German Predictive Analytics Startup Rapid-I Rebrands As RapidMiner, Takes $5M From Open Ocean, Earlybird To Tackle The U.S. Market

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Rapid-I — a German specialist in analytics tools that wants to become the industry standard for how enterprises predict the future — is today announcing its first round of funding, a rebrand to RapidMiner, and a new HQ in Boston to jump with two feet into growing its business in North America. The Series A of $5 million — the first money ever raised by RapidMiner — is led by Earlybird Venture Capital and Open Ocean, the investment firm backed by the founders of MySQL. To gear up for its next stage of growth, RapidMiner is also adding Yahoo’s former chief data officer, Usama Fayyad, to its board, and is starting to hire in the U.S.

The involvement of Open Ocean is strategically important for RapidMiner, both as a mark of its success so far, and also of how it can develop. “With three million product downloads, RapidMiner has rapidly become one of the leaders in the predictive analytics space,” said Monty Widenius, MySQL founder and partner at Open Ocean Capital, in a statement. “We plan to leverage our experience in building MySQL, and the MySQL community, to help the RapidMiner team advance its technology and grow its user community around the world.”

The explosion in data that has been a by-product of the rise of the Internet and cloud-based services has created a knock-on market for business intelligence and big data solutions for companies to better harness this information to their best advantage.

This is where RapidMiner fits into the equation: the company works across a number of verticals such as entertainment and technology, through to pharmaceuticals, government and academia to provide them with the tools to look at their data and make better guesses about what customers and their own business may do next. Typical areas where RapidMiner’s solutions are implemented include customer segmentation; loyalty and retention analysis; credit ratings; resource planning; and asset maintenance. Sitting on an open stack, RapidMiner incorporates data from some 60 different structured and unstructured sources, including those sitting in SAP and Hadoop-based systems.

It’s a lucrative area but one that is still a work in progress. Gartner estimates that the business intelligence market was worth $57 billion at the end of 2010 but that by 2014 it will grow to $81 billion by 2014. Around one-fifth of the $57 billion, or $10.5 billion, was spent on business intelligence platforms/analytics in 2010, but that is projected to grow to $20 billion by 2014.

Why the increase in proportion? I suspect that as more enterprises start to demonstrate how they can actually gain an edge over competitors by relying on better analysis of the data they already have, the more investment you will see in this area. This is a big switch from where predictive analytics first had its beginnings as an academic pursuit. As a measure of that, before co-founding RapidMiner, CEO Ingo Mierswa started and ran the Artificial Intelligence Division of the University of Dortmund, Germany.

So far, RapidMiner has shown to be a strong leader in the space, with some 3 million total downloads (including documents and products) and some 200,000 users, including the likes of eBay, Intel, PepsiCo and Kraft among its paying customers. The company already claims to be leading the market for predictive data analytics services, against competitors like Revolution Analytics, SAS, SQL Server, StatSoft and IBM. To date, that growth has largely been in Europe — specifically, its user base is 65% Europe, 25% U.S. customers and 10% rest of world; with 50% of the company’s open source users in the U.S.

As with so many startups from this part of the world, now that RapidMiner is ready to scale, the U.S. is its prime target.

Jason Whitmire, the Earlybird partner who led the VC’s investment in RapidMiner, says that the company stood out because it was the “only solution we found that puts the person who has to solve a predictive analytics problem right in the middle of a very broad value proposition.” The global traction was also a boost, he added. “With this footprint, we believe that RapidMiner will stand a good chance become the de-facto industry standard for predictive analytics based on an open stack,” he says.

He also believes that the way that RapidMiner was built on an openstack also lends itself to working as well with large enterprises as much as smaller businesses. “We felt that RapidMiner’s products address the core of this market by fulfilling the spectrum of predictive analytics requirements large and small enterprises — i.e. flexibility of the solution based upon level of skill, complexity and overall sophistication of the customer’s analytics needs,” he adds.