UPDATED 09:15 EDT / DECEMBER 15 2014

What you missed in Cloud: VCs pile on the bandwagon

RunnersLast week was a good one for cloud startups as investors flocked to the new crop of contenders hoping to make their mark on the industry amid the intensifying struggle for dominance. Mesosphere Inc. charged ahead on Monday with a $36 million round from Khosla Ventures and existing investors to fund its efforts to build a new kind of data center operating system.

In conventional virtual environments, each service is deployed on a dedicated cluster of machines with a fixed amount of computational resources that practically never align with the real requirements of the workload, leaving hardware underutilized. Mesosphere’s DCOS platform consolidates servers into one giant computer that runs applications side-by-side such that the underlying infrastructure is utilized more efficiently with less effort.

The new $36 million investment, which also saw the participation of venture capital giant Andreessen Horowitz, will help the startup scale its global operations. That same goal motivated fellow rising star DigitalOcean Inc. to take out a $50 million loan the next day in a move meant to capitalize on surging demand from developers and small businesses,

The startup gained more than 100,000 new users over the last year to become the third largest cloud provider in the world on the back of growing frustration with the complexity of configuring cloud platforms. DigitalOcean has taken much of the hassle out of the process with a slim setup wizard that blurs the lines between infrastructure- and service-as-a-service, allowing customers to deploy instances pre-configured to run specific applications.

The firm also offers industry-leading pricing, an advantage that the debt should help sustain, allowing it to lease more equipment at better rates thanks to economies of scale as it opens new facilities around the globe. But it remains to be seen whether DigitalOcean has what it takes to stay competitive against the incumbents on the long run, a question that AltiScale Inc. also needs to address following the $30 million round it announced on Tuesday.

The company offers a cloud-based implementation of Hadoop featuring “unparalleled” uptime guarantees and integration of most of the key components in the upstream ecosystem, a combination that helped it win over numerous enterprise customers from top providers. But as is the case with DigitalOcean, it’s fighting an uphill battle against larger and better-funded rivals, as well as other startups. The capital infusion is meant to level the playing field and fuel continued growth amid the intensifying competition.

Photo via Pixabay

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