Cloud Startups Reel In Funding; Cloudflare Leads Pack With $150M

The Cost Of Cloud

Cloud startups and vendors continue to attract interest from venture capital and private equity firms so far this month as enterprise information technology spending shifts to cloud-based offerings.

Cloudflare, a San Francisco cloud network platform, is leading funding recipients with a $150 million round.

At stake is a piece of the estimated $1 trillion in enterprise information technology spending this year forecast by Gartner, the Stamford, Conn., research firm.

Other companies scoring funding include Tetrate, Sharpen Technologies, MegazoneCloud, Impact, Velosio, Jargon, Functionize and Scytale, while Mission, a Los Angeles managed cloud and consulting company, secured an $8 million line of credit.

Enterprise Service Mesh Company Tetrate Launches With Dell Backing

Tetrate emerged from stealth mode to launch a new enterprise service mesh company with $12.5 million in funding led by Dell Technologies Capital.

The San Francisco startup is entering the networking market by leveraging Envoy and Istio, industry-standard, open-source “service mesh” networking projects for microservices.

The company’s CEO is Varun Talwar, a co-creator of Istio at Google and founding project manager of gRPC, a high-performance, open-source universal remote procedure call framework.

“Fortune 500 enterprises need a microservices-friendly networking layer to power their digital transformation, including application modernization and public/hybrid cloud adoption,” Talwar said in a statement. “Tetrate’s mission is to create a secure and flexible application networking layer to help enterprises transition from their decades-old rigid networking stack. Our tools and technologies will help customers with availability and manageability of their applications as they undergo this transformation.”

Tetrate will use the funding to build its enterprise-grade service mesh platform, which it said will make it easy for DevOps, security and network administrators to manage the complexity of the modern hybrid cloud application infrastructure, and to expand its open source contributions.

It also announced a collaboration with Google for operating hybrid cloud environments with Istio and another partnership with the Cloud Native Computing Foundation.

Intel Capital, 8VC, Rain Capital and Samsung NEXT also participated in the funding round along with Pankaj Patel, former chief development officer at Cisco; Guido Appenzeller, Yubico’s chief product officer; BV Jagadeesh, founder of Netscaler and managing partner at KAAJ Ventures; and Shiva Rajaraman, WeWork’s chief product officer.

Cloudflare Scores $150 Million

San Francisco-based Cloudflare, an Internet performance and security company, raised $150 million in funding.

Franklin Templeton, a San Mateo, Calif., investment firm., led the round, the first since 2014 for Cloudflare, which has raised more than $330 million to date.

Cloudflare said it will use the new funding to support its growth, extend its product ranges and continue international expansion into new markets.

The company also appointed two new board members: former Silicon Graphics chief financial officer Stan Meresman and Maria Eitel, founder and co-chair of the Nike Foundation.

Sharpen Technologies Gets $15 Million In Growth Capital

Customer experience technology provider Sharpen Technologies will use $15 million in new capital growth funding to increase its sales and marketing, and expand its agent-first, omni-channel cloud contact center platform.

The Indianapolis company’s investors include Allos Ventures, Cultivation Capital, Elevate Ventures, Jupiter Peak, Collina Ventures, IU PhV, F&M Investment Office, Lightchain LLC and Rodger Riney, founder and former CEO of Scottrade. Allos managing director David Kerr will join Sharpen’s board.

Megazone Cloud Raises $45 Million

Megazone Cloud, which bills itself as Asia’s largest cloud solutions and managed service provider, has raised $45 million in Series A funding to help accelerate its growth and expand beyond South Korea into Japan and other parts of Asia.

Its funding came from the Korean National Pension Service, Korea Development Bank, Korea Investment Holdings, KB Financial Group and Nau IB Capital’s growth capital fund.

The Seoul-based company expects to secure Series B funding in the second half of this year.

An Amazon Web Services (AWS) partner since 2012, Megazone Cloud said its revenue reached $200 million last year with more than 1,000 customer companies. It became Korea’s first AWS Premier Consulting Partner in 2015.

The company’s U.S. headquarters is in San Jose, Calif.

Impact Secures Funding Led By Providence Strategic Growth

Santa Barbara, Calif.-based Impact, a partnership automation SaaS provider, has secured a $75 million investment led by Providence Strategic Growth, a Providence, R.I., firm that invests in middle-market software and technology-enabled service companies.

Impact said the funding will go toward platform development and further go-to-market and regional expansion. Its Partnership Cloud provides automation for the full partnership lifecycle, allowing for discovery, recruitment, onboarding, engagement and optimization. Impact counts Ticketmaster as one of its customers.

Existing Impact investor Silversmith Capital Partners, a Boston growth equity firm, also participated in the funding.

Velosio Lands Capital Investment Funding From Private Equity Firm

Velosio, a cloud consulting firm specializing in business management solutions, has received an unspecified capital investment from Harren Equity Partners, a Charlottesville, Va., private equity firm.

The Columbus, Ohio-based company was founded a year ago with the merger of Microsoft Dynamics partners SBS and Socius, and offers the entire Microsoft Dynamics business solution portfolio and NetSuite, along with Office 365 and Microsoft Azure cloud services.

Velosio will use the funding to support its growth.

Mission Gets $8 Million Line of Credit

AWS partner Mission, a Los Angeles managed cloud and consulting company, inked a line of credit agreement with Silicon Valley Bank that provides it with up to $8 million in new capital to support customer growth.

The credit line follows a previous $75 million investment from Great Hill Partners, a Boston private equity firm.

“The line of credit will open up new and exciting opportunities for our customers to take advantage of Mission programs -- like the reserved instances optimization program -- that help drive discounted pricing for their AWS usage,” Mission chief financial officer Stewart Armstrong said in a statement.

Jargon Raises $1.8 Million For Conversation Platform for Voice Applications

Seattle’s Jargon has secured $1.8 million in venture pre-seed financing to accelerate the launch of its conversation platform that enables voice applications to intelligently manage and personalize how they respond to users.

Jargon’s customers include brands, agencies and independent developers that want to build voice applications for services like Amazon Alexa and Google Assistant. Its software developer’s kit and cloud-based tools allow customers to structure, manage and optimize their voice application content.

Palo Alto, Calif.-based Ubiquity Ventures and San Francisco’s Crosslink Capital led the investment round, with participation from Amazon’s Alexa Fund and Bedford, Mass.-based iRobot. Ubiquity Ventures founder and managing partner Sunil Nagaraj has joined the board of Jargon, which was founded in 2017.

Functionize Raises $16 Million in Series A Funding

Functionize, an intelligent cloud-based software testing solution provider, closed on a $16 million Series A investment round led by Portola Valley, Calif.-based Canvas Ventures.

The San Jose, Calif., company said the financing will speed market adoption of its proprietary natural language processing solution for enterprise-level software testing. Its artificial intelligence-powered autonomous cloud-based testing platform allows testers and developers to expedite testing and speed up the development cycle, according to the company.

TOTVS, Zenefits and Agvance are among Functionize customers, and its partners include Google, SHI, Wipro, Marlabs and SQALogic.

Scytale Gets $5 Million Investment

San Francisco’s Scytale, a founding contributor to the Cloud Native Computing Foundation’s Secure Production Identity Framework for Everyone and SPIRE , a production-ready implementation of the SPIFFE APIs, has scored $5 million in funding. It will use the investment to launch its commercial offering based on the popular open-source projects.

The funding came from Palo Alto, Calif.-based Bain Capital Ventures, Atlanta venture capital firm TechOperators, New York venture capital firm Work-Bench and Bessemer Venture Partners of Menlo Park, Calif.

“In an increasingly complex and fragmented enterprise IT environment, Scytale has not only built SPIFFE’s amazing open-source community but has also delivered a commercial offering to address hybrid cloud authentication challenges faced by Fortune 500 identity and access management engineering teams,” Bain Capital Ventures partner Enrique Salem said in a statement. “Scytale enables enterprises to more easily accelerate cloud adoption and reduce development efforts while also standardizing and automating service authentication.”

Scytale also has launched Scytale Enterprise, a service identity management platform for cloud-native enterprises that enables frictionless service authentication across cloud, container and on-premise platforms.