Big data is turning into big money for some New England companies
DataGravity, a start-up based in Nashua making data crunching technology for smaller businesses, has raised $30 million from a team of venture capitalists that include Netscape cofounder Marc Andreessen. The size of the funding, as well as the cachet of backing from a pioneer of the Internet Age, has made DataGravity one of the hottest start-ups in the Boston area.
DataGravity is part of a fast-growing technology sector that broadly has become known as big data, in which companies use highly sophisticated analytic tools to extract customer leads, business insights, and other useful information from the massive amounts of data they and others collect.
The field includes start-ups and tech veterans alike, and in New England has already garnered numerous multimillion-dollar funding deals. In fact, the first investment that Andreessen’s firm, Andreessen Horowitz, made in the Boston area was in Actifio Inc., a Waltham data company. It was the lead investor in a $33.5 million funding round in late 2011.
“There are billions and billions of dollars at stake in this transformation into the new world of computing,” said Peter Levine, a partner at Andreessen Horowitz, who will take a seat on DataGravity’s board. “That’s really the catalyst that’s driving these investments.”
The two other funders involved in the $30 million DataGravity deal are stalwarts of the Boston venture scene, Charles River Ventures and General Catalyst Partners.
Having raised $2.7 billion in four years, Andreessen Horowitz is one of the country’s largest and fastest-growing venture capital firms. Levine said he was drawn to both DataGravity and Actifio because the founders of each company have strong backgrounds in the tech community.
Actifio was started by Ash Ashutosh, a serial entrepreneur who founded AppIQ, a data company that Hewlett-Packard acquired in 2005.
The cofounders of DataGravity, Paula Long and John Joseph, were executives at data storage firm EqualLogic Inc. , which Dell bought for $1.4 billion in 2007. They also worked for Digital Equipment Corp., the minicomputer company. They remained with Dell for several years before starting DataGravity, which has 30 employees and plans to hire about 20 more this year.
Long was elusive when describing the product DataGravity plans to bring to market next year with the help of the $30 million investment. She described it as a combination of software and hardware made for midsized companies, such as medical clinics or architectural firms, that don’t have large IT staffs or teams of “data scientists” to perform sophisticated analysis of their business data.
The DataGravity funding is among a number of deals where investors are pumping money into firms that make business software, said Anand Sanwal, chief executive of CB Insights, a New York research firm that tracks venture capital spending.
Part of the reason is that investors are now shifting away from companies that specialize in consumer technology, after Facebook Inc. and Groupon Inc. have failed to light up Wall Street as promised, he said. And now that business tech is hot again, said Sanwal, “there are going to be lots of people jumping on the bandwagon.”
Correction: Because of a reporting error, an earlier version of this story, misstated how much Dell paid to acquire data storage firm EqualLogic Inc. in 2007. It was a $1.4 billion deal.