Hosting company DigitalOcean raised a Series A round of $37 million at a $153 million valuation from Andreessen Horowitz. The VC firm is the sole investor in this round. Peter Levine will join the board. Previously, the company had raised $3.2 million.
“We’re the 9th largest infrastructure provider worldwide and it’s such a capital intensive industry,” DigitalOcean co-founder and CEO Ben Uretsky told me in a phone interview. “Our users can buy a slice of a physical machine for a short period of time for a fraction of a penny. Securing this capital is very important to make sure that we stay ahead of our customers’ demand.”
DigitalOcean provides scalable virtual private servers with a few key features to differentiate itself from its competitors. First, it’s cheap. For $5 a month, you can run your virtual server (droplet) with 512MB of RAM, 20GB of SSD storage and 1TB of bandwidth — and you are billed per hour. It’s great to run a small app and experiment. When asked whether the company will be able to maintain these prices, Uretsky’s answer was straightforward. “We have no intention of changing our prices,” he said.
But it doesn’t mean that you can’t run more serious services. Creating a droplet takes 55 seconds and you can resize it in a single click — there are many different droplet sizes. You can run multiple droplets. The company has multiple data center locations in New York, San Francisco, Amsterdam and Singapore. It promises 99.99 percent uptime. In other words, DigitalOcean is all about providing low-level access to its users thanks to its virtual private server infrastructure. But you won’t have to manage and upgrade dedicated servers in a collocation center.
“Flywheel built an entire WordPress hosting service on top of our cloud,” Uretsky said. “They are running over a thousand droplets for their users. The integration is so tight that customers can’t tell that we’re running the service.”
Another example, Beyoncé launched her new album in December. It turns out that Beyonce.com runs on DigitalOcean. The servers handled the album launch without breaking a sweat.
“We’ve seen 15 million visitors within the first 24 hours. She’s been pretty happy with the service,” Uretsky said.
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