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IBM gets start-ups hooked early

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IBM is reaching out to venture capitalists by offering technology and go-to-market help for software start-ups they back.

According to IBM, use of its software, servers and consulting from staff in 30 Innovation Centers worldwide will help young companies get to market quickly and reduce development costs of advanced and emerging technologies in Web 2.0, software as a service (SaaS), security, virtualization and wireless. All services will be provided free of charge.

It's important for platform providers to get in early with start-ups, as limited R&D budgets mean their products will generally use just one vendor's database or middleware stack. Only as their business increases can companies port to others platforms.

The software field represents rich pickings for tech companies eager to establish life-long relationships with new users and partners. According to latest figures, VCs invested $1.26bn in 231 deals in the second quarter of 2006, compared to $1.31bn and 215 deals in the first quarter, beating all other sectors, including biotech - often touted as the "one to watch." That's not bad going, considering just 12 per cent of US and international VC and private equity funds actually target software and software services.

Furthermore, cash has funded companies' expansion and later-stage development ($579m and $511m respectively), rather than seed capital or first round funding. That means start-ups have budget for infrastructure software.

IBM is already claiming success from earlier efforts, with some 9,500 developers so-far this year trained on IBM technologies the company said.®

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