Since we started profiling companies for the Rainmaker Index programme, the frequency of debate over size has escalated. Major IT vendors typically enjoy huge market share and often corresponding mind share that can influence market sentiment. However, in our experience, some of the sharpest solutions come from start-ups responding to market demand. But do we really want to look at tiny companies? Or is there a tipping point after which companies become worth the attention?
The passage from start-up to public company is fraught with challenges. Business leaders who have stayed the course demonstrated significant rainmaking capabilities. Most start-ups are self funded and only momentum can attract venture or equity investors. The first round is often testimony to the founder’s ambition to grow, track record of success and investors’ belief that the market opportunity is attractive. We have come to believe that these companies that operate in the space in between self-funded start-up and publicly traded companies represent some of the most exciting technologies and services.
Punching above their weight
For these privately funded companies, competing effectively against the majors requires an array of tactics that will allow them to be more compelling to customers, and punch above their weight. Most often, good technology and early adopters will get them off to a good start – Huddle is one such example. Sometimes, partnering effectively makes all the difference. Cloud Apps builds its entire proposition on Salesforce’s Force.com platform and is rising with the tide. And in other cases, it is the management drive to create a collection of similar capabilities such as KKR’s Northgate and Visma propositions. Leadership and management teams in private hands arguably have to bring greater persuasive skills to bear, to win against more established brands.
At Rainmaker Files, we rely on IT Candor’s global industry database for our market numbers. Preliminary 2011 results suggest that the top 100 players had 34% of aggregated industry revenues, and 31% of aggregated industry profits. Lost more space for the minors to conquer, then. We have therefore started to include privately owned firms in our Rainmaker Index library. Let us know if you want to recommend any outstanding IT players in private hands that we should profile.
Image credit: moaan, Japan