Not bad for a recession, that’s what I say. The news from Cloud9 Analytics and Mayfield Fund says a lot about a lot. First, the nearly moribund venture capital industry is showing signs of life after a couple of long, quiet years.
Last year, 2009, was the worst venture capital year since 1997 measured by the amount of cash invested (about $17.8 billion) and cash raised (about $15.2 billion). That’s right in 2009 the industry invested more than it raised and that hasn’t happened in a long, long time. For a benchmark, in 2000 the industry invested just over $100 billion and then you know what happened. A more typical annual tally in the last decade was between $20 billion and $30 billion. So the fact that Cloud9 was able to raise $8 million is very interesting news.
Of course, a C-round is an important marker because it means the company is maturing and becoming ready for a liquidity event. The short event horizon is a sign that the VC’s a stepping carefully into the water again. When we see a stampede to A round companies it will be a different story.
So, what about Cloud9 makes it appealing? I think a couple of things. First, they offer SaaS based analytics but that’s not enough these days. SAS got into that market a month ago and they’re the gold standard and there are many others doing something with analytics as a SaaS service. But the thing I like about Cloud9 is that they’re articulating, or starting to, a vision of more strategic use of analytics for the small business through the small enterprise.
SAS can be excused from this conversation, but there are a lot of analytics vendors out there that haven’t gotten beyond the idea of selling people on the tactical use of analytics.
So this announcement has legs and it shows hope that the venture capital industry in resurgent and that analytics is gaining more traction where it’s needed.
Incidentally, the hot markets for venture funding, in order are Biotech, Software, Industrial/Energy, and Medical Devices according to PriceWaterhouseCoopers and the National Venture Capital Association who compiled the data referenced here.