Enterprise startups: Is the fun about to end?

There are too many enterprise startups and they are starting to saturate various categories. What's a tech buyer to do when the music stops?
Written by Larry Dignan, Contributor

If you're a business technology buyer it has never been easier to buy from an enterprise startup due to cloud computing, integration ease and the appeal of being a big innovative customer of a smaller vendor.

But that music is going to stop at some point. The big question is whether you'll be ready. Consider the merger and acquisition and venture capital moving parts of late.

Need more? Funding rounds for enterprise software are a dime a dozen. Not all of these companies are going to survive. Many have been built solely for a buyout offer. There are only so many buyers.

We're likely to see a few varieties of enterprise startups:

  • Startups that get B and C rounds of funding, but then stall. These companies will either be bought, blow up or thrive and go public.
  • Startups that go public, stall and then get bought.
  • Startups that turn into the next Salesforce and Workday and can go it alone (maybe).

In either case, it's highly likely that your enterprise vendor you grew up with is going to be acquired.

Louis Columbus, a contributor to Forbes, recently rounded up the top 100 analytics startups. Finding the top analytics startups is a worthy endeavor. I couldn't get past the following question: Why are there more than 100 startups focused on analytics?!?

You could substitute the analytics category for enterprise mobility management and ask the same question. Simply put, there are too many alleged disruptors chasing one enterprise wallet. The cloud makes it easier to start an enterprise technology vendor. But the cloud also means that the barriers to entry are lower. Lock-in is challenging in the cloud. That reality is good for technology buyers, but does have the side effect of having to judge too many entrants to a market.

In other words, make sure you conduct your due diligence. The tech startup sledding could get tricky out there because it's a safe bet that the new breed enterprise vendor is going to be consolidated---willingly or otherwise.

ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8am AEST in Sydney, Australia, which is 6pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and the US.

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