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Summary:

Last year, venture capital investment in “true” cloud computing companies constituted more than a quarter of overall Internet deal volume and more than a third of Internet investment dollars, according to new research from CB Insights.

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Venture capital investment in cloud computing companies accounted for more than a quarter of Internet deal volume and more than a third of Internet investment dollars in 2011, according to CB Insights.

It’s difficult to pinpoint cloud computing dollars simply because the definitions of cloud computing are all over the map (I was going to say cloudy, but…)

The CB Insights 2011 Venture Capital Report, released Thursday, showed that Internet or web companies took in a healthy $10.5 billion in 1185 deals total last year, although the number of deals tailed off in the fourth quarter (see chart.)

The report itself doesn’t even mention cloud computing per se, but CB Insights Co-Founder Jonathan Sherry was a good sport and took a shot at parsing out the true cloud computing numbers.

Via email, Sherry said:

Over the course of 2011, we’ve seen a steady uptick of venture investment into cloud-based software and services.  In Q4, cloud-based companies comprised 26.5% of internet deal volume and 34.5% of  internet investment dollars.  Dollar share skewed higher than deal share due to mega deals including Dropbox and Box.net.

For its purposes, CB Insights put Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS) and cloud storage companies like the aforementioned Dropbox and Box.net —  or any true cloud infrastructure players in this category. It did not include game companies or those that run part of their business on Amazon Web Services, for example, in that number.

Some VCs agreed that the categorization remains tricky, especially as any new company now claims cloud credentials whether it has any or not.

“If you’re talking about pure cloud infrastructure, I’d say there are a good number of deals done there and they’re going up sequentially,” said Paul Santinelli, general partner with North Bridge Venture Partners.  Santinelli counts companies that do network virtualization, systems virtualization, orchestration and management for the cloud among the true cloud faithful.

There will be new VC numbers out of the National Venture Capital Association and PriceWaterhouseCoopers  coming out Jan. 19, so expect still more confusion over what deals are true cloud vs. the product of “cloud washing.”

Feature money photo courtesy of Flickr user yomanimus

Cloud photo courtesy of  Flickr user akakumo


  1. No surprise here. Cloud is the flavor of the day, right? Everybody and their mum is trying to jump on in. All sorts of industries and companies are trying to convert, some with more success than others (CMO being a good example). I think we´ll see an ever bigger growth this year, until the field clears a little bit and only those who have something truly innovative to offer will stand.

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