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By: Katherine O'Neill, Executive Director Jumpstart New Jersey Angel Network
Trends in Big Data for Making Money and the Funding that Supports It

As Executive Director of New Jersey’s largest angel group, I see many business plans.  Right now I am seeing more and more investment opportunities from entrepreneurs in the area of big data.  It is fascinating to watch this “wave of change”. It is a wave of new data and new solutions. It is overwhelming as to how many different companies are being formed.

Investments in big data are focused in two areas. Large corporations such as SAP, IBM, Oracle and Microsoft who address about 60% of this market are making investments in big solutions with big dollars. But the second area is those big dollars going for the acquisition of early stage companies who are solving specific problems.  The large corporations are pursuing early stage companies to get in on innovative ideas as part of this wave.

Big data startups—using a very broad definition of big data-- have all sorts of solutions.  They are finding problems, solving them agilely, and trying to scale those solutions as startup companies—all being done specifically for future acquisition. 

There are two drivers of investments in startups.  One is improving customer relationships and the other is making businesses more data focused.  They are the top two drivers because these are the top two goals of any business now.

Data is money.  The data that companies acquire can be re-sold. The information you have about your users is real value.  That is something that was not in existence a few years ago.

Let’s take Facebook for example. Facebook’s value is what it knows about every person who comes onto their site, as well as the number of times it can sell something and the number of times it can target at you.  The metrics have moved.

Another driver of investment is business use of data to improve company performance.  About 80% of enterprises agree that the collection and analysis of data will potentially change the way they do business over the next one to three years.  We see this clearly in the decline of bricks & mortar businesses.  Their sales levels are declining and they need data and strategy to respond to this change.

Consumer services now are more tied to the cloud. These Innovative changes reduce the amount time that real humans interface with the customer.  At the same time it provides companies greater metrics, better data and better closing rates on services and purchases.

Where is the focus? The answer is everywhere.  It is IoT, cybersecurity especially, financial fraud and regulation in the banking and financial industries, healthcare and insurance. There are all sorts of issues arising around this topic, not the least of which is “who owns the data about you?”

Consumers sign their data away when they enroll in most programs. Do you want to be tracked in every environment? Do you want the vehicle performance information sent to your car insurer? Do you want the Amazon Alexa listening to you? Do you want to give this information to every retailer you interact with? This issue of monetizing data assets is driving startup growth, while the decline of brick and mortar is going to continue.

Blockchain is the backbone of what was originally bitcoin, but the backbone of that technology can be applied to almost everything—applied to real estate transfers, health records etc.  It has become a commodity in that you can buy a customized blockchain platform for anything you want to track.

These are the 11 most active venture capital firms investing in Big Data since 2012-2016 with the number of investments by each firm (Source: Pitchbook)
1. Data Collective (33)
2. New Enterprise Associates (31)
3. Intel Capital (29)
4. AME Cloud Ventures (26)
5. Sequoia Capital (24)
6. Accel (22)
7. Andreessen Horowitz (19)
8. SV Angel (18)
9. Battery Ventures (17)
T-10. Lightspeed Venture Partners (16)
T-10. Khosla Ventures (16)

These active investors are doubling down on this area—some of their investments have been very successful, some have been very large, but also some have been in early stage companies to obtain innovative solutions.  Jumpstart NJ Angel Network for which I am the Executive Director is an early stage Mid-Atlantic regional investor group, so we put in the first round of professional money after founders or following Series A and B rounds. We look to early stage also in big data.

There are many trends that are very exciting on how this market is moving: has identified some of trends and challenges in big data for 2017.  I also see many of these trends in early stage companies

  • Deep Learning: Deep learning algorithms are not trained by humans. They are exposed to massive data sets and the algorithms must figure out for itself how to recognize different objects, not programed but taught. We have more knowledge about our own data in the space so we become smarter and it leads us to more artificial intelligence solutions.  It is happening all the time. When you do an analysis of a new or an existing drug, you can receive deeper information from the data that is provided.
  • Blockchain: It can go into any space. It is still in the beginning stages. It is still searching applications. I have seen many blockchain early stage business plans that are related to insurance coverage, currency transfers, loan documentation and property records-- besides the original bitcoin.
  • Conversational AI: This is something that I am most excited about. Think about how quickly this has changed. Take for example Alexa or Dot.  Think about the fact that we no longer have to type.  We talk.

One of the most interesting conversations I had recently is on the impact on culture via children.  Do your children have to address Alexa politely by saying please or thank you?  Is Alexa a servant or an independent adult to children?  Why are we talking about the social status of a computer voice and taskrabbit? Will adults limit children’s access to Alexa the way screens and TV may be limited?

These are big cultural changes.  It changes how we interact with technology.  This is the next wave of big change.  Who wouldn’t rather talk, if Alexa can understand what you are saying? While Alexa is listening to you all the time, even more changes and improvements are coming in the conversation interfaces.

  • IoT data breaches and attacks will continue. Yes, DDoS attacks will use more cameras, security lights and microwaves. Major breaches will continue to occur too often. Is your connected refrigerator your friend or attack bot?  

The UK is one of the most security camera covered countries in the world.  You cannot stand on a street in England without being tracked by a camera.   We don’t think that is true in the US?  

Have you noticed that every time when there is a crime in a US city the police go to the local homeowners to obtain home security camera information in order to track the criminal coming down the street?  The city may not have put up the cameras, they are there already and available for access.  That is a major change.  You are visible all times and all places; and certainly, with your live devices where you can be tracked everyplace. I believe there is no real privacy and most of these cameras are not secure from hacking and as a result they expand the attack and breach opportunities. 

  • Big data needs drive the creation of self-service platforms. As these platforms are created, companies will have easy access to their own data and analytics. Such platforms are becoming very powerful and very desired as products. 
  • Visualization and Mixed reality. When we see data as visual record we see interactions much better.  This is the issue of mixed reality with visualizations that will improve decision making.  Don’t just analyze the date, show the data.

High growth in these areas is expected to continue at a rapid pace.  

The title of this overview that was given at the New Jersey Big Data Alliance conference is “Big Data, Big Bounce” because of the projected high revenue growth rates in this sector. Big Data and data analytics worldwide revenue are expected to show grow 50% over the 5 year period, starting in 2014 and growing to $187B by 2019. This clearly represents the money making opportunities to be found in the high growth big data arena.