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Tier 3 becomes CenturyLink
The Tier 3 team celebrating the acquisition by CenturyLink

Tier 3, a Bellevue cloud computing startup backed with $18.5 from Ignition, Madrona and Intel Ventures, has been sold to CenturyLink.

The terms of the deal were not disclosed, though Madrona Venture Group’s Matt McIlwain described it as a “very good outcome for all of the folks involved.”

Jared Wray
Jared Wray

The 60 employees at Tier 3 will stay on board, forming the backbone of CenturyLink’s new Cloud Development Center. Tier 3 founder and CTO Jared Wray will remain involved, leading the new center and serving as CTO of CenturyLink’s cloud organization.

“Our mission is to provide world-class managed services to global businesses on virtual, dedicated and colocation infrastructures. Tier 3’s innovative automation and self-service platform are game-changing for our global enterprise clients,” said Jeff Von Deylen, president of CenturyLink’s Savvis organization. “This acquisition underscores our continued commitment to delivering the most complete portfolio of cloud services.”

Wray, who founded Tier 3 seven years ago, said it was the best time for the company to sell.

“We were able to ‘out innovate’ the market on a startup budget, but the obvious next step for us is to become a much bigger cloud,” said Wray. “Our focus — enterprises — need cloud plus managed services, access to fiber, and a global data center footprint. That’s what we have now with CenturyLink. Our customers get a unified portfolio to address their most critical business needs. Now, Tier 3 has an amazing home that complements our existing services and helps us grow.”

Madrona’s McIlwain said the acquisition and the establishment of the new Cloud Development Center provides even more evidence that Seattle is the “cloud capital of the world.” With the deal, he said CenturyLink has acquired technologies that help businesses run and manage enterprise applications in the cloud.

“A lot of companies that are more established with large customer bases are looking to be more relevant in the cloud, and CenturyLink has already made a big investment in that with their acquisition of Savvis, and now they’ve got with Tier 3, a real production service that can run across all kinds of data center deployments throughout the world,” said McIlwain. “I think it is a really good strategic move.”

This marks the second acquisition by CenturyLink of a Madrona-backed company, following the acquisition of Portland-based AppFog earlier this year.

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