March 06, 2014, 10:00 AM — DigitalOcean, the infrastructure-as-a-service provider that sets itself apart by offering SSD servers exclusively, has landed a whopping $37.2 million in funding, led by Andreessen Horowitz.
That's big for a Series A round, according to research into IaaS investment activity released late last year by CB Insights. The average Series A investment into IaaS providers is $12 million, the researchers found.
Image credit: Flickr/JeepersMedia
The funding suggests that investors think there's room in the market for the relatively smaller service providers to make it. The IaaS market is dominated by Amazon Web Services, with other giants like Microsoft and Google far behind but chasing AWS's heals. Then there are a host of smaller IaaS providers, like DigitalOcean fighting for a foothold.
With data centers in Amsterdam, Singapore, San Francisco and New York, DigitalOcean says it competes against AWS by focusing on simplicity of use and offering a high performance cloud, due to the use of SSD servers, said Mitch Wainer, DigitalOcean's co-founder and chief marketing officer.
He said the new investment will help the company in several ways. "The funding is enormous for us because it will allow us to hire a lot more engineers, Ruby engineers to help us build new features and help us build a better cloud for developers," he said.
In fact, he said that DigitalOcean is working on adding PaaS services to its platform. "We're focused on building right now internally a PaaS model where we're going to provide one-click provisioning for different images. So for example, a Rails image," Wainer said. "These will be provided to make it easier for developers to instantly create new servers with preconfigured setups."
That means DigitalOcean is among other IaaS providers that are increasingly offering PaaS functionality, adding a new threat to some PaaS players. "For the standalone PaaS guys, like Heroku, they're going to have more competition," Wainer said.
The investment will also help DigitalOcean boost capacity and build new data centers, the company said. And, the company will spend more on building its brand by reaching out to developers at conferences and other events, he said.
DigitalOcean customers include Nike, which uses the service to launch microsites for new product releases and TaskRabbit, which uses it for dev and test, he said.
Read more of Nancy Gohring's "To the Cloud" blog and follow the latest IT news at ITworld. Follow Nancy on Twitter at @ngohring and on Google+. For the latest IT news, analysis and how-tos, follow ITworld on Twitter and Facebook.