Big Data bringing down big bucks from venture capitalists

Q2 investments in Big Data companies quadruple over year-ago quarter, CB Insights reports


If Big Data is a fad -- a proposition currently being discussed in many places on the Internet -- the news certainly hasn't trickled down to the venture capital community.

According to numbers compiled by private-equity research firm CB Insights, venture capitalists poured $1.03 billion into Big Data firms over the past year, including $460.3 million in the second quarter alone.

That Q2 dollar total is more than four times the $113.9 million in VC funding for Big Data in the second quarter of 2011, and is more than five times the $87.0 million doled out to Big Data companies in the first quarter of this year, when VCs were surprisingly stingy regarding Big Data investments.

Here are CB Insights' numbers for the past five quarters, with the total dollar amount, total number of deals and average deal amount:

Q2 2012 -- $460.3 million, 25 deals, $18.41 million average

Q1 2012 -- $87.0 million, 20 deals, $4.35 million average

Q4 2011 -- $284.9 million, 17 deals, $16.76 million average

Q3 2011 -- $200.9 million, 18 deals, $11.16 million average

Q2 2011 -- $113.9 million, 10 deals, $11.39 million average

That big dip in Q1 clearly is an anomaly relative to the overall trend, not to mention a bit of a mystery (I don't have access to CB Insights' Q1 2011 data, as most of the company's information requires a paid subscription). Maybe it's a seasonal thing, maybe a few big deals got pushed back to Q2, maybe the VCs were freaking out about the economy in Q1.

But focusing on one aberrant quarter is short-sighted. If we look at other data from Thomson Reuters, we see that the annual trend for Big Data investments is firmly on the upswing:

2011 -- $2.47 billion

2010 -- $1.53 billion

2009 -- $1.1 billion

One thing that jumps out is that CB Insights' VC dollar amounts for 2011 -- $600 million for the three quarters shown -- are much lower than Thomson Reuters' $2.47 billion. That's probably because Thomson Reuters uses a broader definition of Big Data, including technologies such as database management and data processing.

However you slice and analyze the numbers, it's clear that venture capitalists are confident Big Data is hardly the fad some Internet wags are speculating it might be. Barring another serious recession, you can expect VCs to continue throwing big dollars at Big Data.

Chris Nerney writes ITworld's Tech Business Today blog.

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