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Data is actually not a great VC-backed business

auren.substack.com · 893 words · saved by 1 readers

Five years ago, I made a full-throated argument that now is a great time to build a pure-play data (DaaS) business and put my money where my mouth was – starting and investing in dozens of pure-play data businesses. This was on the back of the DaaS Bible. But I was wrong. This was a mistake. My main argument was that that number of data buyers was sure to grow exponentially. Companies were getting much more data-forward (investing in data lakes, snowflake, databricks, etc.) and employing armies of data scientists. Surely they will need to buy more data. And this was even before the AI wave. I wrote: One example is hedge funds. Not that long ago, just ten funds were buying significant alternative data. Today it is still under 100. But there are 500-700 funds that are currently making the investment to ingest large amounts of data. But today, there are actually fewer than 100 hedge funds that spend millions on alternative data. the number of hedge funds buying a lot of data is going down

trigger warning: there is a lot of pouring cold water on data businesses Five years ago, I made a full-throated argument that now is a great time to build a pure-play data (DaaS) business and put my money where my mouth was – starting and investing in dozens of pure-play data businesses. This was on the back of the DaaS Bible. But I was wrong. This was a mistake. My main argument was that that number of data buyers was sure to grow exponentially. Companies were getting much more data-forward (investing in data lakes, snowflake, databricks, etc.) and employing armies of data scientists.…

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