proudman-jesse
Blue Box founder and Young Entrepreneur of the Year award winner Jesse Proudman at the 2014 GeekWire Awards with his young son.

Blue Box, the 11-year-old Seattle startup that specializes in private cloud offerings, has raised $10 million in fresh funding.

Blue Box founder Jesse Proudman declined to name the strategic investor that led the round, saying only that it is a large publicly-traded technology company. Voyager Capital and Founders Collective also participated in the funding of the 55-person company, which brings total financing to about $18 million.

bluebox1The deal marks the second major financing round for a Seattle area cloud services company this week, following the $10 million invested in Amazon Web Services migration service 2nd Watch. Unlike 2nd Watch, which specializes in moving large enterprises onto Amazon’s public cloud, Blue Box helps companies utilize what’s known as a hosted private cloud service.

Customers of Blue Box get a single tenant private cloud service, powered by OpenStack, that runs on dedicated hardware. That’s different from AWS — known as a public cloud — where customers utilize shared infrastructure on-demand.

proudman
Jesse Proudman

“Our goal is to take many of the benefits of public cloud, particularly elasticity and time to market … and combine them with all of the benefits of private cloud — control over the environment, control over cost, security and performance,” said Proudman.

He added that many customers are cost-sensitive when it comes to public cloud offerings, noting that the the Blue Box service provides more “consistency” in their cloud hosting bill. He also said that some customers have sensitive workloads that they do not feel comfortable putting in the public cloud.

“Public cloud is here forever,” said Proudman. “It is a wonderful set of technologies, and we are not trying to compete head-to-head with public cloud. We think there are certainly workloads that make sense to run in those environments. Our goal is to provide a solution for small to medium enterprises that have existing workloads running in their own data centers today, and are looking for a technology stack that gives them the ability to build next-generation applications on cloud infrastructure that integrates back with existing technologies.”

Proudman said that IT departments spend around $475 billion each year, and today the public cloud leader of Amazon Web Services is at about $4 billion to $5 billion in revenue. “That’s an impressive number and an impressive growth rate, but there is a significant amount of spend that still sits on premise,” he said.

Matthew Schiltz
Matthew Schiltz

Blue Box is now led by CEO Matthew Schiltz, a well-known technology executive who previously led Bellevue-based cloud computing startup Tier 3, which was acquired by CenturyLink last year. CenturyLink’s Seattle area team was in the news this week for opening its new cloud development center in Bellevue, with plans to more than double staffing at the facility in the coming months. (Yes, the cloud is red hot in Seattle).

Proudman said that Blue Box proved the viability of its product on the back of the series A financing round, and the most recent funding will be used to scale up the product.

“We have just had incredible success following our … launch with sales traction,” said Proudman. “The series B is really focused on two things: One how do we continue to grow our engineering efforts to move our product along, and then two: How do we really invest in a sales and marketing engine that will drive significant sales volume for us. We are pretty excited about the opportunity.”

Blue Box has “double digit” customers using its services, including Seattle gaming company Big Fish and a top-tier media company. The 55-person company, which is no longer profitable, plans to nearly double in staff by the end of 2015.

It competes against RackSpace, Mirantis and MetaCloud, which was recently acquired by Cisco.

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