What’s the Next Big Thing?
If by that you mean a venture capital-backed startup and you listen to the annual rankings compiled by the Wall Street Journal, it is Genband, a supplier of voice-over-internet-protocol technology for the telecommunications industry.
Where’s the Next Big Thing? Silicon Valley, right?
Wrong. Genband is actually far away from the Bay Area. Headed by Chief Executive Charlie Vogt, Genband calls Frisco, Texas, home.
Genband tops the list of the Wall Street Journal’s third annual ranking of venture capital-backed start-up companies. Xirrus took the number-two spot (for the second year in a row). Xirrus provides wireless networking hardware. Tabula, a manufacturer of semiconductors, came in third.
This year’s list displays an interesting trend. While dazzling, high-minded Internet start-ups might get the lion’s share of attention (and a fair amount of venture capital, too), many investors are putting their money into companies that provide behind-the-scenes products and services for other businesses.
It’s hard to get very excited about the somewhat mundane—but very important—business tech essentials that Genband, Xirrus and Tabula provide.
But that’s where the money is headed, and it is running far away from the darlings of yesteryear: health care and energy. No energy company even made the cut this year. This is also the first year the health care industry was toppled from the top of the heap (although it makes a few appearances in the list). Last year, Castlight Health, a company that produces programs that help patients understand health costs, was number one. This year, they aren’t even in the top 50.
For a company to be in the running, it has to be based in the United States, have received equity financing sometime in the past three years, and be valued at under $1 billion. (Twitter, for example, was not considered.) The judges based their rankings on fundraising ability, growth in value and the merit of the board and founders.
Some interesting companies made the top 50. Cheezburger, the company behind LOLcats and FAIL Blog, among many other humor sites, came in 28th place.
California is still home to the most tantalizing start-ups. Thirty-seven of the companies on the list are based there, while the other 13 are spread around seven other states. Genband is one of the 31 start-ups that are making their debut and shaking up this year’s list.
Information technology was favored this year with 28 start-ups in that sector, while nine companies were in business or financial services, eight were in consumer services and five were in health care.