Object storage appliance maker Cloudian Inc. is joining the “composable infrastructure” trend with a combined round of investment and loan financing that will enable it to offer pay-by-the-drink licensing.
Composable infrastructure is a cloud-inspired approach to deployment and licensing that physical compute, storage and network resources as services. Hewlett Packard Enterprise Co. has popularized the concept with its Synergy offering, which delivers computing resources as an integrated platform that can be spun up or down as needed, with customers paying only for the capacity they use.
In a funding announcement today, Cloudian said it’s getting a cash infusion of $25 million from private equity firm Digital Alpha Capital along with $100 million in “utility financing,” which is effectively a loan. The money will be used to enable Cloudian to provision infrastructure to existing and new clients who want to pay on a consumption basis rather than forking over big payments from their capital expense budgets. Cloudian will continue to offer its appliances for purchase.
Cloudian calls its object storage platform “infinitely scalable,” with integrated data management features and broad interoperability. Object storage supports unstructured data, and it’s increasingly popular in big-data projects. Cloudian’s products are primarily used in corporate data centers, and can be joined to cloud storage services such as Amazon Web Services Inc.’s S3 via application program interfaces.
The $100 million in utility financing permits investors to trade off risk for return by not taking a stake in the company. “It’s a slightly different type of financing for investors who are looking for a 10 percent to 15 percent return,” said co-founder and Chief Executive Michael Tso (pictured). “It’s a lower-risk but more stable financing vehicle.”
Cloudian is responding to a surge of demand by customers to move information technology costs out of capital expenditure budgets and into more flexible operating expenditure models that dominate in the cloud. The trend is accompanied by an increase in the number of organizations that are linking their on-premises and cloud storage resources. “We thought that if we’re linking them in a technical way, can’t we also do it in a financial way?” said Jon Toor, Cloudian’s chief marketing officer.
Terms of the company’s consumption-based pricing offer are still being worked out, and probably won’t be announced for at least two months, Tso said. In the interim, Cloudian is structuring individual programs for customers who want the flexible payment capability now. Cloudian executives said they see no risk of cannibalizing sales by offering alternative payment plans. “We’re assuming this is completely upside,” Tso said. “We expect it to be a fairly significant piece of our business.”
The agreement also gives Cloudian preferred access to Cisco Systems Inc.’s customer base through an arrangement with Digital Alpha in which Cisco is a minority partner.
The $25 million investment brings Cloudian’s total funding to $105 million. The six-year-old company said it has doubled in size each of the last three years and now has more than 200 customers, primarily large enterprises and midsized businesses.
Tso said this probably isn’t the last financing round. “It’s more likely than not that we’ll raise some additional funding to continue to grow the company,” he said. “Object is still a new space, and there’s plenty of greenfield to be captured.”
Since you’re here …
… We’d like to tell you about our mission and how you can help us fulfill it. SiliconANGLE Media Inc.’s business model is based on the intrinsic value of the content, not advertising. Unlike many online publications, we don’t have a paywall or run banner advertising, because we want to keep our journalism open, without influence or the need to chase traffic.
The journalism, reporting and commentary on SiliconANGLE — along with live, unscripted video from our Silicon Valley studio and globe-trotting video teams at theCUBE — take a lot of hard work, time and money. Keeping the quality high requires the support of sponsors who are aligned with our vision of ad-free journalism content.
If you like the reporting, video interviews and other ad-free content here, please take a moment to check out a sample of the video content supported by our sponsors, tweet your support, and keep coming back to SiliconANGLE: