Home Will the Cloud Be Tinged with Venture Capital Gold in 2011?

Will the Cloud Be Tinged with Venture Capital Gold in 2011?

The forces changing the enterprise are not lost on venture capitalists. They recognize the transformation as well as anyone. So much so that it looks like cloud computing investments are expected to be greater than those in other market sectors.

That’s evident in just the past few days with three venture capital investments that total $55 million.

The investments are going to companies that have only one thing in common: they are able to show promise due to the fast acceptance of cloud computing in the enterprise and the overall high level of interest in the ways that businesses can use Web and mobile applications for better optimization and reach with customers.

Cloud computing is a catalytic factor for the Dachis Group, which has raised $30 million in a series B round from Austin Ventures. Skytap received a $10 million series C round to fund sales and marketing efforts for its cloud automation technology. SCVNGER is a location-based app that competes with Foursquare. It received $15 million this week.

Dachis Group

Dachis Group is the largest consulting company in the world dedicated to integrating social business solutions into the enterprise. It will use its funding for international expansion, staffing and other investments that include acquisitions. Dachis has made several acquisitions in the last year. These were mostly consulting companies, including Hinchcliffe and Associates, Archrival and Stuvo.

Dachis competes with both boutique groups and the largest consulting companies. For example, companies such as Accenture are increasingly paying attention to the enterprise and the adoption of social technologies. In an interview, founder Jeffrey Dachis said the transformation is extending from the enterprise and deep into the supply chain. “I think cloud computing is one of the core components of social business,” Dachi said.


Skytap is a cloud automation technology company based out of Seattle. The company’s platform provides the capabilities for self-serve cloud deployment and virtualized environments. Skytap plans to use its investment for sales and marketing purposes.

The service allows for companies to develop, test, migrate, evaluate, demo and train on new and existing applications in the cloud. Its most significant offering has to be its network automation which it launched earlier this year. In an interview we did last month, Sundar Raghavan, chief product and marketing officer at Skytap, said the goal for the service is to make it as simple as possible for people to realize the benefits of a cloud platform.

That means far better automation than the processes today that require assistance from people with specific expertise. Networks can break down. When that happens, a company will have to go lengths to get it fixed. Skytap provides the capability to move applications with ease. Krishnan Subramanian wrote earlier this year that Skytap is a hot company to watch due to its ability to “enable IT organizations the ability to move multi-tiered enterprise applications with clustering and fail-over networking capabilities into the cloud with point-and-click ease.” The resulting cost savings can be significant. Companies are seeking ways to pull the bits and pieces together to build a cloud environment. Skytap automates the process.


SCVNGR is a location-based service that emphasizes gaming and challenges. It’s an entirely different play than Skytap or Dachis. SCVNGR is not exactly an enterprise technology but it has direct correlations to the cloud and its use for business to reach out to their customer base. This may mean a business asking customers to take photos and share them with others. That’s opposed to a check-in where a person is simply saying they have arrived at a location such as you see with a service like Foursquare. Gaming is entering the business world and the cloud is the vehicle for it.

Overall View

According to the National Venture Capital Association, Internet technologies and cloud computing software will outpace green tech. So much so that venture capitalists say there could be over investment in the Internet and cloud computing categories.

That’s not too hard to believe considering the rapid pace of investment we are already seeing this year.

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