Big Data, a mega-trend that is showing no signs of slowing down, now has its own dedicated venture fund. “Data Collective” launches today, and is head up by storied investors, Zachary Bogue and Matt Ocko.
The fund’s cofounders plan to invest in about 40 early stage and seed startups in the IT infrastructure, Big Data, and analytics space, which they see as a several hundred billion dollar market opportunity. I caught up with them on the eve of the announcement to chat about the hype surrounding Big Data, and their decision to go rogue with a new fund.
The partners told me they plan to take an active role in the day-to-day operations of their portfolio companies, more so than traditional venture firms. It will likely differentiate them from established VC firms from Accel Partners (who carved out a $100 million Big Data fund in 2011) to Andreessen Horowitz, who are also angling for a piece of the Big Data pie.
Both investors are still knee deep in the process of raising capital, and so would not yet disclose a figure.
The founders are confident they have right team for the challenge. Ocko has been an investor and adviser on the startup circuit for 30 years, with investments in Zynga, BranchOut and CrowdMob. Bogue, (pictured, above) an analytics expert, is an early investor in Square and cofounder of San Francisco-based office space for entrepreneurs, Founders Den.
The fund’s extended team is comprised of 35 “equity partners,” who will have a significant material share in the investments. The equity partners are all experienced technical types — data experts, CTOs and chief scientists — currently or formerly at tech giants like VMware and Facebook.
“They range from rising star female principal engineers of name brand companies who haven’t yet made a giant pile to grizzled veterans of two or three IPOs,” Ocko explained. “What they all have in common is the opportunity to work collectively with each other and be part of a unified elite club.”
Jacob Rosenberg, formerly a lead systems architect at Zynga, is a founder of one of the fund’s portfolio companies. He told me the managing directors have a rare “nitty-gritty of what a hacker, especially a data hacker, does every day.”
Gaining access to the partners’ network doesn’t hurt either. Rosenberg said that in 48 hours, Bogue was able to pull some strings to get him a meeting with Lieutenant Governor, Gavin Newsom. Bogue, a Bay Area-based investor and philanthropist, is currently expecting his first child with wife, Yahoo’s new CEO, Marissa Mayer.
By joining the Data Collective club, the startups will also gain a head start in the painful customer acquisition process. According to Ocko, this will help them scale quickly and “punch outside of their weight class.”
This may be Data Collective’s first micro-VC fund, but the team has been working quietly in “stealth mode” for several years. They have already made seed investments in promising, early-stage Big Data startups like Kaggle, Citus Data, and Continuuity.
“Don’t get me wrong. I may be wearing a nice jacket, but I still write code,” said Ocko, formerly a managing partner at Archimedes Ventures. “Zack and I have been at this for a long time and were evangelizing Big Data when no one knew what it meant.”
Ocko defines Big Data, a rapidly emerging tech segment, as “the set of technologies and practices for dealing with an exponential increase in the amount of data being accumulated, stored, and prepared for analysis from terabytes per month to potentially pedabytes per day.” It’s a mouthful, I know. In a nutshell, Ocko and Bogue are investing in startups that can make sense of extremely large volumes of messy data within the enterprise, and use it to derive new insights. In the right hands, data can be a highly valuable commodity.
The cofounders said they like to think of the space as layers of a wedding cake. The bottom layer is infrastructure (storage, cloud management, networking, and security), the middle layer is analytics, and the top layer is the application layer, which is closest to the end-user, the person who actually uses the product.
For Data Collective, the middle layer is the sweet spot. “We’re looking for startups that are doing analytics at scale, at speed, or better yet, both,” said Bogue.
The core team will also include two data experts: Bradford Cross, Prismatic’s technical cofounder; and Michael Driscoll, Metamarkets’ CEO, who will retain their existing full-time roles. Bogue and Ocko will not reveal the exact equity breakdown for the partners, but they stressed that the terms are simple and transparent. They did reveal, however, that the equity partners will not be offered seat on the company’s board.
Before wrapping up our interview, I asked the managing directors about the trend for young talent to build new geo-located, social mobile apps, and not enterprise technology. “I welcome them, the future customers of our companies,” joked Ocko. “It means more data for us to crunch.”