Enterprise spending on cloud services continues to grow, reaching $675 billion this year, thanks to organizations' embrace of software-as-a-service, the proliferation of distributed work, and the rise of computing. Intensive technologies like AI. A startup called PointFive believes it has found a better way to understand usage, and today announced $20 million in funding from a strong list of backers to take on the market.
New backer Salesforce Ventures is leading the Series A, with participation from Index Ventures, Entree Capital, Sheva VC, and Vesey Ventures. The company, headquartered in New York, was founded out of the Israeli tech industry and has a long list of angel founders who have followed a similar path themselves. They include Wiz's Assaf Rappaport, Mickey Boodaei, Tamar Yehoshua, Yasmin Lukatz, Dean Sysman, Raanan Raz, Kfir Tishbi, and Amiram Shachar. He himself has raised $100 million for his current startup, cloud security company Upwind.
This round is also notable for how quickly it succeeded following the seed round. Just 18 months after its establishment, the company announced index-led funding of $16 million in June 2024 (currently total funding is $36 million). We understand that PointFive is currently valued at around $100 million.
Coincidentally, one of the angels, Shachar, made a name for himself with a cloud cost optimization tool called Spot, which he eventually sold to NetApp and later founded Upwind. The opposite is true for Alon Arvatz, CEO and co-founder of PointFive. He previously founded security startup IntSights, which he sold to Rapid7 for $350 million before founding PointFive with cloud optimization. This is because security and cost management are actually two sides of the same coin in the cloud, and both require the same data about usage across instances, apps, and endpoints to operate. (P.S. This was also the impetus for starting PointFive.) At a previous startup, Arvatz explained how cloud security was important to teams who were under pressure to explain why cloud security was so necessary. He said he found it difficult to sell security: You can't show financial institutions where your cloud spending is going in the first place.
Albats said in an interview that Shachar is now the go-to person for investors who do due diligence before backing startups in the cloud cost space in Israel, which is why he himself has become an investor in the company. He said that it was the impetus for him to do so. Shachar believed that “we were the next big thing in this space,” Arvatz claimed.
What Arvatz describes as the “next big thing” is that traditional cloud cost optimization solutions have been limited in scope and limited to specific cloud platforms (for example, Spot provides visibility on AWS). ) and basic usage tracking. Various apps and services are available on that platform.
However, the reality of how organizations approach cloud services is very different. Typically, a hybrid architecture is deployed using multiple clouds and combined with a warehousing solution such as Snowflake.
The breakthrough for PointFive, in Arvatz's view, is the technology that allows it to do so more comprehensively across more silos.
“We were able to build technology that collects and ingests various data points from cloud providers,” he said. “Plus, we’re the only one in the industry.” [that have] Developed an agentless Kubernetes solution. So today, in less than five minutes, we can give you all the data about your cloud infrastructure and everything you need to know about Kubernetes clusters. ”
In addition to this, he said PointFive's research team has developed an AI algorithm that identifies what the company calls “deep waste.” This is the equivalent of deep learning (of sorts) for cost management.
“Traditionally, waste in cloud environments has been unused resources,” he said. “You pay for certain resources, but you don't use them or you only use them half-way. If you have a containerized environment and a lot of managed services for storage, you have huge network costs. When a network is heavily influenced by architecture, there is a large amount of waste that is very deep and difficult to identify. It takes very sophisticated algorithms to actually plan for and continuously monitor them. This may not be the case forever, but PointFive is currently the only company that can map this, and mapping this is the first step to remediation. There may be quotas involved, but you should at least track them so you know what to negotiate. Enter the future.
This is especially important in emerging fields such as AI, where there are real constraints on computing and, as a result, higher costs.
It's very interesting to see Salesforce Ventures leading this round. The company is a leader in SaaS services, so in order to upsell its products to more customers, it's definitely advantageous to have a solution that makes customers feel more empowered. But we can also imagine an increased focus on cloud management and security in the future as Salesforce continues to add cloud applications for more use cases far beyond sales and marketing.
Salesforce Ventures Managing Director Nowi Kallen said in a statement: