How Ignorant VCs can F…Up the Enterprise Software World

13 Jul

Last night I was having a conversation with a venture capitalist and friend about some new technologies in the enterprise software space. My friend was a bit surprised and upset about how a specific consumer technology, let’s call it “product X”, was aggressively being positioned to enterprise customers and the negative reactions that these customers were experiencing. Apparently, the move of going after enterprise customer with “product X” came from some of the VCs associated with the company. In his opinion “product X” was a natural consumer technology that, accidentally, has seen some small adoption within enterprise customers. He was very concerned that by positioning “product X” to enterprise customers, the company and its VCs were exhibiting a lack of knowledge of the space that it was hurting products similar to “product X” that were really focused on the enterprise.

He is right…..

In the past’ I’ve been very vocal about the fact that the renaissance of enterprise software and movements such as the consumerization of the enterprise requires a change of mindset and a lot of education from software vendors, enterprises and venture capitalists in order to become relevant movements. As the founding arm of the enterprise software ecosystem, VCs will have a lot of influence and responsibility on the ultimate success or failure of the consumerization of the enterprise movement.

While the industry has the privilege of counting with super knowledgeable enterprise software VCs such as Andreessen-Horowitz’s Peter Levine (ex-CEO of XenSource), Allegis Capital’s Robert Ackerman, Ignition Partner’s John Connors or Rembrandt Ventures’s Michael Baum (ex-CEO of Splunk), the fact of the matter is that the majority of VCs exhibit an incredible lack of knowledge when comes to evaluate and position enterprise software startups. As a consequence, we constantly see startups waving the “consumerization of the enterprise” flag and going after enterprise customers with consumer products that have no chance to being adopted by any company with common sense. This wouldn’t be an issue if only the naïve startups and the ignorant VCs will get hurt but the fact of the matter is that it affects the entire ecosystem.

Just because a consumer mobile app is cool and has been by 10 or 20 enterprise customers doesn’t mean that its an enterprise-ready product. If you are an enterprise software startup and are looking for funding make sure you associate yourself VCs have the knowledge and the                   experience in the space to help you be part of these wonderful times we are experiencing in the enterprise software world.

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Posted by on July 13, 2012 in Uncategorized


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