When Stacklet founders Travis Stanfield and Kapil Thangavelu left Capital One to launch their startup in 2020, most companies weren't too concerned about containing cloud costs. But in the years since, economic headwinds — first the pandemic and then rising interest rates — have made containing cloud costs a necessity.
That's why Stacklet's cloud cost management and governance platform is growing in popularity. In fact, CEO Stanfield said the company will triple its revenue in 2023 compared to the previous year, though he couldn't provide specific numbers. Investors seemed pleased with what they saw, and have now invested $14.5 million to capitalize on continued growth.
TechCrunch's Frederic Lardinois described the company's core commercial product in a 2021 article, indicating that cost management is only a small part of its offering.
“Stacklet helps enterprises manage their data governance regime across different clouds, accounts, policies, and geographies, with a focus on security, cost optimization, and regulatory compliance. The service provides users with a set of predefined policy packs that encode best practices for accessing cloud resources, but also allows users to specify their own rules. Additionally, Stacklet provides numerous analytics capabilities on policy health and resource auditing, as well as real-time inventory and change control logs of an enterprise's cloud assets.”
The company also has a true open source product called Cloud Custodian. The two founders developed this software while working at Capital One before leaving the company to start Stacklet. The project was open sourced in 2016 and became part of the Cloud Native Computing Foundation in 2019.
While some open source projects have switched to more restrictive licenses in recent years, Thangavelu said that won't happen because the project is forever part of the CNCF. When it comes to protecting commercial products from being cannibalized by free versions, he said the gap between open source and the company's core commercial products is too large.
“The open source project is a stateless rules engine. It's just a CLI (command line interface). With our commercial product, we provide a platform that uses context to accelerate your work right out of the box, providing value and additional capabilities that aren't present in the open source part,” he said.
Stanfield says the cost-control part has proven especially important to customers. That wasn't always the case: When the company first started, most people didn't know anything about FinOps, which refers to managing cloud spending within an organization. But in recent years, cost control has become even more important as AI, which tends to be resource-intensive, has grown in popularity.
“Certainly as people evolve their products and services and go deeper into the cloud, they're going to need to get better control over their spend. What we're fundamentally focused on in the FinOps space is continuous usage optimization — making sure that anything that developers may be using in the cloud is kept aligned with efficiency best practices,” Stanfield said.
He said that to continue to grow, the company needs to find the right balance between growth and efficiency, and that even with the new influx of capital, it will remain cautious about spending, investing only if it makes sense to accelerate growth.
It's worth noting that this investment is less than the company's previous round of funding, when it raised $18 million in 2021, but Stanfield said he's comfortable with the figure because things are different now.
“We feel very fortunate, certainly given the economic climate of the last few years, that we've had some really great investors,” he told TechCrunch.
Today's funding round was led by SineWave VC, with participation from Strait Capital, Uncorrelated Ventures, Capital One Ventures, Foundation Capital and Relentless Ventures. Stacklet says it has raised $36.5 million to date.