Seattle’s Skytap has raised a big funding round to help companies that never thought they’d be able to take advantage of cloud services move their applications out of their data centers without a massive overhaul.
Goldman Sachs led a $45 million Series E funding round in Skytap, the company plans to announce Tuesday, three years after it raised a $35 million round. Skytap now has raised $109.5 million for its public cloud services, and plans to nearly double its staff in both engineering and sales, said Thor Culverhouse, CEO of the 11-year-old company based on the edge of Pioneer Square.
The new round included participation from Skytap’s existing investors, which include Insight Venture Partners, Madrona Venture Group, Ignition Partners, OpenView Capital, and a host of others: Amazon CEO Jeff Bezos actually put money into Skytap way back in the day.
The company currently has 170 employees and plans to hire engineers to add support for a wider range of enterprise tech into the core product, Culverhouse said. It also wants to dramatically expand its sales and marketing department with the new funding.
Skytap isn’t exactly trying to compete head-on with Amazon Web Services and Microsoft Azure, which has been a very difficult thing for even the largest tech companies to do. Instead, it’s targeting companies with older applications that would take a huge amount of work to move to the larger public cloud services, aiming to give them an easier path to cloud computing.
It does this by replicating a customer’s data center buildout in its own data centers, down to the specific infrastructure products used by that customer, and then helps them “lift and shift” their apps to the Skytap Cloud. Applications developed before the cloud era tended to be written with a very specific set of hardware in mind, and rewriting them to be hardware-agnostic — which is the modern approach to enterprise software development — can take years, depending on the size of the company or application.
The unwillingness of the finance folks to invest that much time and money to “fix” something that seems to be working just fine is a common stumbling block encountered by tech staff at older companies that would like to take advantage of modern cloud concepts, and in a lot of cases, those companies decide to just soldier on with their data centers. Skytap provides another option, Culverhouse said. Skytap can also help companies who have invested in some aspects of modern software development but still have a huge legacy code base, like companies that have built nice modern mobile apps that rely on ancient databases.
One reason investors are still so excited about cloud computing as it enters its second decade is that there are a large number of companies who are still doing things the old-fashioned way, with big huge monolithic apps running inside their own data centers that haven’t been touched since VMware was the hot enterprise computing technology more than a decade ago.
Estimates vary, but IDC thinks around half of all enterprise workloads will still be running in traditional data centers in 2020, so there’s a long runway to convert those companies into cloud customers.
“This marketplace is so huge, and the time frame under which those (legacy) apps get migrated … I’ll be long retired,” Culverhouse said.