There has been a lot of talk about enterprise startups becoming ‘cool again’ , ‘the place to invest’ and so on. So what has really changed? How have enterprise startups, long considered boring and ‘un-scalable’ become sought after again? Here are the top three reasons –
1. Tremendous focus on ROI at enterprise level – The one common thread across all enterprise startups is an unwavering focus on ROI. This focus has particularly come in the spotlight in the wake of the global downturn that hit the World Economy in 2008. After this, there has been a definitive shift towards optimally using all resources, without exception, at an enterprise level. This has created newer opportunities and startups are exploiting those.
2. B2B outreach is easier than before – The biggest problem for a B2B startup is marketing. For example, an Accenture advertisement at best serves as a branding tool in the minds of 99% of the advertisement viewers. After all, mass media is definitely not the way to reach out to the enterprises. However, with the advent of channels like Google, Slideshare, Linkedin etc, this process has become simpler and inquiries through these channels are increasing for enterprise startups.
3. The advent of the cloud – Cloud, the ease of access and lowering costs of storage has meant that enterprise startups can stay afloat longer by curbing their expenses to the minimal. It wouldn’t be far fetched to say that enterprise startups owe a lot to services like AWS ( Amazon Web Services) for actually enabling their business models to go afloat at a lower cost than before.
Given all these factors, it is natural that enterprise startups are doing all sorts of innovative things and most importantly, at scale! Here are a couple of areas in which enterprise startups are totally cracking the whip –
(a) Analytics – A huge area where startups are innovating big time is analytics. An analytics backbone is a huge plus across sectors, be it in the ad network domain or in the enterprise effectiveness domain.
(b) Cloud storage – Startups like GitHub, Box, Dropbox, Diablo, Messagebus, Gridstore etc are all innovating on the cloud storage front and evolving new business models that are not only sustainable, but also scalable. And, they are well supported by Angel/VC money as well.
(c) CRM – Salesforce has literally become a common factor across almost all major companies today. The scale that Salesforce has been able to achieve has proven the scalability of B2B Startups. However, in the field of CRM, Salesforce is not alone and is closely followed by competitors like SugarCRM.
Given this, its natural that top VCs are entering the fray here –
Kleiner Perkins Caufield & Byers will invest at least $200 million this year in mobile applications and cloud computing services for corporate users, investment partner Matt Murphy said. The Menlo Park, California-based venture capital firm, which boosted its enterprise-technology investments in 2012, will also seek security-startup investments, Murphy said in an interview.
Startups focused on corporate users are benefiting as employees adopt personal smartphones and tablets for work. That’s triggered increased investment by companies in new tools to manage mobile and cloud-based computing, Murphy said.
“The traction in our enterprise portfolio really surprised us,” Murphy said. “We view the timing and opportunity as even better than in 2012.”
When Andreessen Horowitz VC Peter Levine looked around a conference room Thursday in San Francisco and saw 10 reporters sitting next to five CEOs of enterprise tech startups, he could barely contain his glee. “There’s a renaissance in enterprise computing – if this were five, six or seven years ago, to get one person to show up in this room would have been quite difficult,” he said. Perhaps he was calculating how much those exits would be worth. After all, 80% of tech IPOs next year are expected to be from enterprise startups. Andreessen Horowitz has invested more than $100 million in the startups in the room.
An India view –
In India as well, there is an unquestionable need for enterprise startups. In fact, a lot of Indian startups focused on the enterprise have made global waves too – Zoho being one such example. Will India react or adapt to this boom in Enterprise Startups? What enterprise startups will emerge from India in 2013? Have your say below.