* Trend for venture capital funding around network and systems management continues to grow
Management vendors are raking in the dough lately, as the trend for venture capital funding around network and systems management continues to grow.
PricewaterhouseCoopers and the National Venture Capital Association in January reported in their most recent MoneyTree Report that investors in 2006 put $25.5 billion into 3,416 deals, 10% more deals than 2005 and the highest number since 2001. Among those, investments in companies developing software remained relatively flat in 2006. But with $5 billion and 865 deals for the year, it was still the No. 1 sector for venture capital attention, industry watchers reported.
Among those software makers are network and systems management vendors, promising to monitor nets without requiring a lot of cash or installment time upfront. Long seen as a necessary evil in IT shops, management technologies don’t often illicit the buzz or excitement of those technologies perceived as game-changing or disruptive, such as security, wireless or VoIP. But because the technology has become more necessary and even critical as cost-cutting and performance improving initiatives take off at enterprise companies, venture capitalists are taking a particular interest in newcomers offering SMB and large enterprise customers a better way to manage infrastructure and applications.
For instance, last fall I compiled a list of 10 management companies to watch, and among those vendors, investors had doled out some $115 million, give or take a million here and there. The common thread among the vendors included ease-of-use features, quick installs and intuitive reporting — that made it simpler to understand the data the software (or in some cases appliances) collected and how that related to the business.
More recently vendors such as GroundWork Open Source, NimSoft and SolarWinds have garnered venture capital dollars to further develop their respective products and serve a relatively untapped market — the SMB. These investments show that not only are venture capitalists interested in the ease of use offered by newcomers — compared to industry veterans BMC, CA, HP and IBM — but also their ability to embed management technology into greenfield accounts.
“We invested because there is a tremendous untapped market opportunity in the mid-market for GroundWork’s solution,” said Tom Mawhinney, general partner at JAFCO Ventures (an investor in GroundWork) in a press release.
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