Have we been through this discussion before? Remember the eWeek article from last year titled "Is .Net failing to draw VC loyalty?" and the corresponding discussion in the blogosphere, including my post? Well, it seems that SAP is taking a page out of the old Java venture fund camp to seed companies and help them build on a Netweaver platform. As I mentioned before, I do not fund a company based on what platform they build on but if they choose one that is not open source then there better be a go-to-market reason for it. Being at the Microsoft Summit last week, I kept asking myself why one of my portfolio companies would want to deploy its software on a Microsoft Sofware as a Service platform if it could do the same thing using open source technology and not have to pay additional license fees? It comes down to tradeoffs. If there is a clear path to customer opportunities and market adoption then it may very well be worth it to lock yourself into one vendors’s technology platform even though a majority of the customer dollars may not go to you. From a VC perspective, I want to reiterate to not focus on what platform you have built on but on what customer problem you are solving, what market you are going after, and how you plan on ramping up your customer base. If the opportunity is large enough (the problem is that many specific .Net-based or Netweaver-based companies are nice businesses but pretty nichey) and the market you are going after maps well with one of the big platform vendors, then it may make sense to align your company closely with theirs. In the case of SAP and Netweaver it will be interesting to see how the market reacts to their investment plans. Clearly, having big exits will spur some entrepreneurs to make a bet with Netweaver. Sap’s Virsa and Frictionless Commerce acquisitions are steps in the right direction to get everyone’s attention.
I look forward to hearing more about this topic from Jeff Nolan (we are grabbing dinner Monday night) as he is blogging from Sapphire now.
Update: this discussion is enterprise focused, not a consumer one