Everyone Wants a Piece of Enterprise Tech Companies

With all eyes this week on the CES trade show in Las Vegas, famous for a mind-boggling array of personal gadgets, it's worth considering something counterintuitive: Venture capitalists like consumer technology a lot less than they used to. From a report: According to PitchBook data compiled for Bloomberg, last year the normal order of funding in venture capital flipped. Enterprise technology companies, which specialize in software or services for businesses -- long the dowdiest landing pad for venture dollars -- attracted $30.42 billion, PitchBook data shows, about one-third more cash than consumer technology companies. That funding total is growing fast. Enterprise companies' venture haul for 2019 was almost double the previous year's. Meanwhile, the cash going to consumer companies fell by almost a quarter between 2018 and 2019, according to PitchBook data, to $23.26 billion. Those numbers mark the first time in at least last five years that pure enterprise companies have raised more money than consumer-facing tech, the data shows.

Or vice-versa

[Anonymous Coward]

Sometimes it's the Enterprise that gets A Piece of the Action [fandom.com].

Well we'll see what happens in year after the Iotians figure out how to reproduce and exploit the transtator [fandom.com].

Re:

[Cajun Hell]

I wanna remake that episode some day, except where the cultural contamination turns out, instead of being a Chicago mobs book, is the song "All about the Pentiums" by Weird Al.

Market

[Gilgaron]

Gotta sell stuff to who has the money I guess?

Re: Market

[mlheur]

I've noticed, over the past few years, my consumer peers are less interested in Consumer Electronics too. Maybe the VC see it the same way: won't improve my life proportionally to the cost, not worth my money.

A tricky balance...

[Junta]

On the one hand, selling to businesses tends to be higher margin, so sweet profits can be had that are appealing. Mainly because people are not spending their own money. In consumer space you either have to be dirt cheap or else have to establish yourself as a designer brand to get any traction.

On the other hand, businesses tend not to buy from startups when there is a vaguely established player in the market. If they have a business relationship already approved by their procurement organization then they will generally strongly favor throwing money at that company versus messing with their bureaucracies. Which is why it's high margin for those that are successful, it's generally low friction for a purchaser to throw the company's money, but high friction to make them go through the general hell that is trying to do business with a new vendor.

Re:

[alvinrod]

It's not that much different in the enterprise world. If you want to break in to some existing space you've either got to catch the customer at exactly the right moment or offer a vastly cheaper solution. Businesses are always looking for places to trim. It's not unusual for the large established players to let their product get stale while a new company has a much easier time responding to the demands of a more limited set of customers, which is another way of providing more value for money to a company.

Re:

[ctilsie242]

You would be surprised though. Some businesses might pivot to a small player if they have something outstanding, or offer a service or cheaper. Plus, it is easier to sell 10,000 PCs to an enterprise customer than sell one PC per person to 10,000 people.

The enterprise tends to be a less risky place as well. In general, you won't find all your sales gone because of a single Facebook meme.

Re:

[Junta]

In businesses though, it has to be *exttreme* and unlikely for an established player to replicate.

For example, Slack did get a lot of interest, but major companies frequently held out for Microsoft to offer a blessed alternative. Not bad for Slack currently but long term it might be tricky.

Locusts moving on

[monkeyxpress]

I think the bigger problem is that the startup industry hasn't really been able to achieve its goal of offloading a bunch of unicorns into the IPO (sucker) market. It got a few companies out the gate, but the valuations had to be slashed, and they have largely fizzled since then. I guess this is a bit of a surprise to everyone, since institutional investors seem to have no problem throwing money at existing companies that are barely growing their revenues. But I think in the end, it was all just too ridiculous even for the absurdity that is the financial industry in the post-GFC, zero-interest-rates-and-bailouts environment.

So now they move on to corporate business, and here I suspect the play will be to come up with a bunch of junk disruptive services, probably mostly involving magical AI, and sell them to big corporations who will essentially be able to covert the hype into a constant stream of junk bond issues that will provide a ready supply of revenue for these startups. In other words, the VCs want a chunk of the corporate debt bubble.

What a mess. Does anyone at the fed honestly believe that their interest rate suppression policies are actually generating sustainable/useful economic growth? Part of me hopes not, as if those in charge are really so stupid then than is genuinely scary.

As a consumer, I agree

[Anonymous Coward]

"Consumer technology" has been surprisingly shitty lately. Oh, there are good things for sale with which to build nice consumer systems, but pretty much anything you can buy working-out-of-the-box is garbage, only intended to suckle on your bank account. Interesting that even the investors are rebelling, since they are the only people who benefit from proprietary video streamers, music rentals, etc. If even they aren't into this shit, then who is left to champion it?

Re:

[davidwr]

"Consumer technology" has been surprisingly shitty lately. Oh, there are good things for sale with which to build nice consumer systems, but pretty much anything you can buy working-out-of-the-box is garbage, only intended to suckle on your bank account.

I assume by "consumer technology" you mean "a computer system".

Yes, Virginia, there is an out-of-the-box computer system that is not a pile of crap or an overpriced ripoff.

Check out Consumer Reports or similar independent-of-industry/not-advertiser-funded magazines and web sites for reviews of computers and other products. You can find recent issues in most public libraries in the United States.

Note - their web site has product reviews but most are behind a paywall.

Re:

[UnknowingFool]

I would say perspective is required. Today you can buy as a consumer, technology that would astound you 20 years ago. For example, if I am camping, I can take a week’s worth of TV shows and movies with me on an inexpensive tablet. 10 years maybe if I bought the most expensive and had the technical know how on ripping/encoding. 20 years ago, it would be a stack of DVDs and I would need to lug a TV and player (and generator).

Re:

[chuckugly]

.... if I am camping, I can take a week’s worth of TV shows and movies with me on an inexpensive tablet. ....

Somehow it just makes me sad that people think this is what a person would or should do while camping.There are plenty of actual camping related tech items that don't involve trying to make campsites just like your living room.

Re:

[UnknowingFool]

It’s just an example of a scenario. I could also bring a million books if that makes the example any more palatable to you. Or lots of videos on survival/camping.

Re:

[jellomizer]

10,20+ years ago. We as consumers were buying more stuff.
Computer, Monitor, Printer, TV, Stereo system, LAN Phone, Cell Phone. Was basic stuff the people had in the late 1990's
Today we have
Smart Phone and TV to be considered to have enough to operate in modern life.
The Smart Phone technology is rather peaked, with the last interesting technology is the Folding Screens, which still is more a Gimmick then something practical. TVs are trying to get above 4k but we are not really seeing any real improvement fro