With Big Tech in Their Path, Start-Ups Turn to Business Markets

With Big Tech in Their Path, Start-Ups Turn to Business Markets


“Public policy should pay attention to this,” said Fiona Scott Morton, an economist at the Yale University School of Management and a former senior official in the Justice Department’s antitrust division. “It’s important to see which way the money and people are moving, and why.”

A decade ago, about half the start-ups that went to Accel, a venture capital firm in Silicon Valley, pitched consumer ideas, said John Locke, an investor at the firm. Today, the consumer-focused pitches have dropped to about 30 percent.

At Amplify Partners, more than 40 percent of the 67 investments the firm has made in business-focused start-ups are companies whose founders have consumer internet backgrounds, said Sunil Dhaliwal, a general partner there.

David Ulevitch, a general partner at Andreessen Horowitz, a large venture firm, said it was increasingly looking to enterprise start-ups, and had invested in several. “The consumer landscape is incredibly difficult, so the consumer world is shifting to the enterprise,” he said.

Start-ups are increasingly writing software that allows mainstream companies to do things that the consumer internet giants pioneered, like constant online monitoring of how people use products, regular updates and personalization. In addition, as banks, manufacturers, hospitals and others struggle to make sense of their digital data from the web, online forms and sensors, they need the help of tech companies.

“The problems we were facing everyone else is facing now,” said Kolton Andrus, chief executive of Gremlin, which offers programming tools to make internet-style cloud applications more reliable. Mr. Andrus helped found the company in 2016, after seven years as a senior engineer at Netflix and Amazon.

Some start-ups are breathing new life into old categories of business software. Superhuman, an email service founded in 2014, is growing rapidly, offering fast, engaging and personalized service.



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