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Cloudera secured $160m from leading tech investors in the latest round of funding. Will it go public, or get acquired before it has a chance?

Cloudera secured $160m from leading tech investors in the latest round of funding. Will it go public, or get acquired before it has a chance?

Big data platform specialist Cloudera announced Wednesday that the company has secured $160m in funding from T. Rowe Price, Google Ventures, and MSD Capital (Michael Dell’s private investment firm) among others. The company said the funding bolsters its leadership in the sector and will help accelerate the Hadoop specialist’s growth as enterprise adoption of distributed file systems hits the mainstream.

Cloudera said the latest round of funding, which brings the company’s total take since its founding in 2008 to $301m, also speaks to what it sees as increased mainstream adoption of “the most important technology sea change in the datacentre for the next decade.”

“When Cloudera emerged from stealth in 2009, the vision was to bring Hadoop to the enterprise,” said Tom Reilly, chief executive officer at Cloudera.

“At the time, the idea of ‘big data’ was on the cusp of adoption. Five years later, Cloudera is setting the standard for how enterprises across all verticals are managing their big data. The market demand for these technologies is fierce as companies realize the competitive advantage and strategic value of their data,” Reilly said.

“We are thrilled to have the backing of major institutional and strategic investors in this latest round and are well positioned to drive our vision and company growth at an even faster pace,” he added.

Karim Faris, a general partner with Google Ventures, the investment wing of the internet search giant said that it’s still seeing broad momentum from enterprises adopting big data technologies like Hadoop, and it’s only increasing.

“We expect this market to continue to grow rapidly,” Faris said.

The news seems to resonate well with recent research from data integration specialist Syncsort. Of the 300 large European enterprises it polled in December 2013, 64 per cent are either using or experimenting with Hadoop, with Cloudera leading in enterprise distributions being tapped for the job at 41 per cent, 11 per cent more than those tinkering with the core Apache open source code and 23 per cent more than those deploying Hortonworks’ distro.

Indeed, with big data project commitment set to rapidly increase this year Cloudera spent much of 2013 inking deployment agreements with big public cloud providers including CenturyLink, Verizon, IBM’s Softlayer and T-Mobile’s T-Systems in a bid to grow its platform among enterprises already shifting other systems and services to the cloud.

According to VC firm GP Bullhound investment in big data technologies will increase over 217 per cent this year – and fuel significant consolidation over the same period, which begs two questions: With $301m in the bank and bolstered by ever increasing adoption of, and the lack of market expertise around Hadoop, will the company choose to go public? Or will the company be gobbled up by enterprise IT incumbents with a clear interest in big data and a clear appetite to spend strategically, like IBM or Oracle, before it even has a chance?

“There is a lot of venture money floating around right now, and with Facebook’s $19b acquisition of a company that few ever heard of, we have the makings of a venture capital bubble” said Tony Baer, principal analyst at Ovum. “As such, there is a flight to quality for tier 1 VCs; in the Big Data arena, players like Cloudera and MongoDB are perceived to be among them.”

Baer told Business Cloud News that the new funding has made the company far more expensive for any potential suitor and that their valuation will only climb as a result.

“This was not a case of a company cash-starved because of growth. The executive team spoke openly about prospects for an IPO; in our opinion it’s not a question of whether but when. Given their public feuding, IBM is an extremely unlikely suitor,” he explained. “The most likely candidate would be Oracle, with which Cloudera already has an OEM agreement. But also don’t discount newly privatized Dell, whose head is one of two new “strategic investors” (along with Google Ventures) alongside the venture firms that are part of the latest tranche.”

But Baer also said that at this point Ovum doesn’t believe Cloudera is for sale as it still seems deeply focused on bolstering itself against and surpassing incumbent data warehousing players like Teradata as a central enterprise data hub.

“Even if the company had an exit strategy, their latest round of funding shows that the current plan is to put more facts on the ground before that might even become a possibility. Those facts include building out the Hadoop platform (and potential Cloudera value-added offerings) to make it the equal in enterprise grade performance, manageability, and security as established incumbents, and of course to greatly expand its market footprint,” he said.

“Naturally, as Cloudera has highly professional investors behind it, never say never.”

Big data world congress 2013