The Next Big Thing

One of the greatest, if not the greatest, challenges that financial technology journalists face is trying to find—and write about—the technologies of the future. While it's important to cover advancements in cloud computing, it's more fun to think about what the next cloud-like breakthrough will be.

What better way to see what the next "hot" thing will be than to look at the companies that investment firms are throwing their money at? On Monday, the Wall Street Journal published a list of the top 50 venture-funded companies, valued at less than $1 billion, that have received an equity round of financing in the past three years.

Health care and information technology firms dominated the list, and there were a few companies that have offerings that may be valuable to buy-side firms. Three in particular jumped out at me:

No. 24, Workday Inc.: A web-based software solutions provider for on-demand human resources and back-office operations. Firms such as AGF Management Ltd., BrickStreet Mutual Insurance, insurance provider Foresters, Guidant Financial Group and the IntercontinentalExchange (ICE) are already clients. Workday was ranked 16th in last year's rankings.

BST's Analysis:
Judging by the number of investment firms that have jumped onboard already—including ICE—Workday, which was founded in 2005, seems to already be taking hold.

No. 33, Xsigo Systems, Inc.: Xsigo’s offering connects a company's server to "any network or storage device," according to the vendor, and provides both hardware and software to connect with datacenters. Futures-clearing merchant Newedge lists itself as a client. Newedge says it went with Xsigo because of how easy it was to get it up and running, as well as the ease of disaster recovery. In a video testimonial for Newedge, Nick Richards, director of systems engineering at the firm, says installation was as simple as "plug and play."

BST's Analysis:
There are likely more capital markets firms employing Xsigo's system. Indeed, "Xsigo does have a number of financial institution customers and some world-leading banks," a spokesperson told me.

No. 46, Yammer Inc.: This San Francisco-based vendor provides a social-networking environment for employees to use—similar to Facebook or Twitter—that is secure and customizable to meet a user's needs. The Suncorp Group is a client, as well as Nationwide, NorthPointe Capital, New Zealand Exchange, NAB, Crowell, Weedon & Co., and Allen & Company.

BST's Analysis:
I find Yammer's offering to be the most intriguing. I've spoken with many buy-side firms, most recently BNY Asset Management, that are developing internal social-networking outlets that are compliant and secure. Yammer was founded in 2008 and seems to be quite popular Down Under.

Do you know what the next "big thing" will be? Shoot me a line at anthony.malakian@incisivemedia.com and I'll only ask for 5 percent of the venture's profits.