2015 Trends: Cyber Security, Big Data and SaaS, Oh My
Last week’s Oasis: The Montgomery Summit in Santa Monica confirmed what we at Frontier Capital had been seeing this year: Cyber security, big data and back office cloud software for small and mid-market companies are the trends in big demand. Here’s more about what Scott Hoch, one of our principals here at Frontier, learned at the invitation-only conference highlighting innovations in business and technology:
- Cyber Security
Cyber security is now a big focus for CEOs, which is a huge departure from past thinking. This translates to increased spending, so we are seeing a lot of venture capital applied to companies with solutions in the space. However, even with recent technology breakthroughs, security breaches are continuing unabated. New companies that can combine technology with process improvement are best positioned to offer next-generation cyber-security solutions for corporations.
- Big Data
While the ability to collect big data is nothing new and the amount of data enterprises are collecting is astronomical, figuring out how to extract value from the data has remained elusive. This is changing, however, as analytics companies, software and services come together to provide successful business use cases. There is tremendous momentum in this area and significant chatter about the companies that are funded in this space.
- Back Office Cloud Software for Small and Mid-Market Companies
This is an area that has always been of interest to Frontier Capital and it remains fresh with a new crop of consumer-oriented software companies that are making moves in this space. Cloud computing and SaaS models brought enterprise technology for back office functions such as payroll and benefits to small and mid-sized companies. The next iteration of this high quality, sophisticated business automation software is focused on end-user interfaces and functionality, and companies with consumer experience are taking advantage of this opportunity. We expect to see the winners emerge in the next 5-10 years.
Is it starting to feel like 1999 again?
Other conversations at the summit surrounded the question we hear every so often: Are we seeing a new tech bubble? Some feel there is too much capital chasing too few companies. NasDaq has broken 5,000 for the first time in 15 years, and 75 venture capital-backed startups have a valuation of $1 billion or more. Companies with no revenue are being acquired for $19 billion. Is the bubble about to burst again? Everyone has an opinion based on anecdotes and their gut, and it seems to be a pretty even split. Fortunately, at Frontier, we have a clear focus on helping accelerate growth in lower middle market companies that offer technology-enabled business services – a market sector that we believe has great staying power regardless of economic turmoil.