to manage, monitor, maintain and do all types of operational things around Hadoop that are necessary for a company."
When it comes to investing in open source Big Data companies, Artale said it's important that there is technology involved that people are willing to pay for. In his view, a company can't just do small things and say that they are proprietary; there has to be some significant value-add.
"Our preference would be to see a company where there are real fees paid for intellectual property," Artale said.
That said, Artale noted that there is value in momentum. So if in the early days of a company, it's okay if everything is open source and builds a solid momentum, so long as there is a roadmap for monetization.
"The monetization of open source by and large is either some proprietary software that you sell or a very expensive support model," Artale said.
When it comes to the investment horizon for Artale, the payback is not expected to be immediate.
"When we place a dollar in a company, our investors don't expect to see it back for a minimum of 36 to 48 months," Artale said. "What's more important to our investors in the short-terms is to see us have a footprint in momentum spaces like Big Data, NoSQL and cloud."