DigitalOcean raises 3 million dollars

Wed, 7th August 2013, 21:46

While a rolling stone doesn't gather much moss, upstart cloud hosting provider Digital Ocean hasn't had much trouble laying down roots either. With the announcement that it has raised a $3.2 million seed round with IA Ventures, with participation from CrunchFund and TechStars, Digital Ocean will be even better positioned to continue its trend of adding new subscribers, currently pegged at a rate of about 500 a day. Digital Ocean plans to use the funding to hire more marketing and engineering talent and to build out its infrastructure. 

Digital Ocean found its market niche by focusing on simplicity and keeping prices as low as $5/month for an entry-level server and has quickly grown with little external funding despite Digital Ocean need to acquire servers and bandwidth just to keep pace with the demand.


Price comparison of using Digital Ocean cloud hosting sevices  

Chart shows comparison of cloud hosting cost using Digital Ocean, Linode, Amazon Web Services and Rackspace. 


Just How Big & Fast 

In June of this year Digital Ocean was reported to have 7,000 web-facing servers, up from 1,000 last December according to Netcraft. The company has accumulated more than 35,000 customers since launching in 2011.

The company has just opened its second New York data center, taking space in the Google-owned 111 Eighth Avenue Data Center. It also utilizes a dc in New Jersey, and San Francisco, as well as a significant amount of server capacity in its Amsterdam, NL location

Digital OceanCEO and co-founder Ben Uretsky is reported as saying that the company’s fast and early growth often meant it ended up in a capacity crunch and couldn’t add users as fast as it wanted to because it simply didn't have enough resources available in its data centers. Users, however, expect that their cloud hosting provider has virtually unlimited resources and that they should be able to spin up a new server whenever they want to.


The cracks were beginning to show 

Just recently speculators of the new Primecoin virtual currency forced DigitalOcean to stop provisioning servers (called droplets) on its cloud for new users utilizing the machines for cheap computer cycles to mine the currency. (never mind.. it’s a different story altogether!)

“Digital Ocean raised the funding at the time when they were reaching the limits of what they could achieve on their own” says Uretsky


Looking Forward 

Since January, Digital Ocean has almost tripled its workforce from 12 employees to over 30 today. This means the company has finally been able to move from just keeping up with growth to actually being able to develop new features for the service. Digital Ocean plans to launch private networking in its new New York data center. Also on the horizon is support for CDNs, load balancing, IPv6, usage graphs in the dashboard and more.


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