VCs Cut Back on Funding Emerging Enterprise Tech

Loraine Lawson

David Margulius over at InfoWorld thinks maybe it's time IT companies started their own research and development venture capital company.

 

Why? Because venture capitalists are falling out of love with enterprise IT investments, it seems. Margulius reports that recent Goldman Sachs research shows venture capitalist reduced technology investments from 64 percent to 54 percent. Instead, they sent dollars to green technology and healthcare.

 

And who can fault them? Anybody who follows emerging technology knows that's where the most exciting research lies. How can pushing Moore's Law one more time compete with gene therapy or Al Gore for headlines, public attention or, let's face it, dollars?

 

But there's another trend that's cut into enterprise technology research dollars. According to the Golden Sachs report, VCs are opting to invest in Web, video, wireless and -- here's the surprise -- small and mid-sized business technology in lieu of enterprise technologies, which it identifies as storage, networking equipment and software.

 

So, bad news all around for emerging enterprise technology, right? Hardly. Margulius questions whether VCs really contributed that much to begin with, pointing out that in general they just get things to a point where they can sell the companies to big-name tech vendors.


 

Well, yeah. That's kinda what VC is all about -- serving as a financial incubator for research and ideas until the concepts are marketable.

 

But it's not like losing VC funding will be the end of enterprise technology. I mean, Microsoft, Oracle, SAP, IBM -- the big names of enterprise tech -- all have deep pockets and fund their own research. Just yesterday, I shared how IBM has spent millions of dollars in research and development on autonomic computing since 2001, according to Information Week.

 

On the other hand, there's a reason acquisition stories are a staple in technology headlines. Sometimes, these companies just aren't agile enough, inspired enough, or interested enough to develop the best-of-breed enterprise tools for which smaller companies are known.



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