Companies undergoing a major transition don’t generally see major investment, as venture capitalists often prefer to take a cautious approach before diving in. That’s why Bain Capital’s investment of $750 million in Nutanix Inc. last year received a great deal of attention in the tech world.

Nutanix, a key player in the hyperconverged infrastructure or HCI market, had been transitioning from a traditional license to an annually recurring revenue model. In addition, the firm has pivoted away from its own hardware to build a software stack. Where some investors might have taken a “wait and see” attitude, Bain saw major opportunity and opened its wallet.

“We were looking for businesses that we thought had faced some dislocation in their market value associated with the COVID environment we were facing but were really attractive,” said Dave Humphrey (pictured), managing director at Bain Capital. “As we went through that effort, we really felt that Nutanix stood out. It’s market-leading technology that customers love that is solving a really important problem.”

Humphrey spoke with Dave Vellante, host of theCUBE, SiliconANGLE Media’s livestreaming studio, during theCUBE on Cloud event. They discussed the resilience of the technology sector during the pandemic, Bain’s interest in cloud as a long-term force in the technology world, and the firm’s fundamental approach to finding investment value.

Tech remains strong

Bain’s investment fit with a dynamic the firm had noticed over the past year as a global pandemic wreaked havoc on the world’s economies. While many sectors were hard hit, technology remained surprisingly robust.

“I don’t think any of us in March, when the COVID crisis was just emerging, would have anticipated that come November the markets would have been even more robust and stronger than they were in January or February,” Humphrey explained. “It’s a testament to the resilience of technology and how intricate and involved technology has become with our daily lives and how much companies depend on its use. You’re seeing that in the reflection of market values that are out there.”

In addition to the digital hyperconverged infrastructure, Nutanix has been focused on DevOps, desktop services and data center solutions. There were trends that Bain tracked closely in evaluating future cloud market opportunities.

“The cloud is the overarching trend and dynamic in the technology market,” Humphrey said. “In 2015, by our analysis, two-thirds of all computing workloads were done on-premises. Only five years later, that’s flipped. Even more interesting to us is the growth of technology and usage of technology that the cloud has created.”

Along with the shift from on-premises to the cloud, Humphrey noted that workload volumes were increasing dramatically. In the venture capital world, where there’s major growth, there could also be investing opportunity.

“The total number of computing workloads run has increased 2.6 times in five years, which is really a dramatic thing,” Humphrey explained. “It makes sense when you think about all of the new software applications that can be created, all of the data that can be used. It’s that growth that we’re really focused on as investors in technology.”

Humphrey’s firm is taking a broader view of the technology world in general. While the computing industry has been dominated by the large hyperscalers, the venture capital community prefers to look at whitespace opportunities where startup firms with a good team and attractive offering can meet an unfulfilled enterprise need.

“The growth of AWS, Microsoft and Google has been a profound competitive shift, those companies can offer and do things that past purveyors of computing cloud not,” Humphrey said. “But fundamentally, they’re selling an infrastructure layer, and there is room for all sorts of new competitors and new applications that can do something better than anybody else can. We see lots of those opportunities.”

Aside from its support for Nutanix, Bain Capital has also made recent investments in a cloud startup focused on technology for managing business spending and another in the open banking, digital payments arena. It’s all part of a strategy to identify solid tech opportunities that will last.

“We’re looking for businesses that are fundamentally great, they’ve got great technology, they solve problems for customers in a way that we could never replicate,” Humphrey said. “The question we ask ourselves is around whether the technology we’re investing in is durable. Is it advantaged, and does it have a growing role in the world?”

Here’s the complete video interview, part of SiliconANGLE’s and theCUBE’s coverage of theCUBE on Cloud event:

Photo: SiliconANGLE