Facebook Backer Launches ‘Big Data’ Fund

Accel Partners wants to invest in the 'picks and shovels' of the social Web

Accel Partners has backed some of the biggest online hits of the past few years, including Facebook, Groupon, and Angry Birds-maker Rovio. But with its new $100 million fund, the firm wants to invest in an area that's a little less sexy—"big data" startups.

Partner Ping Li acknowledges that the companies offering data infrastructure and applications don't have the name recognition of some of Accel's home runs, but he argued that they will provide the tools (or, as he put it, "the picks and shovels") that online companies need if they're going to serve millions of users or more.

The challenge of dealing with massive amounts of data has been the "undercurrent" beneath the current wave of social startups, Li said. For example, he said, "all gaming companies are basically analytics companies these days." (Social gaming giant Zynga is famous for its data-driven approach to game design.) And Li isn't the only venture capitalist to think this way. LinkedIn founder-turned-Greylock-partner Reid Hoffman has said that "Web 3.0" will involve sorting through massive amounts of social data.

Li also says he's hoping to see data companies that are looking to improve specific industries, like healthcare, banking, and, yes, advertising.

The fund will be global, with partners in the United States, Europe, China, and India. Its advisors will include technical experts from link shortener Bitly and data management startup Cloudera to Facebook and Stanford.

This is the first time Accel has created a fund devoted to a specific market, but Li says it's not an entirely new direction. After all, the firm has backed data infrastructure startups in the past, such as Cloudera. And of course it will continue to invest in consumer-facing startups with its existing funds.

 The real purpose of the new initiative, Li says, is to draw a little more attention to Accel's interest in the market (and perhaps to remind entrepreneurs that they don't need to build a "me-too" social app to attract VC dollars).

"We want to add some fuel to the fire," Li said. "There's nothing like money to get entrepreneurs excited."