GS – Tech VC Trends

Goldman Sachs just came out with a report on Tech VC trends – amongst the highlights, is (surprise, surprise!) the reduction in enterprise software investments, and increase in web/mobile and global (india/china) investments.

It makes me wonder if these two put together create a blind spot for VCs. Enterprise automation in developing countries like India and China is fairly nascent and fast growing, compared to a mature market like US. And global solutions dont always fit. We have seen interesting companies that are riding this localization need in emerging markets. Investors will need to take local calls on sectors that they want to play in.

Another interesting part of the report is that enterprise space may see a resurgence, especially in hardware area, on back of recent IPOs in that space.

9 Responses to “GS – Tech VC Trends”

  1. Kiran says:

    Jaspreet
    VMWare is actually used in production. Some of our (Hyperion now Oracle) major customers deploy our heavy weight BI and Financial apps on VMWare in production. I am not saying I agree with those deployments but just giving out facts.

  2. Krish says:

    Deepak,

    You are not confused. I think you are getting it right. The needle is moving more towards `buy’ than `build’.

    With more and more solutions levitating from the desktop and streaking into the cloud, the lines are clearly blurring between high cost on-premise enterprise software that is now increasingly becoming on-demand. Call it enterprise 2.0 (oh so convenient :) ). Looking at the pace of user adoption, there will hardly be much of a difference except where clients mandate specialized applications that have to be bred in captivity.

    That said, the old model of on-premise solutions will continue to exist so long as customers – be they on-premise or on-demand – are willing to pay for the vendor’s ability to out-invent them so that they could then out-innovate the competition and/or out-economize an internal staff dedicated to creating bespoke solutions.

    It would also mean enterprise vendors will have to build their future versions allowing for existing accounts to take advantage of innovations, given the scenario that the majority of these accounts is stuck on old releases with massive costs and time to upgrade or ‘back-port’ the functionalities.

  3. So is a Software-as-a-Service offering like Salesforce.com a Web-2.0 or is it an enterprise application? I mean, enterprises could just as easily use it – depending on your definition of “enterprise”, which at some level can be construed as any set of enterprising people, and that would involve most of us here.

    So is customer-end-deployed software an enterprise software? A salesforce.com architecture can be sold at customer ends – in fact Joel’s FogBugz used to exclusively sell customer-end deployments rather than a web front end until recently. Read his post at: http://www.joelonsoftware.com/items/2007/12/06.html

    Is Enterprise software something that only a 100 person company can buy? Or is it software that solves a problem that only big enterprises have, like too many meetings? (For which I know no legal solution)

    I’m just confused that at one end you have the huge retail consumer mass mega base kind of companies, and at the other is the enterprise level which seems to be to aim at all the 1000 person companies that can actually use your product and have the money to pay for it.

    Isn’t there a middle ground? Software for accounting for instance, or tax management, but of a much larger scale than the fragmented players currently. An online version for the 5 person shops, that will also do stuff like filing with ROC, or PF/ESI/TDS stuff and so on. And regular supplies. With franchise setups so that you can get into more locations easier (with the offline touch).

    Is this not wide enough a market?

  4. Krish says:

    Jas,

    Thanks.

    I said in trying to solve the problems virtualization encounters today, there lies the enterprise startup opportunity. If VMware has some bugs as you may have observed, chances are they’ll fix it sooner than later – they see their niche in production as well as testing.

    On your web 2.0 rant -

    From where do you think Web 2.0 emerge? Marc Benioff has an Oracle DNA in him. What made his team start salesforce.com? Simple. They said to themselves “enough of gouging the customer”. Look at the amortized costs of an enterprise solution (say, an SAP/ Oracle ERP system) over 5 years that are $ 1,000+ per user a month. License, maintenance for 5 years, 2 upgrades, hosting, functional and technical support staff for 5 years and the initial implementation by Deloitte and more – now tell me, if you were the buyer, do you like what you see and eventually pay?

    Now look at Marc’s model. It says I am the single throat to choke. Upgrades, bug fixes, up-time, response time, software functionality – I am the man. And you can see my performance transparently on my site. At $ 100 a user a month (or less). Now will you blame the buyer for swapping his religion or will you change the way you did business ? C’mon, gimme’ a break…

    When vendors start thinking like users, they’ll be better innovators. That’s what Marc did and how he got users to love him. Can enterprise guys grudge him for that? If possible, let them go one up on him. But then they’ll have to (swap some religion too) break up and rethink their business models and find out how to live without gouging customers :)

    People have come around to believe the I in CIO is Innovation. CIOs in turn see it as their job, not just to ensure security and compliance, but to deliver applications to delight business users while reducing TCO; but certainly not to impress technologists. The bond between CIO and LOB is being strengthened on the back of innovation projects.

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