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Investors Still Bullish on Enterprise Startups Despite Risks

It’s a good time to be raising money as an enterprise startup.

For the first three quarters of the year, U.S. venture funding for enterprise services increased 42 percent to $18.6 billion from $13 billion the same period a year ago, according to Dow Jones VentureSource. By contrast, venture funding for consumer information and media services declined 7.1 percent to $429 million from $462 million the previous year.

All told, 20 enterprise startups, from Dropbox to New Relic, were valued at between $1 billion and $10 billion as of June. The valuations have grown despite some rocky enterprise IPOs—and some, like Box—that have been put on ice.

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Nimble Storage has performed the best so far, with revenues rising 93 percent to $88.4 million in the first half of the year, though losses more than doubled to $45.5 million in the same period. Sales to two customers alone made up 72 percent of the company’s revenue.

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One of the perils of enterprise startups is they typically play in mature markets, where profits can quickly shift from one company to another amid stiff competition.