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Unstructured Data Is A Rare Hot Area For Startup Funding

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One tends to think of digital data as something that’s easy to contain in neat silos and access on demand.

In reality, however, the zettabytes of data that enterprises collect and store can more resemble a disorganized home. The stuff you need may be in there somewhere, but it’s often hard to find.

And the piles of clutter are only getting bigger. Data collection and storage are expected to grow at double-digit rates for the foreseeable future. In tandem, tools to help organize, navigate and access all that digital information are generating more interest as well.

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Money is flowing too. Even as overall startup funding is down, we’re seeing rising investment to startups touting expertise in data automation and orchestration as well as tools to manage unstructured data.

“Something needed to be done to give you a singular global access view and control of data,” said David Flynn, CEO and founder of Hammerspace, a developer of unstructured data orchestration tools. The 5-year-old, San Mateo, California-based company picked up $56.7 million this week in its first round of institutional funding, led by Prosperity7 Ventures.

Hammerspace’s round is one of several recent, sizable financings for startups offering tools to manage our mountains of data. That was the finding from a Crunchbase analysis of funding to software companies that described their core business with the terms “unstructured data,” “data automation” and “data orchestration.”

Startups meeting this criteria that were funded in the past year have collectively raised over a billion dollars to date. For a sense of where investment is going, we put together a sample list of 15 companies funded in the past year that raised $10 million or more in their latest round:

Demand driven by rise of distributed teams and AI

Flynn sees two major shifts in workplace expectations and technology that are driving demand for stepped-up tools.

The first is the shift toward remote work and distributed teams. Today, it’s often not realistic for employers to expect their core staff to show up every day at a single physical location to collaborate on complex projects. Yet team members still need access to all the data.

“To do that, data needs to be agile,” Flynn said.

The second, and most-talked-about, shift is the rise in AI-enabled tools that can draw unprecedented insights from mounds of data. Orchestration tools come into play here because AI requires massive amounts of data, much of it of the unstructured variety.

“The fact that most data is not organized in a pre-defined manner makes it difficult for enterprises to really understand what they have, but more importantly, to find and extract the value held within their digital assets,” Flynn said. “Data orchestration gives the ability to move the data to where you’re going to need it.”

Exits ahead?

Acquirers and public markets also seem favorably disposed toward makers of tools for managing our information stores.

Most recently, Databricks, the data storage and management startup last valued at $38 billion, signed a definitive agreement three weeks ago to acquire OpenAI competitor MosaicML for $1.3 billion. MosaicML allows customers to build generative AI tools using their own proprietary data.

At Hammerspace, Flynn also has his eyes on a public offering down the road. That’s one reason he chose crossover investors for the company’s latest round, including tech investor Catherine Wood’s Ark Investment Management, as they would likely be long-term holders following an IPO.

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Illustration: Dom Guzman

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