By Sarah McBride and Alistair Barr
SAN FRANCISCO, April 20 Splunk Inc's
impressive debut on Nasdaq Thursday, where it doubled its $17
initial public offering price, has investors suddenly paying
attention to a sector that has grown in relative obscurity: big
Essentially a catch-all term, big data refers to the ability
to collect and analyze massive amounts of information on almost
every dimension of the human experience.
Splunk allows companies to analyze data cheaply and simply,
compared to the expensive data warehouses and specialized,
hard-to-deploy technology they might have needed in the past.
From general business aspects to narrow sectors ranging from
retail to healthcare to climate, the possibility of capitalizing
off this data has the investment community excited.
Investors "know a heck of a lot more about big data now than
they did two weeks ago, and they'll know a heck of a lot more in
a month than they do now," said John Connors, a former Microsoft
investor who now works as a venture capitalist at Ignition
Partners, where he headed up the firm's Splunk investment.
Some backers of big-data companies didn't realize they had
such a hot ticket until well after they made their initial
Dave Hornik, an early backer of Splunk and who also backs
traffic-information company Inrix, said he did not think of
Inrix as a big data investment at first.
"But it turns out it is absolutely about big data," he said.
Most of the pure-play big data companies are still a couple
of years away from IPOs, said Asheem Chandna at Greylock
Partners, which invests in big data companies Cloudera and Sumo
Logic. But he predicts stepped-up mergers and acquisitions of
smaller big data companies in the short term, as well as
blockbuster IPOs in the future.
"We're at the start of a decade-long run around new
opportunities in big data," he said, singling out sub-areas such
as analytics, business intelligence and automated pattern
Greylock Partners fields around two dozen pitches a month
from big data start-ups, more than double the rate of a year
ago, Chandna noted.
"Splunk's IPO is going to have a huge impact," said Ted
Tobiason, who runs technology equity capital markets at Deutsche
Bank. "You can't ignore the valuation."
Splunk shares opened at $32, up 256 percent from the
mid-point of the company's original IPO filing, valuing the
business at about eight times forecast 2013 revenue. That is a
lot higher than Jive Software, a recent hot software
IPO that priced its offering at 4.7 times 2013 revenue, Tobiason
While there are few pure-play big data companies nearing
IPOs soon, Splunk's stock-market splash may encourage venture
capital firms to invest more when big data firms look for new
rounds of financing, Tobiason said.
VC firm Accel Partners launched a big data fund headed by
Ping Li recently, but investors in other VC firms are likely
asking how they plan to get more involved in the sector, he
It may also help big data start-ups to persuade more
talented software engineers to jump ship from established tech
companies, Tobiason said.
"This is the expansion of a huge market and you're going to
have a lot more winners like Splunk," said Rob Ward of venture
capital firm Meritech Capital, which invests in Cloudera and
another big data company called Tableau Software.
Tableau is growing quickly and is likely considering an IPO
some time next year, Ward added.
Curt Monash, an independent tech industry analyst, said he
is busy meeting several big data companies, including Cloudera,
Couchbase and Hortonworks.
"Cloudera probably has the second-best traction after
Splunk," Monash said. "They have doubled in every metric you can
measure them by. They have about 220 employees and a number of
subscription customers. Subscription is the majority of their
revenue now, which they are happy about."
Couchbase is part of a group of companies including 10gen
that offer a hot type of database technology that can handle
massive amounts of variable data, he added.
Other companies doing well in the big data space include
MetaMarkets and Infobright, according to Monash.
Here are a handful of promising big-data businesses
highlighted by venture capitalists, bankers and tech industry
Cloudera: Helps other companies, including Nokia, Qualcomm
and Groupon, store and crunch big data using Hadoop, a popular
type of open-source software.
Cloudera is run by Michael Olson, former CEO of database
company Sleepycat Software, which was acquired by Oracle in
2006. Cloudera's Chief Scientist is Jeff Hammerbacher, who built
Facebook's data team.
While most people complain about the avalanche of data
spewing from social networks and other sources, Hammerbacher
thinks there is not enough data in the world.
Cloudera raised $40 million in Series D funding in late 2011
led by Frank Artale of Ignition Partners and existing investors
Accel, Greylock, Meritech Capital Partners and In-Q-Tel, known
as the investment arm of the CIA.
Hortonworks: Formed from the team that helped develop Hadoop
as an open-source project inside Yahoo several years ago. The
company is trying to get Hadoop used by as many people as
possible, and it boldly predicts the technology will process
half of the world's data within the next five years.
Hortonworks has support, training and partner programs to
help other companies learn how to use Hadoop. CEO Rob Bearden
was COO SpringSource and JBoss, two successful open source
companies. The CTO and co-founder is Eric Baldeschwieler, who
led the evolution of Hadoop at Yahoo.
Hortonworks has been coy about its funding. However,
Benchmark Capital general partner Peter Fenton is an investor
and sits on the company's board of directors.
Sumo Logic: Think of this company as a next-generation
Splunk, building in cloud-based capabilities right from the
start. Currently, Splunk is premise-based, meaning it uses
on-site computer servers rather than remote, cloud-based
The company raised $15 million earlier this year from
investors including Greylock and Sutter Hill Ventures. Chandna
at Greylock Partners says on top of its existing business, Sumo
Logic's cloud-based technologies mean it could one day sell
anonymized industry insights gleaned from across the spectrum of
companies it does business with.
Inrix: This company represents one of many industry-specific
big data plays venture capitalists are making. It uses several
hundred thousand receivers based around the roads to gather
millions of pieces of data every hour on factors such as how
fast cars are moving, whether they are slowing down or speeding
up, whether windshields are on, and so on.
Together, the data gives a complete picture of traffic
patterns now, and likely ones in the future. The data can be
sold to entities ranging from GPS makers to municipalities who
need to plan roads. Its latest funding round was last year, when
it raised $37 million led by Kleiner Perkins Caufield & Byers
and August Capital.
10gen: The company develops MongoDB, an open-source database
that can handle lots of different types of data, partly because
it does not require information to be store in traditional
tables and rows.
10gen was founded by former DoubleClick Founder and CTO
Dwight Merriman and former DoubleClick engineer and ShopWiki
Founder and CTO Eliot Horowitz.
10gen raised $20 million in Series D funding last year from
Sequoia Capital, Flybridge Capital and Union Square Ventures.
MetaMarkets: This company helps online media businesses
analyze high volumes of streaming data in areas such as online
advertising, gaming and social media.
MetaMarkets is run by Michael Driscoll, who led Dataspora,
which delivers data science to telecom companies, insurers and
MetaMarkets raised $6 million last year from investors
including IA Ventures, Village Ventures and True Ventures.