The amount of capital invested in these startups has already surged to over $5.4 billion in the first half of 2014. That’s roughly the same amount that enterprise-facing companies raised in the entire year for 2013.
The surge in investment dollars is actually accompanied by a slowdown in commitments to new technology companies, indicating that investors’ confidence in the sector’s strength is matched by a belief that this current crop of business technology companies is maturing. In the second quarter of 2013, investors backed 328 startups in the enterprise software category, by the second quarter of 2014 that number had declined to 205.
While the numbers indicate a slowdown in the commitments going to business-focused technologies, some investors insist this is only the beginning. The idea of selling software as a hosted online service has been around for nearly a decade, beginning with the Salesforce.com customer relationship management revolution, but the technologies that are moving to the cloud were never part of core business operations, they argue. Now, these hosted software businesses are everywhere, and taking over core functions that used to be the purview of internal information technology departments.