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OpenStack’s latest release focuses on bare metal clouds and easier upgrades
The OpenStack Foundation today released the 18th version of its namesake open-source cloud infrastructure software. The project has had its ups and downs, but it remains the de facto standard for running and managing large private clouds.
What’s been interesting to watch over the years is how the project’s releases have mirrored what’s been happening in the wider world of enterprise software. The core features of the platform (compute, storage, networking) are very much in place at this point, allowing the project to look forward and to add new features that enterprises are now requesting.
The new release, dubbed Rocky, puts an emphasis on bare metal clouds, for example. While the majority of enterprises still run their workloads in virtual machines, a lot of them are now looking at containers as an alternative with less overhead and the promise of faster development cycles. Many of these enterprises want to run those containers on bare metal clouds and the project is reacting to this with its “Ironic” project that offers all of the management and automation features necessary to run these kinds of deployments.
“There’s a couple of big features that landed in Ironic in the Rocky release cycle that we think really set it up well for OpenStack bare metal clouds to be the foundation for both running VMs and containers,” OpenStack Foundation VP of marketing and community Lauren Sell told me.
Ironic itself isn’t new, but in today’s update, Ironic gets user-managed BIOS settings (to configure power management, for example) and RAM disk support for high-performance computing workloads. Magnum, OpenStack’s service for using container engines like Docker Swarm, Apache Mesos and Kubernetes, is now also a Kubernetes certified installer, meaning that users can be confident that OpenStack and Kubernetes work together just like a user would expect.
Another trend that’s becoming quite apparent is that many enterprises that build their own private clouds do so because they have very specific hardware needs. Often, that includes GPUs and FPGAs, for example, for machine learning workloads. To make it easier for these businesses to use OpenStack, the project now includes a lifecycle management service for these kinds of accelerators.
“Specialized hardware is getting a lot of traction right now,” OpenStack CTO Mark Collier noted. “And what’s interesting is that FPGAs have been around for a long time but people are finding out that they are really useful for certain types of AI, because they’re really good at doing the relatively simple math that you need to repeat over and over again millions of times. It’s kind of interesting to see this kind of resurgence of certain types of hardware that maybe was seen as going to be disrupted by cloud and now it’s making a roaring comeback.”
With this update, the OpenStack project is also enabling easier upgrades, something that was long a daunting process for enterprises. Because it was so hard, many chose to simply not update to the latest releases and often stayed a few releases behind. Now, the so-called Fast Forward Upgrade feature allows these users to get on new releases faster, even if they are well behind the project’s own cycle. Oath, which owns TechCrunch, runs a massive OpenStack cloud, for example, and the team recently upgraded a 20,000-core deployment from Juno (the 10th OpenStack release) to Ocata (the 15th release).
The fact that Vexxhost, a Canadian cloud provider, is already offering support for the Rocky release in its new Silicon Valley cloud today is yet another sign that updates are getting a bit easier (and the whole public cloud side of OpenStack, too, often gets overlooked, but continues to grow).
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Boston-area startups are on pace to overtake NYC venture totals
Joanna Glasner
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Boston has regained its longstanding place as the second-largest U.S. startup funding hub.
After years of trailing New York City in total annual venture investment, Massachusetts is taking the lead in 2018. Venture investment in the Boston metro area hit $5.2 billion so far this year, on track to be the highest annual total in years.
The Massachusetts numbers year-to-date are about 15 percent higher than the New York City total. That puts Boston’s biotech-heavy venture haul apparently second only to Silicon Valley among domestic locales thus far this year. And for New England VCs, the latest numbers also confirm already well-ingrained opinions about the superior talents of local entrepreneurs.
“Boston often gets dismissed as a has-been startup city. But the successes are often overlooked and don’t get the same attention as less successful, but more hypey companies in San Francisco,” Blake Bartlett, a partner at Boston-based venture firm OpenView, told Crunchbase News. He points to local success stories like online prescription service PillPack, which Amazon just snapped up for $1 billion, and online auto marketplace CarGurus, which went public in October and is now valued around $4.7 billion.
Meanwhile, fresh capital is piling up in the coffers of local startups with all the intensity of a New England snowstorm. In the chart below, we look at funding totals since 2012, along with reported round counts.
In the interest of rivalry, we are also showing how the Massachusetts startup ecosystem compares to New York over the past five years.
Who’s getting funded?
So what’s the reason for Boston’s 2018 successes? It’s impossible to pinpoint a single cause. The New England city’s startup scene is broad and has deep pockets of expertise in biotech, enterprise software, AI, consumer apps and other areas.
Still, we’d be remiss not to give biotech the lion’s share of the credit. So far this year, biotech and healthcare have led the New England dealmaking surge, accounting for the majority of invested capital. Once again, local investors are not surprised.
“Boston has been the center of the biotech universe forever,” said Dylan Morris, a partner at Boston and Silicon Valley-based VC firm CRV. That makes the city well-poised to be a leading hub in the sector’s latest funding and exit boom, which is capitalizing on a long-term shift toward more computational approaches to diagnosing and curing disease.
Moreover, it goes without saying that the home city of MIT has a particularly strong reputation for so-called deep tech — using really complicated technology to solve really hard problems. That’s reflected in the big funding rounds.
For instance, the largest Boston-based funding recipient of 2018, Moderna Therapeutics, is a developer of mRNA-based drugs that raised $625 million across two late-stage rounds. Besides Moderna, other big rounds for companies with a deep tech bent went to TCR2, which is focused on engineering T cells for cancer therapy, and Starry (based in both Boston and New York), which is deploying the world’s first millimeter wave band active phased array technology for consumer broadband.
Other sectors saw some jumbo-sized rounds too, including enterprise software, 3D printing and even apparel.
Boston also benefits from the rise of supergiant funding rounds. A plethora of rounds raised at $100 million or more fueled the city’s rise in the venture funding rankings. So far this year, at least 15 Massachusetts companies have raised rounds of that magnitude or more, compared to 12 in all of 2017.
Exits are happening, too
Boston companies are going public and getting acquired at a brisk pace too this year, and often for big sums.
At least seven metro-area startups have sold for $100 million or more in disclosed-price acquisitions this year, according to Crunchbase data. In the lead is online prescription drug service PillPack . The second-biggest deal was Kensho, a provider of analytics for big financial institutions that sold to S&P Global for $550 million.
IPOs are huge, too. A total of 17 Boston-area venture-backed companies have gone public so far this year, of which 15 are life science startups. The largest offering was for Rubius Therapeutics, a developer of red cell therapeutics, followed by cybersecurity provider Carbon Black.
Meanwhile, many local companies that went public in the past few years have since seen their values skyrocket. Bartlett points to examples including online retailer Wayfair (market cap of $10 billion), marketing platform HubSpot (market cap $4.8 billion) and enterprise software provider Demandware (sold to Salesforce for $2.8 billion).
New England heats up
Recollections of a frigid April sojourn in Massachusetts are too fresh for me to comfortably utter the phrase “Boston is hot.” However, speaking purely about startup funding, and putting weather aside, the Boston scene does appear to be seeing some real escalation in temperature.
Of course, it’s not just Boston. Supergiant venture funds are surging all over the place this year. Morris is even bullish on the arch-rival a few hours south: “New York and Boston love to hate each other. But New York’s doing some amazing things too,” he said, pointing to efforts to invigorate the biotech startup ecosystem.
Still, so far, it seems safe to say 2018 is shaping up as Boston’s year for startups.
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Enterprise software investments may be tepid now, but they’re poised to engage
Logan Bartlett is a vice president with Battery Ventures.
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Have we reached “peak software”?
Just like the idea of “peak oil” — the hypothetical point at which global oil production could max out — you could say we’re approaching a saturation point for venture-capital investments in software companies.
Recent data from PitchBook shows that venture investing in software companies has plateaued: The amount of VC money invested in these companies — $32 billion last year — remained roughly constant over the last four years. The actual number of venture-backed software investments, mostly for business-focused companies, has actually declined, from 4,068 in 2014 to 2,980 last year.
But software is not, in fact, a declining industry. As I explore with my colleague Neeraj Agrawal in a recent report called Software 2018, released last month, a closer look at the PitchBook data shows that the fall-off in software deal volumes is primarily in the Bay Area, where an overheated market has boosted valuations and caused some investors to temporarily pull back. Investment in other U.S. regions, and globally, is actually going up. Investment in software companies based in Europe, Canada and Australia/New Zealand, for example, was $5.4 billion in 2017, up nearly 69 percent from the previous year.
Perhaps more important, a number of broader, global mega trends continue to fuel software innovation today, promising more new companies and more new jobs. These trends include everything from the rise of artificial intelligence, which is pushing software into new fields like autonomous driving, to the recent corporate tax cuts in the U.S., which could free up hundreds of billions of dollars for big corporations to buy up software startups.
Mary Meeker just released her annual, consumer-focused Internet Trends report in May. But here are some of the key trends we see shaping the global, mostly business-focused software market this year:
(Photo by Tomohiro Ohsumi/Getty Images)
SoftBank: Not just for consumer companies anymore
SoftBank’s new, $100 billion Vision Fund has had a huge impact on the technology industry already, given the Japanese firm’s ability to essentially play kingmaker in a given technology market by making a huge investment of hundreds of millions of dollars in one company. This, obviously, makes it extremely difficult for competitors to keep up in terms of building market share. And if a company declines SoftBank’s money, there’s the potentially lethal possibility that SoftBank could fund a competitor, essentially snuffing out the first company.
What’s less noticed, however, is that SoftBank is investing in many business-focused software companies, not just big consumer names like Uber, FlipKart and SoFi. Softbank recently put $2.25 billion into GM’s Cruise business unit for autonomous driving and $250 million into secondary storage vendor Cohesity, for example, and has backed other B2B players such as construction/building-software outfit Katerra; real-estate software company Compass; and workplace chat app Slack.
With these investments and others, SoftBank is accelerating the pace of growth in many key software markets and likely also dampening these companies’ IPO prospects, since companies receiving several hundred million dollars from the Japanese company face less of a financial need to go public. SoftBank is essentially taking the place of an IPO.
Image: Bryce Durbin/TechCrunch
More software means less hardware, more robots
The continuing march of software innovation isn’t great for everyone — losers in this picture could include hardware vendors and people with jobs that can be automated by smart, software-powered robots. (Yes, even lawyers and doctors could be affected — it’s not just truck drivers.)
The implications of artificial intelligence on the job market, and the auto industry, have been widely discussed. Less noticed, though, are the shifting growth rates in cloud-based IT gear versus traditional IT hardware, the technology that powers large corporations and other organizations. IDC predicts that by 2020, corporate spending on cloud-infrastructure software will finally exceed spending on non-cloud IT infrastructure — meaning all those boxes inside corporate data centers from vendors like Dell, IBM, Cisco, H-P etc. Many of those companies are trying to figure out their cloud services approach to stay relevant.
Lower taxes = more software M&A
Not everyone loves the Trump administration’s policies, but if you’re a software CEO, you might be a fan of the administration’s new tax bill. That’s because the 2017 bill could be a boon for software-industry M&A. Two key components of the new law — the reduced rate charged to companies to repatriate cash from overseas and the lowering of the corporate tax rate to 21 percent from 35 percent — could leave many big tech acquirers with new war chests, analysts believe.
According to investment bank Qatalyst Partners, both changes could leave a group of the largest traditional tech-company acquirers with an additional $400 billion to spend, if they repatriate money from overseas. This would be enough to buy 50 leading software companies today, according to Qatalyst. We have already seen some of this with the recent acquisitions of GitHub by Microsoft ($7.5 billion) and Adaptive Insight by Workday ($1.55 billion) and Q1 deals like MuleSoft by Salesforce ($6.5 billion) and CallidusCloud by SAP ($2.4 billion).
The traditional tech acquirers could be more receptive to acquisitions than ever these days, given that the easy, low-cost cloud business model has allowed a range of young tech upstarts to attack many parts of their businesses from all angles. Often, the easiest solution is for the big tech companies to buy the upstarts.
Niche is nice for software
As software transforms big, well-known corporate markets — like data center software, and technology for functions like human resources, sales and marketing — it is also making inroads into much more narrow industries and corporate functions. The low cost of the cloud makes it easy for every industry, from physical therapy to prison management to mortgage lending, to grow its own, customized software, usually deployed for tasks like operations and customer management. Often there are multiple firms vying for customers (and investor dollars) today in these specialized fields.
Similarly, software is fueling extremely specialized companies to serve business needs inside companies today. These include companies as varied as DocuSign, which has built a multi-billion dollar public company focusing exclusively on document signing, and Carta, which sells technology to help companies manage their financial cap tables.
Mary Meeker is right that consumer internet trends like the rise of online wallets, subscription services for certain goods and increasing oversight of social media by regulators will have big economic implications in the years to come. But we humbly offer that business software is a pretty big economic driver too — you just have to work a little harder to figure out the implications for businesses and the markets.
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SoftBank Vision Fund leads $250M Series D for Cohesity’s hyperconverged data platform
San Jose-based Cohesity has closed an oversubscribed $250M Series D funding round led by SoftBank’s Vision Fund, bringing its total raised to date to $410M. The enterprise software company offers a hyperconverged data platform for storing and managing all the secondary data created outside of production apps.
In a press release today it notes this is only the second time SoftBank’s gigantic Vision Fund has invested in an enterprise software company. The fund, which is almost $100BN in size — without factoring in all the planned sequels, also led an investment in enterprise messaging company Slack back in September 2017 (also a $250M round).
“Cohesity pioneered hyperconverged secondary storage as a first stepping stone on the path to a much larger transformation of enterprise infrastructure spanning public and private clouds. We believe that Cohesity’s web-scale Google-like approach, cloud-native architecture, and incredible simplicity is changing the business of IT in a fundamental way,” said Deep Nishar, senior managing partner at SoftBank Investment Advisers, in a supporting statement.
Also participating in the financing are Cohesity’s existing strategic investors Cisco Investments, Hewlett Packard Enterprise (HPE), and Morgan Stanley Expansion Capital, along with early investor Sequoia Capital and others.
The company says the investment will be put towards “large-scale global expansion” by selling more enterprises on the claimed cost and operational savings from consolidating multiple separate point solutions onto its hyperconverged platform. On the customer acquisition front it flags up support from its strategic investors, Cisco and HPE, to help it reach more enterprises.
Cohesity says it’s onboarded more than 200 new enterprise customers in the last two quarters — including Air Bud Entertainment, AutoNation, BC Oil and Gas Commission, Bungie, Harris Teeter, Hyatt, Kelly Services, LendingClub, Piedmont Healthcare, Schneider Electric, the San Francisco Giants, TCF Bank, the U.S. Department of Energy, the U.S. Air Force, and WestLotto — and says annual revenues grew 600% between 2016 and 2017.
In another supporting statement, CEO and founder Mohit Aron, added: “My vision has always been to provide enterprises with cloud-like simplicity for their many fragmented applications and data — backup, test and development, analytics, and more.
“Cohesity has built significant momentum and market share during the last 12 months and we are just getting started.”
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TravelPerk grabs $21M to make booking business trips suck less
TravelPerk, a Barcelona-based SaaS startup that’s built an end-to-end business travel platform, has closed a $21 million Series B round, led by Berlin-based Target Global and London’s Felix Capital. Earlier investors Spark Capital and Sunstone also participated in the round, alongside new investor Amplo.
When we last spoke to the startup back in June 2016 — as it was announcing a $7M Series A — it had just 20 customers. It’s now boasting more than 1,000, name-checking “high growth” companies such as Typeform, TransferWise, Outfittery, GetYourGuide, GoCardless, Hotjar, and CityJet among its clients, and touting revenue growth of 1,200% year-on-year.
Co-founder and CEO Avi Meir tells us the startup is “on pace” to generate $100M in GMV this year.
Meir’s founding idea, back in 2015, was to create a rewards program based around dynamic budgeting for business trips. But after conversations with potential customers about their pain-points, the team quickly pivoted to target a broader bundle of business travel booking problems.
The mission now can be summarized as trying to make the entire business travel journey suck less — from booking flights and hotels; to admin tools for managing policies; analytics; customer support; all conducted within what’s billed as a “consumer-like experience” to keep end-users happy. Essentially it’s offering end-to-end travel management for its target business users.
“Travel and finance managers were frustrated by how they currently manage travel and looked for an all in one tool that JUST WORKS without having to compare rates with Skyscanner, be redirected to different websites, write 20 emails back and forth with a travel agent to coordinate a simple trip for someone, and suffer bad user experience,” says Meir.
“We understood that in order to fix business travel there is no way around but diving into it head on and create the world’s best OTA (online travel agency), combined with the best in class admin tools needed in order to manage the travel program and a consumer grade, smart user experience that travelers will love. So we became a full blown platform competing head on with the big TMCs (travel management companies) and the legacy corporate tools (Amex GBT, Concur, Egencia…) .”
He claims TravelPerk’s one-stop business trip shop now has the world’s largest bookable inventory (“all the travel agent inventory but also booking.com, Expedia, Skyscanner, Airbnb… practically any flight/hotel on the internet — only we have that”).
Target users at this stage are SMEs (up to 1,500 employees), with tech and consulting currently its strongest verticals, though Meir says it “really runs the gamut”. While the current focus is Europe, with its leading markets being the UK, Germany and Spain.
TravelPerk’s business model is freemium — and its pitch is it can save customers more than a fifth in annual business travel costs vs legacy corporate tools/travel agents thanks to the lack of commissions, free customer support etc.
But it also offers a premium tier with additional flexibility and perks — such as corporate hotel rates and a travel agent service for group bookings — for those customers who do want to pay to upgrade the experience.
On the competition front the main rivals are “old corporate travel agencies and TMC”, according to Meir, along with larger players such as Egencia (by Expedia) and Concur (SAP company).
“There are a few startups doing what we are doing in the U.S. like TripActions, NexTravel, as well as some smaller ones that are popping up but are in an earlier stage,” he notes.
“Since our first round… TravelPerk has been experiencing some incredible growth compared to any tech benchmark I know,” he adds. “We’ve found a stronger product market fit than we imagined and grew much faster than planned. It seems like everyone is unhappy with the way they are currently booking and managing business travel. Which makes this a $1.25 trillion market, ready for disruption.”
The Series B will be put towards scaling “fast”, with Meir arguing that TravelPerk has landed upon a “rare opportunity” to drive the market.
“Organic growth has been extremely fast and we have an immediate opportunity to scale the business fast, doing what we are doing right now at a bigger scale,” he says.
Commenting in a statement, Antoine Nussenbaum, partner at Felix Capital, also spies a major opportunity. “The corporate travel industry is one of the largest global markets yet to be disrupted online. At Felix Capital we have a high conviction about a new era of consumerization of enterprise software,” he says.
While Target Global general partner Shmuel Chafets describes TravelPerk as “very well positioned to be a market leader in the business travel space with a product that makes business travel as seamless and easy as personal travel”.
“We’re excited to support such an experienced and dedicated team that has a strong track record in the travel space,” he adds in a supporting statement. “TravelPerk is our first investment in Barcelona. We believe in a pan-European startup ecosystem and we look forward to seeing more opportunities in this emerging startup hub.”
Flush with fresh funding, the team’s next task is even more recruitment. “We’ll grow our teams all around with emphasis on engineering, operations and customer support. We’re also planning to expand, opening local offices in 4-5 new countries within the upcoming year and a half,” says Meir.
He notes the company has grown from 20 to 100 employees over the past 12 months already but adds that it will continue “hiring aggressively”.
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Investors are betting 3DR can find life after Solo as a drone data platform
An early player in drone-tech, 3D Robotics Inc. on Thursday announced that it has raised $53 million in a Series D round of funding, including new equity funding and conversion of debt equity. Atlantic Bridge led the round, joined by Autodesk Forge Fund, True Ventures, Foundry Group, Mayfield and other undisclosed investors, according to the company statement. Read More
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Okta acquihires Stormpath, doubles down on identity in apps and APIs
Okta, the $1.2 billion identity management startup for enterprises that some tip for an IPO this year, has made an acquisition of sorts to expand one of its newer lines of business: managing IDs across APIs and apps. Today the San Francisco-based company announced that it has picked up the team from Stormpath, an early mover in providing a way for developers to implement authentication… Read More
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Classy raises $30 million to help nonprofits raise donations, make a greater impact
A San Diego startup called Classy has raised $30 million for software-as-a-service that helps nonprofits raise donations online, and keep supporters engaged in a good cause for the long run. Specifically, Classy helps 501c3 or other nonprofit organizations to run crowdfunding, online and mobile campaigns, awareness and fundraising events all under one roof. This makes it possible for nonprofits… Read More
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Zenoti raises $15 million for spa bookings
The spa industry is in need of a technology makeover and Zenoti thinks it can help. The Seattle-based startup is raising $15 million in a round led by Norwest Venture Partners to help salons run their businesses. A cloud-based management platform, Zenoti helps spa chains with everything from billing to inventory management. They aim to create a tailored enterprise software experience for what… Read More
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Google buys Orbitera, a platform for cloud marketplaces, for $100M+
Google today announced another acquisition that will help the company improve how it competes against Amazon’s AWS, Salesforce and Microsoft in the area of enterprise services, and specifically selling enterprise services in the cloud: it has acquired Orbitera, a startup that developed a platform for buying and selling cloud-based software. Terms of the deal have not been disclosed but… Read More
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