AI is driving the demand for cloud services. Cloud spending is expected to more than double between 2019 and 2023 and exceed $2 trillion by 2030, according to Goldman Sachs Research.
However, poor spend management can put your ROI at risk. Yodar Shafrir discovered this while working at Run:AI, a workload management startup that Nvidia is acquiring.
“I saw firsthand the frustration of DevOps teams due to resource inefficiency,” Shahrir told TechCrunch. “We observed high costs for unused resources and saw applications crash due to lack of sufficient resources. Constant pressure on engineering teams to fine-tune application resources reduced core development efforts. There was often a lot of time spent on.”
Guy Barron, Wix's head of research and development at the time, sympathized with Shahril's plight. He met Shahril as a customer and the two began talking. After a few months, they decided to found a startup focused on solving a common problem: optimizing cloud resource usage.
The startup, ScaleOps, operates in a niche cloud spend management tool known as FinOps. However, it's a niche market crowded with competitors like Broadcom-owned CloudHealth, IBM's Kubecost and Cloudability, and startups like Exostellar, Ternary, CloudZero and ProsperOps.
Like its rivals, ScaleOps seeks to automate cloud management for enterprises based on the performance requirements of individual apps. ScaleOps works to minimize the size of your app's cloud service footprint by analyzing your app's requirements, taking into account available resources and cost considerations.
A snapshot of the backend ScaleOps management dashboard. Image credit:ScaleOps
Self-hosted ScaleOps can run in any cloud, on-premises, or air-gapped environment, says Shafrir (CEO).
“ScaleOps automates resource optimization, reduces waste, improves performance, and streamlines workflows between DevOps, FinOps, and application teams,” he added. “This value proposition resonates strongly with businesses looking to optimize their operations during economic downturns.”
As for resonance, Shafrir points out that ScaleOps' customer base (which includes SentinelOne, Cato Networks, and Wiz) appears to be growing steadily. He expects the number of brands to grow to more than 100 by the end of the year.
This traction has also helped startups attract investment. The company closed a $58 million Series B funding round this month, bringing its total funding to $80 million.
Shahrir did not provide details on ScaleOps' revenue and burn rate, but said the company maintains a “prudent financial strategy” to “ensure sustainability and growth.”
FinOps becoming mainstream is definitely a benefit for ScaleOps. Recent research shows that more than four out of five companies now have a formal FinOps team in place, and an additional 16% are actively considering adding one. 71% of respondents to the same survey said their investments in FinOps increased in the last year.
“The widespread slowdown in the technology industry has increased the focus on operational efficiency and cost optimization,” Shahrir said.
Lightspeed Venture Partners led ScaleOps' Series B, with proceeds expected to help the New York-based company grow its workforce from 60 to more than 200 by 2026. NFX, Glilot Capital Partners and Picture Capital also participated in the round.